For 18 years, famed Canadian photographer Yousuf Karsh, who captured the likes of Audrey Hepburn, Albert Einstein and Ernest Hemingway, lived with his wife Estrellita in Suite 358 of the Château Laurier, Ottawa's most prestigious hotel.
The couple enjoyed cleaning, room and laundry services. And the hotel's four-star restaurant and downtown Ottawa were just steps away from their suite. The Karshs moved out in 1992, but today a new generation of tenants is discovering the benefits of hotel living.
New luxury properties called hotel residences are cropping up from Montreal to Vancouver. They mirror traditional condo properties save for the fact that units are attached to a hotel and owners can tap directly into amenities such as the concierge, valet and gym.
By providing these services, developers are able to charge a premium for the units and finance smaller hotels, which might not have been built so easily after the beating the industry took last year. Practically no one wants to build a stand-alone hotel these days, and experts say that hotel residences are set to provide solid returns on all sides. Yet, they're not only good investments. Some say, that if done right, they promise to lend a hand in rejuvenating downtown cores.
"From the floor-to-ceiling windows in my bedroom I can watch the sun rise," says Louise Houle from her 3,000-square-foot penthouse nestled in the heart of Montreal. "But my favourite view is when it sets behind Mount Royal and the city lights come out."
This March, Ms. Houle moved in on the 23rd floor of Hôtel Le Crystal which opened in early 2008. Right from the get-go she says she was impressed with how extensive the hotel's services are. It even made moving in easier. "I used the valet quite a lot when I was having all my furniture delivered," she says. "These deliveries usually happen through the day when you're not around. But the valet took care of it."
After the move she also found that, for a fee, there's someone to water the plants while she's away, deliver dinner to her room and take care of the dry cleaning if she gets it to the front desk by nine. "They have it back by the time I'm home at six," she says.
These are just a couple of reasons why the 53 condos built atop Le Crystal's 131 hotel suites have an occupancy rate of 95 per cent, says Louise Latreille, a real estate agent with Sotheby's International Realty Quebec who represents the building.
As baby boomers age, they want more services available to them. "They like the benefit of the hotel's restaurant downstairs, they like the valet service, the pool and they want to be where the action is downtown," she says.
Owners are willing to pay for what they get. A 3,000-square-foot penthouse with sweeping views of Montreal on the 25th floor costs $2.8-million, $2,800,000 and a 4,000-square-foot unit on the 17th floor costs $2.2-million. $2,200,000 Condo fees, which are paid every three months, run from 35 to 40 cents a square foot.
"The hotel residence model allows developers to charge a premium for the property because they're offering those extra services," says Curtis Gallagher, vice-president of hotel investment at CB Richard Ellis.
The land value is high where these projects, such as Toronto's Trump International Hotel & Tower and Vancouver's Living Shangri-La, are being built, he says. "In the past, building a smaller hotel there might not have made financial sense. But by adding condos to the mix, developers maximize their return from the property."
The hotel industry will see some gradual improvement in the coming year, Mr. Gallagher says. And the fact that many new hotel-residence projects won't open for a year or two will help drive that recovery.
Yet when they do, unit owners stand to benefit. "The Ritz-Carlton in Montreal is adopting the same concept, and when it opens in 2011 the value of the properties at Le Crystal will go up," Ms. Latreille says. "Its presence creates competition and indicates this isn't just some fad."
But buyers should know they are making an investment in the hotel industry, Mr. Gallagher suggests. "You should understand how and why the industry improves. The brand and management behind the hotel play a large role." Nevertheless, he sees these units generating decent returns in three to five years.
"I truly believe it's an investment, and I'm quite sure my condo's value will appreciate," Ms. Houle says. "But by far, one of my favourite things is the fact that my car stays inside and I only have to travel a block to the law firm where I work."
If hotel-residence projects are done right, they add density to downtown cores and vibrancy to the streetscape, says Ken Greenberg, a consultant and former director of urban design and architecture for the City of Toronto.
"The real challenge for these properties is to be extroverted," he says. "They need to get rid of big hotel drives that remove the building from the street and bring the restaurant, bar and retail closer to the sidewalk."
The Thompson Hotel in Toronto, a condo-hotel property that will open in May, is an excellent example, with large inviting windows that look in on retail space and restaurants, Mr. Greenberg says. This makes the building an asset to its tenants and other local businesses because they generate more public foot traffic.
"I walk everywhere," Ms. Houle says. The Metro is close by, the grocery store is only a couple blocks away, and shopping on bustling Ste. Catherine Street is right around the corner from her home in Le Crystal.
"Compared to my life in a traditional house in Westmount, where there were all sorts of things I was in charge of and had to worry about," she says, "this is a completely modern way of living."
Same, but different
There are a few different business models that are similar, but not quite the same as hotel residences. At le 400 Sherbrooke Ouest, which opened early last year in downtown Montreal, tenants pay rent monthly as they would for an apartment, rather than owning the condo unit.
Still, they're able to access the amenities of the Hilton Garden Inn hotel which 400 Sherbrooke's 217 apartments are built on top of. "Our tenants are students, local business people who are on contract, families and people who just want to move back downtown," director of leasing Stewart Black says.
But the unique thing about this property is the fact that appliances (including a washer and dryer), electricity, heating, telephone service, basic cable and high-speed Internet are included in the price of each tenant's monthly rent.
"It allows people to follow a budget," Mr. Black says. "It's comforting for them to know that there aren't all these bills they have to manage."
In the building, a 470-square-foot studio apartment goes for $1,150 a month, while a 1,900-square-foot penthouse with 22-foot high ceilings costs $5,800.
"On a clear day, you can see the mountains in New Hampshire to the south from the eleventh floor," Mr. Black says. "It's just one of the reasons there's been very little turnover in our first year."