Hotel operator flies high
The Hampton Inn rode traffic growth at Dorval Airport

In the top drawer of Stephen Cooper's desk is a large clipping file, filled with stories about the Dorval airport. But Cooper isn't in the airline business, he manages hotels.

"With both our hotels within ten minutes of the airport, airline traffic is a big factor," said Cooper, president of the Dorval-based Hampton Inn & Suites and Travelodge hotels. "We've had a dip lately because of 9-11, SARS and the weak the economy. But things aren't so bad."

That's an understatement. The Hampton Inn & Suites, which Cooper manages on behalf of his wife's family trust, has had an average occupancy of about 80 per cent since it opened in March of last year, far ahead of Montreal's 68 per cent industry average. The Travelodge, located near the Dorval circle, has averaged 85 per cent occupancy for the last five years.

The hotel industry is highly competitive. So when one operator outperforms, it pays to ask why. And Cooper, a chartered accountant by profession, is the perfect guy to ask.

Cooper got into the hotel business in 1982, when his late father in-law, real estate developer Paul Boretsky, asked him to manage one of his holdings, the Travelodge, then known as the Beauséjour Motel, which had been managed by an outside firm.

When Cooper took over, the place was in disrepair and many of the rooms were unfit to be rented. The occupancy rate hovered in the disastrous 25 per cent range. During the next few years Cooper gradually began upgrading rooms and retraining staff.

"Hotels are a people business. Your staff is the first line of contact with the customer," Cooper said. "If they are happy, then guests will be too."

During the next few years occupancy rates at the Beauséjour, steadily climbed. In 1988 Cooper led a massive $4 million renovation, expanding the hotel from 50 rooms to 108.

Eventually Cooper renamed the hotel the Travelodge to reflect a licensing arrangement signed with the U.S. based hotel operator. The association proved to be a good learning experience for Cooper, who got a chance to travel throughout North America while serving on Travelodge's advisory board, which helps set marketing policies for the entire chain.

The experience got Cooper thinking big, and during the late 1990s he began looking at expansion opportunities in the U.S., then in the midst of a red-hot market. At the time, investment in West Island hotels was almost non-existent, in part due to uncertainty in the lead-up and fallout from the 1995 referendum.

But the more Cooper looked at the situation, the more he began sensing an opportunity. "Many people think building hotels is about location, location, location," Cooper said. "But it's also about timing, timing, timing."

By the late 1990s Aéroports de Montréal began consolidating flights at Dorval airport, a move that instantly boosted traffic by 1.4 million passengers a year, and Cooper began looking for land for a new hotel.

According to one industry professional, Cooper wasn't the only one.

"There were a lot of dreamers in the hotel industry who were talking about expanding in the West Island during the late 1990s," said Gilles Larivière, president of the Montreal office of Horvath Consultants. "But (Cooper) is the only one who did it."

Despite the West Island's numerous advantages including proximity to the Ville St-Laurent industrial park, the large pharmaceutical industry presence, there hadn't been a major investment in the industry in more than a decade.

According to one financing consultant, one reason was due to the banking industry's lack of enthusiasm for the hotel business.

"Banks are nervous when it comes to hotels because they combine business risk and real estate risk," said Eric McCarty, president of Source Financial Services. "I mean, what are you going to do with the building if the hotel fails?"

Before founding his own firm, McCarty was a major account manager at the Business Development Bank of Canada, which is where he met Cooper for the first time.

"(Cooper) was very well prepared. His forecasts were well done, and he knew exactly what he wanted to do," McCarty said. "I'd seen many hotel deals in the past, but this was one of the few I believed in."

Eventually the BDC agreed to cough up half of the $9 million that Cooper needed to build the Hampton Inn. The timing couldn't have been better.

The 100 room Hampton Inn opened in March of 2002, just as Quebec was in the midst of a growth spurt.

Cooper had to scrounge up a lot of money to come up with the down-payment. So he sold off a good chunk of the family estate's equity holdings at what turned out to be near the top of the market and he invested in real estate, just before the sector was set for a big rise.

The hotel is considered mid-range, limited service, but the rooms are spacious, well-furnished and have high-speed Internet connections and 25" televisions. Although the hotel doesn't have a restaurant, guests are served a continental breakfast in a lobby dining room and they have access to a pool and exercise room. The average price runs at about $125 per night.

Cooper has a licensing agreement with the Hilton Hotels Corporation which manages the Hampton brand. Hilton supplies Cooper with a steady flow of guests through a central reservation system and takes care of marketing.

But about 70 per cent of hotel bookings are generated through Cooper's sales staff of three. They sell rooms through direct marketing to local businesses and amateur sports organizations that bring in teams from outside the province.

But competition could get tougher. Several local rivals are adding capacity and renovating, including Best Western, a Hilton hotel on Cote de Liesse and others, which are in the exploratory phase.

Despite his good timing, Cooper isn't looking to do an encore anytime soon, though the Hampton property has room to accommodate a 50-room expansion.

"I guess I got a bit lucky," said Cooper. "These opportunities don't come around every day."

 

 

 

Sidebar: About the Hampton Inn

"Their occupancy rates are very high, clearly above the industry average. They must be doing something right."
Marie-Thérèse Guérin, researcher, Tourisme-Montréal

"There were a lot of dreamers in the hotel industry who were talking about expanding in the West Island during the 1990s. (Cooper) is the only one who went out and did it."
Gilles Larivière, president, Montreal office, Horvath Consultants.

"Bankers are very nervous when it comes to hotels because they combine business risk and real estate risk. I mean, what are you going to do with the building if the hotel fails?"
Eric McCarty, financing consultant, Source Financial Services

 

 

peter@peterdiekmeyer.com

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