Hang your Hat in Fort McMurray, Alberta
Fort McMurray is best known for being a major hub for oil sands development in Canada. In recent years it has become a true “boom town” (both as a result of the oil sands industry development and tourism industry growth), and so the need to expand the number of hotels in the area grew.
Temple Hotels Inc., a real estate investment trust (REIT) on the TSX stock exchange, recognized that growing need and decided to shift some of its focus and resources to the Fort McMurray area. In 2005 the investment company entered the hotel business with the acquisition of Temple Gardens Hotel & Spa in Moose Jaw, Saskatchewan. Temple entrusted the management of this property to Atlific Hotels, one of the leading hotel management companies in Canada. Thus began a successful and trusted partnership that would eventually span numerous hotels across the country, including those in the Fort McMurray portfolio.
Atlific Hotels is a Canadian company that manages over 60 hotels across the country, seven of which are concentrated in the Fort McMurray area. That makes them a strong contender in the market. We spoke with Area Director Jean-Marc Guillamot to learn more about the ups and downs of the hotel industry in Fort McMurray.
No doubt, oil sands production has given Fort McMurray a significant economic boost. Fort McMurray is continuously improving its infrastructure, from building new stadiums and highways, to new power plants and landfills. All of these projects have large companies bringing subcontractors into Fort McMurray, and the people need somewhere to stay.
Temple Hotels Inc., already familiar with the Fort McMurray area from the apartment building side, recognized an opportunity on the hotel accommodations side and seized it. The mandate of the investors and the Real Estate Investment Trust (REIT) was for the hotels to position themselves in places of strong activity in Canada’s natural resources sector. “It started in Moose Jaw with potash, and then Yellowknife with Chateau Nova and diamond resources,” explains Mr. Guillamot. “2007 saw the oil sands gaining momentum in Fort McMurray, so the first acquisition there was the Clearwater Suites Hotel, which at the time was the most expensive purchase per room in North America.”
Just one month after the first acquisition, Temple purchased three more properties in Fort McMurray, and with Atlific Hotels managing these properties, it enabled both companies to gain a solid foothold in the market. From there, they expanded their portfolio and today they own close to forty percent of the Fort McMurray hotel market.
Knowing that fluctuations in the price of oil could disrupt any portfolio, Temple Hotels Inc. wanted to diversify. “We knew that the cycle was going to bounce from time to time. Now it is simply a matter of adjusting with the changing market, doing the very best that we can to service our clients and achieve our goals,” shares Mr. Guillamot. Today, Temple’s portfolio extends from Vancouver to Halifax with Atlific managing all its hotels for a total 4,329 rooms. Atlific oversees everything from hiring to sales & marketing, accounting and IT, operations, food & beverage and even construction management.
The diversity of its offerings in Fort McMurray is one of its greatest strengths, along with the fact that these hotels also cater to the particular market needs of this resource sector. For example, the company’s portfolio includes the Clearwater Residence Hotel – Timberlea, which offers a great extended-stay product with the option of one-or-two fully furnished apartments with a full kitchen and in-suite laundry. Alternatively, the Vantage Inn & Suites is a favourite with business travellers and for shorter term stays. The portfolio also includes a higher-end accommodations product with the Radisson Hotel & Suites Fort McMurray.
Another advantage of Atlific Hotels managing the Fort McMurray cluster is their central reservation system and a comprehensive website, which gives them flexibility in addressing these different demands. “We have a system at the front desk whereby if one property is oversold, we can push reservations right to another sister hotel,” explains Mr. Guillamot. “Everything has become more and more centralized, including the management. We have a healthy portion of market share here, but we also have the right product and service standards that have allowed for it.”
Of course developing and maintaining the right product for the right market means keeping one’s fingers on the pulse of the community. To this end, Atlific Hotels maintains strong relationships with leaders in the communities in which it operates. One such relationship in Fort McMurray, through Mr. Guillamot, has led to a partnership with the primary industrial college, Keyano. “We have a great relationship with all the people that they bring into town,” shares Mr. Guillamot. With more than 2,800 full-time students and over 13,000 part-time students, Keyano is the major industrial college for those who want to operate in the oil sands industry. “We also have a very good partnership with the city and are part of various committees, including tourism, the Chamber of Commerce, and Economic Strategies.”
Another example of Atlific’s involvement in the community is with the Fort McMurray’s MacDonald Island Park, the largest community centre in Canada. This unique recreational, leisure and social centre is set to expand to include a football and baseball stadium, and Mr. Guillamot is collaborating with ‘Mac Island’, as it is known locally, to bring in events and exhibitions. For every room booking involving a sporting event, Atlific is giving back to the local sporting teams. “There is a big curling championship in 2015. For every room booked, we will give five dollars back to the local curling club. This started with the provincial tournaments, and now we have graduated to the nationals. We are leveraging that by creating a new sports council in partnership with the municipality and tourism board.”
Outside of sports tourism, Mr. Guillamot also seeks to build a tourism package around the Northern Lights, which are gaining interest with the rise of the eco-tourist and travellers who descend on the Boreal Forest every year in order to pursue a tradition of mating with a view of the Aurora Borealis. “This is an interesting market that we are working on,” shares Mr. Guillamot. “We are in the Boreal Forest and are witness to the wonders of the Aurora Borealis. Yellowknife has been very successful in putting this market on the map, and I think we can certainly round out that market’s offerings by providing a first-class product.” This will call for more infrastructure and the attainment of an ideal site from which to witness the natural wonder. “Working with the Provincial and Municipal governments, we are confident we can successfully put a ‘unique North Alberta Tourism experience’ on the market.”
Finally, Mr. Guillamot and his team are also working with the economic board and the city to bring in industry-specific tours, and are planning to offer one or two-day tours to the market for people to come and learn about the oil sands. Visitors will stay at a hotel, learn from the economic board and tour an oil sands site. These industry resources tours are currently in the planning stages.
Atlific Hotels understands that it must be cautious with any additional expansion plans in the market due to potential market instability. “Investors have to be protected and all the eggs cannot go into one basket,” says Mr. Guillamot.
Atlific’s group of hotels in Fort McMurray headed by Mr. Guillamot currently participate in a number of fundraising and corporate events, as well as supporting local causes like the SPCA and local sports teams. Deals are in place with certain industries to collect unused food to give to the food banks. Atlific Hotels also participates in the Clean the World program, which collects clothing, shampoos and soaps left over from the rooms and donates them to less advantaged countries throughout the world.
As is the case with any business in the area, Atlific Hotels must rise above certain challenges in Fort McMurray; the falling price of oil has certainly had an effect on everyone in the industry. Oil sands companies and engineering firms are announcing downsizing, leading to cancelled or reduced crews. “When the bust comes, it’s severe and sudden,” shares Mr. Guillamot.
Yet short term business remains strong. Although the market has 2,437 rooms, there are times when one simply isn’t available.
This is not a doom and gloom time; it is simply a rough patch, and Atlific is well set to weather it. “Unfortunately, that is the nature of the beast. We are going to adapt. The good news is that we have a lot of sporting events lined up for next year. This includes two CFL games; one between the Edmonton Eskimos and the Saskatchewan Roughriders, and the other between Toronto Argonauts and the Edmonton Eskimos. It also includes the 2015 Canadian Rivalry presented by the FC Edmonton Pro Soccer Club, as well as the Western Canada Summer Games. So I am very excited as to the potential for sports tourism and sports events – that is going to help us bridge the gap,” says Mr. Guillamot.