TORONTO, Canadian Pacific Ltd.'s (CP.TO) hotel unit on Tuesday said it has agreed to buy Delta Hotels for about C$94 million ($70 million), creating the largest manager of hotel rooms in Canada.

CP Hotels bought closely-held Delta from Toronto's Realstar Group and the Lai Sun Group of Hong Kong. Under the deal it would acquire Delta's management company and brand, as well as the long-term leases on three hotels.

CP Hotels said it will maintain Delta as a separate unit and attempt to expand the chain.

"We think it's a great acquisition for us, the opportunity to have a second brand," CP Hotels President Chris Cahill told Reuters.

"The future for both Canadian Pacific Hotels' brand and for Delta is very secure in the Canadian marketplace and provides opportunity for growth outside of Canada."

Toronto-based Delta manages or franchises 34 hotels and resorts with about 10,000 rooms. The company also has six other hotels under development.

CP Hotels – also based in Toronto – operates 27 hotels across Canada, eight of which it owns outright. The company is best known for its landmark five-star hotels, including the Banff Springs Hotel in Alberta, the Royal York in Toronto and the Chateau Laurier in Ottawa.

After the purchase, CP said it will own or manage about 22,000 rooms worldwide and have control of about six percent of the hotel rooms in Canada.

The acquisition makes CP Hotels the biggest manager of hotel rooms in the country, pushing it ahead of Holiday Inns and Best Western, said Tony Pollard, president of the Hotel Association of Canada.

Pollard said the merger of the two chains is part of a trend in Canada, and worldwide.

"What we're seeing this last year and a half is that there's one word to describe this industry, it's consolidation," Pollard said.

CP Hotels said it will pay for the purchase with cash on hand. Once the acquisition is made, it will offer the long-term leases on three of the hotels to Legacy Real Estate Investment Trust (LEYir.TO). CP owns a third of Legacy.

Canadian Pacific's shares rose 0.35 to 40.45 in Toronto Stock Exchange trading of more than 470,000 shares. In New York, the company's shares rose 1/4 to 28 5/8 on 461,700 shares.

Hospitality Net Editorial
reuters.com