The Hotel Citadel was a 411-room independent mid-tier hotel at a downtown location in Ottawa, Ontario, the national capital of Canada. The hotel offered 23000 square feet of meeting space. Ottawa was considered a strong market at the t (the late 1990s). CHIP REIT (Canadian Hotel Income Properties Real Estate Investment Trust), the investor, had identified a promising opportunity to unlock the hotel's potential and had purchased it in April 1998.

The new owners decided to renovate and reposition the hotel to target an upscale market segment. CHIP successfully secured a franchise for the Crowne Plaza Hotel brand (owned today by InterContinental Hotels Group). The exterior of the property was upgraded and all meeting rooms, public areas, all guestrooms, including Club Floor and Club Lounge, were renovated in 1999. The changes involved management as well: a seasoned upscale management team was installed.

Total Cost Per Room

Purchase Price $20M $48,660

Investment $11.5M $28,000

Total $31.5M $76,640

	8 months before	8 months after	1999	2000	2001	2002
Occupancy	65%	74%	65%	74%	70%	71%
ADR	$86	$102	$100	$121	$120	$118
REVPar	$56	$75	$65	$89	$85	$83
Total Revenue	$8.5 M	$11.2M	$14.0M	$19.2M	$18.4M	$18.3M

Note that 2001 was the year of the 9/11 catastrophe. The entire travel industry declined in North America after the terrorist attacks of September 11, 2001. This hotel's performance metrics also reveal a minor decline.

The new owners and operators of Crowne Plaza claimed that their Re PAR market share increased from 77 percent in 1999 to 92 percent in 2002.

`As a fine ending to the story of the acquisition and repositioning of the hotel, HVS (Hotel Valuation Services) Transactions published in its Canadian Market Report that in December 2007 the 411-room Ottawa Crowne Plaza sold for $63,638,829, or $154,839 per room.

QUESTION : What were the key reasons for the improvement in the hotel's performance?

QUESTION: What was CHIP REIT's return on the investment for the period of its ownership?