YOW Alt Hotel [1085 Airport Pkwy] | ?m | 7f | U/C

[phil235]

Originally Posted by acottawa

I have travelled fairly extensively both for work and pleasure and been in probably close to a hundred airports on 6 continents. I am not an expert in the sense that I know about negotiations between the airport authority and airlines, but I am fairly familiar with how people travel.

An in terminal hotel is of significant value if it is airside and it saves hours going through customs/security, etc for a short, but overnight layover. Other than that, its value depends on how hard it is to get in and out of the airport to other hotels nearby (for example checkpoints, toll plazas, complicated access roads can make getting to nearby hotels difficult).. Ottawa airport is extremely easy with a 5 minute shuttle to two existing hotels on the airport property. I also expect the uplands and south keys stations to eventually get nearby hotels over time that would take advantage of rail access.

For these reasons there is no business case for this hotel without panhandling at city hall.

I can see what you are saying, but I do think that avoiding a shuttle has value to a lot of people. Just look at the difference in room rates between the attached hotels and the ones a shuttle ride away. Even if the ride is only 5 minutes, you generally have to wait for the shuttle to go, so realistically it adds time and inconvenience, which matters to frequent travellers and air crews.

I also think that the proposed hotel is different from the current offerings as it will be higher-end. Based on location, it will also pay much higher rent to the airport authority than the others, which adds to the amount of money they have to develop facilities and routes. Again, this is just my non-expert opinion, but there has to be a reason that the airport authority is making this a priority and all of the other major airports in Canada already have this. It certainly suggests that a business case exists.

[acottawa]

Originally Posted by phil235

I can see what you are saying, but I do think that avoiding a shuttle has value to a lot of people. Just look at the difference in room rates between the attached hotels and the ones a shuttle ride away. Even if the ride is only 5 minutes, you generally have to wait for the shuttle to go, so realistically it adds time and inconvenience, which matters to frequent travellers and air crews.

I also think that the proposed hotel is different from the current offerings as it will be higher-end. Based on location, it will also pay much higher rent to the airport authority than the others, which adds to the amount of money they have to develop facilities and routes. Again, this is just my non-expert opinion, but there has to be a reason that the airport authority is making this a priority and all of the other major airports in Canada already have this. It certainly suggests that a business case exists.

The premium they are willing to pay depends on the value of the terminal connection. If it was high in Ottawa it wouldn’t need a subsidy to get built.

The doublethink of “this hotel is going to be popular and people will pay a premium to stay there” and “it couldn’t get built without a subsidy” is a little hard to follow. If the former is true and this is just a company chasing a free subsidy (like the Porsche dealership) then it should definitely be canned as another Watson-era failure. If the latter is true then the city should be looking at whether it will do what the proponents are promising (i.e. attract new airlines). Airline representatives should be at the council to explain their post hotel plans.

I wouldn’t describe Alt hotels as high end. The one at long term parking near YYZ is pretty basic, as is the one downtown.

[phil235]

Originally Posted by acottawa

The premium they are willing to pay depends on the value of the terminal connection. If it was high in Ottawa it wouldn’t need a subsidy to get built.

I'm not sure that logic is correct. This hotel was going to be built without a subsidy, but then COVID. The fact that the airport has seen a 80% reduction in traffic over the past two years means that the risk profile of this project has changed dramatically. The whole point of the subsidy program is to encourage businesses to take a chance and invest following a huge period of uncertainty. The upside for YOW is huge - we are essentially mitigating the risk of these large investments to bridge until the growth is realized.

[originalmuffins]

Originally Posted by roger1818

He also talks about it for about 3 minutes in his weekly video. He mentions a few things in it that aren't on his website, such as (paraphrased by me):

• YOW is competing with other airports for new routes, and having an hotel attached to the terminal is one of the factors that airlines are looking for when they decide to add new routes to a community.
• The airport is subsidizing the new Air France route as it won't break even for them, yet.
• Under Ontario law, the city is limited in what they can directly grant to the airport, which is why they are using a CIP.

Link to where he starts talking about the Hotel.


People on hear complain about YOW not having enough flights, but when the airport asks for help from the city, many of those same people are saying, "Hell no! We don't want to pay anything for those flights. They should be given to us for free."

Subsidies for Air France was definitely needed, and a step in the right direction. It looks like Alt is willing to accept much lower than originally asked, so if the grants they're looking for as per the program is for this lessened amount, I think it's a hit the city should take at this point to get this project running.

[roger1818]

Originally Posted by acottawa

The premium they are willing to pay depends on the value of the terminal connection. If it was high in Ottawa it wouldn’t need a subsidy to get built.

The feasibility of the hotel without the CIP certainly is unknown, but I would argue that is irrelevant. The bigger issue is the importance of the airport in general to the city, and finding a way for the city to subsidize it within Ontario law has value IMHO.

Don't forget property taxes are paid by the land owner, and since the airport is planning to lease the land to the hotel, they will still own the land, and be responsible for the taxes. Thus they will be the recipient of the tax break, not the hotel. It is up to them if they want to pass the savings on to the hotel or keep it for other purposes.

[Williamoforange]

Originally Posted by roger1818

The feasibility of the hotel without the CIP certainly is unknown, but I would argue that is irrelevant. The bigger issue is the importance of the airport in general to the city, and finding a way for the city to subsidize it within Ontario law has value IMHO.

Don't forget property taxes are paid by the land owner, and since the airport is planning to lease the land to the hotel, they will still own the land, and be responsible for the taxes. Thus they will be the recipient of the tax break, not the hotel. It is up to them if they want to pass the savings on to the hotel or keep it for other purposes.

Leases usually State that the tenant is responsible for paying taxes...NNN type leases I think are what there called

[acottawa]

Originally Posted by roger1818

The feasibility of the hotel without the CIP certainly is unknown, but I would argue that is irrelevant. The bigger issue is the importance of the airport in general to the city, and finding a way for the city to subsidize it within Ontario law has value IMHO.

Don't forget property taxes are paid by the land owner, and since the airport is planning to lease the land to the hotel, they will still own the land, and be responsible for the taxes. Thus they will be the recipient of the tax break, not the hotel. It is up to them if they want to pass the savings on to the hotel or keep it for other purposes.

I guess evading the intent of provincial regulations is a reason. I am not convinced there is a particular need to do so, particularly with the numerous financial pressures the city is under.

The land is owned by the federal government, leased to the airport authority. The AA doesn’t pay property taxes, it makes payments in lieu of taxes on behalf of the federal government.

[J.OT13]

We're debating businesscase , but at the end of the day, the Airport Authority knows best what's good for the Airport. This is not a vanity project, but a way to catch up and compete with other major Canadian Airports.

Any Councillor who voted for the CIP in July but against it now is a hypocrite, running with the Mayor of the day instead of voting for what they believe in.

Last week's vote breakdown, courtesy of Kate Porter:

https://twitter.com/KatePorterCBC/st...44805190049793

Criss reference with the July 2022 vote on the overall CIP:

https://ottawacitizen.com/news/local...rt-of-the-deal

Tierney, Brockington and Darouze (boohoo, no Parkway expansion) are the hypocrites.

[Tesladom]

Originally Posted by acottawa

The premium they are willing to pay depends on the value of the terminal connection. If it was high in Ottawa it wouldn’t need a subsidy to get built.

Folks, we are talking about the 61st busiest airport in North America (Canada+USA) 2019 stats
https://gettocenter.com/airports/con.../north-america

[acottawa]

Originally Posted by J.OT13

We're debating businesscase , but at the end of the day, the Airport Authority knows best what's good for the Airport. This is not a vanity project, but a way to catch up and compete with other major Canadian Airports.

Any Councillor who voted for the CIP in July but against it now is a hypocrite, running with the Mayor of the day instead of voting for what they believe in.

Last week's vote breakdown, courtesy of Kate Porter:

https://twitter.com/KatePorterCBC/st...44805190049793

Criss reference with the July 2022 vote on the overall CIP:

https://ottawacitizen.com/news/local...rt-of-the-deal

Tierney, Brockington and Darouze (boohoo, no Parkway expansion) are the hypocrites.

We all know that Watson excepted a lot of influence over local politics, so I don’t think it is hypocritical to see things differently when free of Watson’s influence. I expect we will see that on a lot of issues.

The situation of the airport has also changed significantly since July 2022. At the time a number of travel-related COVID restrictions were still in place, travel by the city’s largest employer was all but banned, China was still in zero-COVID mode, etc. From a regulatory perspective we are back to 2019, with stafffing issues seeming to be the main issue (which is affecting the whole economy).

[waterloowarrior]

Originally Posted by roger1818

The feasibility of the hotel without the CIP certainly is unknown, but I would argue that is irrelevant. The bigger issue is the importance of the airport in general to the city, and finding a way for the city to subsidize it within Ontario law has value IMHO.

Don't forget property taxes are paid by the land owner, and since the airport is planning to lease the land to the hotel, they will still own the land, and be responsible for the taxes. Thus they will be the recipient of the tax break, not the hotel. It is up to them if they want to pass the savings on to the hotel or keep it for other purposes.

Only tenants paying property taxes are eligible for the CIP incentives, the Airport does not get the money and the CIP funds are separate from the PILTs the airport authority pays
https://ottawa.ca/en/business/get-he...f-d4f927dbc5a5

The Ottawa International Airport Authority, as the property Owner, will undertake YOW CIP applications as permitted by the Ontario Planning Act(link is external), but only tenants paying municipal property taxes will be eligible to receive YOW CIP incentives.

https://pub-ottawa.escribemeetings.c...umentId=117204
Property tax increase (Municipal portion) from zero ($0.00) to $393,796 in year 1
(2025).
*PILT payment to the City is not affected as the PILT calculation is based on
airport passenger volumes.

[acottawa]

Do city staff even know the AA doesn’t own the property? I wonder if this is even eligible for this program.

[phil235]

Originally Posted by acottawa

The situation of the airport has also changed significantly since July 2022. At the time a number of travel-related COVID restrictions were still in place, travel by the city’s largest employer was all but banned, China was still in zero-COVID mode, etc. From a regulatory perspective we are back to 2019, with stafffing issues seeming to be the main issue (which is affecting the whole economy).

Except that a key rationale for assisting the airport was that it was placed in a precarious financial position due to COVID ($25 million in losses in 2020 and 2021). That hasn't changed.

Any investments that help establish YOW as a hub and get more direct flights are good investments from a regional economic growth perspective. A good indication is that the tech industry has been begging for these investments for years.

[waterloowarrior]

Originally Posted by acottawa

Do city staff even know the AA doesn’t own the property? I wonder if this is even eligible for this program.

Groupe Germain is leasing the land from the Airport Authority (which leases it from the government)

[acottawa]

Originally Posted by phil235

Except that a key rationale for assisting the airport was that it was placed in a precarious financial position due to COVID ($25 million in losses in 2020 and 2021). That hasn't changed.

Any investments that help establish YOW as a hub and get more direct flights are good investments from a regional economic growth perspective. A good indication is that the tech industry has been begging for these investments for years.

Bailing out the airport authority is not the city’s job. The airport is owned by the federal government and leased to a quasi-independent board. If this were a municipally owned airport (like Breslau, for example) it would be a different discussion. If the federal government wants municipalities to take a role in airport bailouts then they should transfer ownership to them.

If in fact the tech industry is begging for these investments, then why are none of them appearing at council. If Lutke appeared at council indicating how important a terminal-connected hotel is for Shopify’s business model then I think this project might get a different reaction.

Also, if this is so critical to the tech industry they should invest in the project.

[acottawa]

Originally Posted by waterloowarrior

Groupe Germain is leasing the land from the Airport Authority (which leases it from the government)

But none of the above pay property taxes. If I understood correctly your post, only property taxes (not in lieu payments) are eligible.

[phil235]

Originally Posted by acottawa

Bailing out the airport authority is not the city’s job. The airport is owned by the federal government and leased to a quasi-independent board. If this were a municipally owned airport (like Breslau, for example) it would be a different discussion. If the federal government wants municipalities to take a role in airport bailouts then they should transfer ownership to them.

If in fact the tech industry is begging for these investments, then why are none of them appearing at council. If Lutke appeared at council indicating how important a terminal-connected hotel is for Shopify’s business model then I think this project might get a different reaction.

Also, if this is so critical to the tech industry they should invest in the project.

I'm not sure I'd characterize the CIP as a "bail out" of the airport. It's a recognition that the airport isn't in a great position to invest at the moment, so it's intended to spur investment (which in turn results in more revenue for the city). Saying that this is solely a federal issue is untrue. The federal government has no incentive to prioritize a particular airport for investment, but the City definitely does.

I think this is more of a philosophical debate at this point. You don't think the city has a role in spurring economic development around the airport, whereas I do.

[acottawa]

Originally Posted by phil235

I think this is more of a philosophical debate at this point. You don't think the city has a role in spurring economic development around the airport, whereas I do.

Yes, I think that is a good summary.

[waterloowarrior]

Originally Posted by acottawa

But none of the above pay property taxes. If I understood correctly your post, only property taxes (not in lieu payments) are eligible.

The airport authority is exempt from regular property taxes for land and buildings used to operate the airport, and instead pays per passenger fee through a formula in the regulations (O. Reg 282/98). However under the Assessment Act land leased by the airport to others is treated as if the lessee owned then property and is subject to regular property taxes.

There is a similar practice for governments and non-profits, e.g. Legion halls and churches are exempt from property taxes for certain uses (clubhouse, place of worship)..but if they bought a hotel or mall it would taxed as if it was privately owned.

[J.OT13]

Originally Posted by acottawa

We all know that Watson excepted a lot of influence over local politics, so I don’t think it is hypocritical to see things differently when free of Watson’s influence. I expect we will see that on a lot of issues.

The situation of the airport has also changed significantly since July 2022. At the time a number of travel-related COVID restrictions were still in place, travel by the city’s largest employer was all but banned, China was still in zero-COVID mode, etc. From a regulatory perspective we are back to 2019, with stafffing issues seeming to be the main issue (which is affecting the whole economy).

No, I still see it as hypocritical. Watson was the puppet master, and now certain Councillors are deciding to follow the new Mayor's lead. These are not free thinking folks. They are not leaders. At least, that's how I see Tierney. Brockington never followed Watson, so not sure why he changed his mind and Darouze is just a bitter little child.