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Banff's hotel assessments dramatically down

“Because of the ongoing issues with COVID-19, there has been a definite reduction in hotels values."
20210129 Banff Springs 0006
The Fairmont Banff Springs Hotel. RMO FILE PHOTO

BANFF – The Town of Banff’s total assessed property value has dropped by 2.5 per cent to $2.94 billion.

The non-residential assessed value – which includes hotels, downtown retail, restaurants and offices and the industrial compound – is shy of $1 billion, a drop of 11.8 per cent in assessed value.

Residential properties held their value compared to businesses, with residential assessments up 3.1 per cent to about $1.95 billion.

But the hardest hit were the hotels, which assessor Frank Watson said are down 21 per cent in assessed value to $525,671,020 for the 2022 tax year and down 20.5 per cent the previous year for a cumulative two-year decline of 37.5 per cent.

“Because of the ongoing issues with COVID-19, there has been a definite reduction in hotels values,” said Watson of the hotel assessments, which are based on an income-based approach using a three-year weighted average.

“In the big picture, hotels are back to about where they were in 2015-2016.”

Watson said seeing hotel assessments back to pre-COVID-19 pandemic assessment levels will depend on the willingness of people to travel and stay in hotels again, particularly international travellers who tend to be bigger spenders.

“Getting back to pre-pandemic it all comes down to how comfortable the travelling public is going forward. All of the restrictions will be lifted in Alberta. Will that lead to more travel? I don’t know,” said Watson.

“Without the international traveller, we’re not going to see the hotels change very much, especially the upper-end hotels that have convention facilities and lots of restaurants… those are the hotels that have suffered the most.”

The average residential assessments are up 3.1 per cent from last year for an average 2.8 per cent increase over the past two years during COVID.

“Last year, the residential values were down slightly so overall over the last two years from last year to this year there’s been an average in the residential assessment of about three per cent,” said Watson.

As for downtown properties on Banff Avenue and Bear Street, a definitive change in value was difficult for the assessor to quantify or support with no open market transactions in 2020 and 2021.

Watson said last year Banff Avenue properties went down about five per cent and this year are flat, but Bear Street properties are up about five per cent in assessed value for this tax year.

“Last year, Bear Street properties were given an extra five per cent reduction because Bear Street was torn up, and the biggest complaint I had was that the businesses were having trouble with people getting access, having to walk across through construction,” said Watson. “So with the Bear Street renewal now finished, that extra five per cent was removed so the Bear Street properties will see an increase in assessment.”

Watson said assessment values in the industrial compound follow similar trends as Banff Avenue and Bear Street.

“The values in the industrial properties are very flat for this year,” he said. “They were down about four per cent last year and the overall two-year change is down four per cent.”

This year’s property assessments will see a significant shift in the tax burden to residential from non-residential, particularly because hotels were hit so hard during the pandemic.

In 2014, Banff’s total property assessment was a little over $2 billion. Of that, non-residential made up 38.7 per cent and residential made up 61.3 per cent. By 2022, non-residential made up 33.8 per cent of the $2.94 billion assessment, while residential make up 62.2 per cent.

“As time passed from 2014, the non-residential was starting to take a bigger piece of the pie, and in 2017-18 is when the non-residential properties were at their peak, and since that time, the non-residential values have decreased,” said Watson.

“Residential has stayed pretty much the same, so there’s been a shift away from the non-residential properties to the residential properties in percentage of total assessment.”

As for hotels specifically, they accounted for 22.8 per cent of Banff’s total assessment in 2014 and 58.9 per cent of the total non-residential property assessment.

Over the years, Watson said hotels made up almost 30 per cent of the town's total property assessment tax base, but represent about 18 per cent of the total assessment for 2022.

“For the total non-residential assessment, hotels were up to as high as 64 per cent of the total non-residential (2016) and are now down to about 52 per cent," he said.

Mayor Corrie DiManno thanked the assessor for his thoroughness.

“We keep talking about the impacts the pandemic has had, so I really appreciate you walking us through the black and white numbers of what that actually looks like in our community,” she said.

Banff has 30 hotels, including the hostels, which account for an approximate total of 3,600 rooms. Of the hotels, 10 owners own one hotel, three owners own two hotels, one owner owns three hotels and one owner owns 11 hotels.

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