Daly site banks on new plan BY JULIA FIELDS ottawa business journal

The oft-delayed Daly site development in downtown Ottawa is back on track, with a new marketing strategy to sell 100 condominium corporate suites, along with a private boutique hotel concept that would be the first of its kind in the region.

The $75-million project hit a snag this spring when negotiations broke off with CP Hotels to operate the planned eight-floor hotel. The national chain had considered using the Daly site as an extension to the Chateau Laurier, which is located directly across the street.

Canadian Gateway Development Corp., the developer of the Daly site, had already secured the aquarium and retail components of the 10-storey building, but it was at a loss on how to proceed with the defunct luxury hotel section.

If this latest scheme takes off, construction should finally begin on the project this fall, says Gateway spokesperson Josh Moon.

Gateway is now negotiating with an undisclosed company to create a 100-room private boutique hotel on four floors. Aimed at a business clientele, it will be designed with an emphasis on quality and personalized services. It will not have the ballrooms and large-scale meeting areas found at other nearby hotels, such as the Chateau Laurier.

Boutique hotels are a popular concept in Europe, however, they have only come to fruition in a handful of Canadian metropolitan centres in the last 10 years. Although Gateway hasn't ironed out all of the details, the boutique hotel would be similar to the Hotel Le Germain in Montreal. The company Web site boasts of loft-style rooms with duvet comforters, daily newspapers, exercise rooms and all the comforts of a workplace double-phone lines, voicemail, computer and fax jacks, etc.

"We believe it's a niche. It fits in a different hotel market," says Moon. "It tends to cater to business clients who come to the city a lot and want an added level of personal service and would like to return to the same place regularly."

Gateway also intends to fill the remaining four floors of the new Daly building with 100 luxury condo suites, which will be sold to corporations "that bring people regularly into town and want to have a block of suites they can control at all times."

Although the exact numbers have yet to be finalized, Moon estimates the 400- to 800-square-foot units will sell for between $160,000 and $200,000. He predicts this model will be extremely popular with the region's exploding high-tech industry.

In fact, if the private hotel deal falls through, Gateway plans to sell off all 200 units as corporate condos.

Market Research Corp. president Barry Nabatian says Gateway might have finally found the missing piece of its development puzzle.

The Daly project essentially stalled because its economic viability relied on the interest of a major hotel operator, he explains. None, however, will commit to the Daly site until plans for a new convention centre are settled. Based on a complicated federal, provincial, municipal and private funding formula, the convention centre's future has become an interminable question mark.

Gateway's latest strategy should give the Daly site the autonomy it needs to proceed, says Nabatian. "If (the condo units) are going to be designed very classy with lots of bells and whistles, that could definitely work. They could sell all 200 units," he states. "I think there on to something very good."

Corporations fork out a lot of money on accommodations for both high-ranking employees moving to the city and a constant stream of clients. They could easily recover their initial investment within five or six years, he estimates.

Even the boutique hotel concept could be a success, as long as it proceeds quickly. Once the convention centre design and funding formula is finalized, Nabatian is convinced that a major chain will announce plans for an adjoining 400-room hotel.

The Daly site will need to entrench its position before this new entity enters the market in several years.

Moon says the entertainment centre should open for business, at the latest, by fall 2003. This is a considerable delay from the original completion date planned for Canada Day of 2001, but Moon is making no apologies.

"It's a real addition to the downtown. We want this to be a success and to be done properly."