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Hôtel Le Germain Ottawa will open in 2017. It will be part of the Ottawa Art Gallery expansion and Arts Court redevelopment project.

A new hotel to be built in Ottawa puts the spotlight on public-private arrangements that are bringing cultural benefits, unique branding and prime downtown locations to mixed-use commercial developments.

Groupe Germain Hospitalité, DevMcGill and EBC Inc. will soon break ground on a 23-storey complex that includes the expansion of the Ottawa Art Gallery as well as the construction of a 120-room boutique hotel, an 82-unit condominium, a theatre, a screening room and four classrooms.

The three Quebec companies make up a consortium recently selected by the City of Ottawa for the redevelopment of Arts Court, Ottawa's 1870 courthouse, which was repurposed in 1988 and today houses 25 arts organizations, including the gallery. The project represents a $60-million investment from the private sector and a $40-million investment from the city and the nearby University of Ottawa, which will use the facility in its educational programming and events.

For Groupe Germain, a family-run business, the project adds to a growing list of distinctive mixed-use developments that have allowed the hotel chain to strategically locate and market itself.

"Ottawa's strong visitor base and the wealth of tourism make the city an ideal place to pursue our national expansion," says Christiane Germain, co-founder and co-president of the company, along with her brother, Jean-Yves Germain.

The company owns and operates four-star Le Germain Boutique-Hôtels and "no-frills-chic" three-star Alt Hotels across the country. Mixed-use developments make it possible for smaller hotels like theirs to be built on downtown properties that would otherwise be too pricey, Mr. Germain explains, given the rising cost of land in city cores over the past 10 years.

"A stand-alone hotel in a major market is not easy, it's almost impossible," he says. "You need other components to maximize density and to be efficient on the site."

Indeed, the mixed-use formula has helped Groupe Germain develop hotels in a number of key places. In March it opened a new Alt Hotel in Montreal's Griffintown district, in a development that includes offices as well as condos. It also combined the three functions in the new Hôtel Le Germain Calgary, which opened in 2010.

The chain currently includes 10 hotels, with four properties in the works, including Alt Hotels in Winnipeg and Calgary and one that is to open on Slater Street in Ottawa in 2016. Mr. Germain says there are another four projects in the pipeline.

The hotel market in Canada is strong, says Tony Pollard, president of the Hotel Association of Canada. An annual report released by the organization and PKF Consulting Canada forecasts that demand for rooms will rise 2.7 per cent this year, while supply will increase by just 0.7 per cent.

City cores remain popular as locations, although the cost of downtown land has more and more developers looking for mixed-use commercial opportunities there, he says. "You're able to derive revenue from more than one source."

Ms. Germain says that mixed-use developments allow for some creativity in terms of branding. For the Arts Court project in Ottawa, for example, there are plans for an art theme throughout the hotel.

"Everybody's excited about it," she says. "Cultural tourism is quite an important segment of our business. To be attached to an art gallery adds to our brand, it adds to the destination."

Peter Radke, manager of realty initiatives and development for the City of Ottawa, says the Arts Court redevelopment at the corner of Daly and Waller streets will more than triple the size of the Ottawa Art Gallery and make it more accessible and obvious, with a striking glass box design. The project overall adds to the intensification of the downtown, he says, while increasing the stock of hotel rooms and tourism facilities, a city goal. The development is positioned between two future stations of the new Confederation Line LRT.

Under the deal with the city, the hotel and condominium are being granted development rights below and beside the existing heritage structure. Hôtel Le Germain Ottawa will extend up through the first 12 storeys of the tower, with the bottom four floors housing the hotel lobby, meeting rooms and services and eight floors above set aside for rooms. The top eight stories will be DevMcGill's private residences, and there will be two levels of underground parking.

The design of the complex is the result of collaboration between Groupe Régis Côté Architectes and LemayMichaud Architecture Design.

Jean-Serge D'Aoust, senior vice-president of buildings at the construction company EBC, says the mixed public-private complex "is one of the few projects of this nature in Canada and represents an example of how other public bodies may create value on their real estate holdings."

Ms. Germain cautions, however, that mixed-use projects can be "very complicated" to pursue and execute. "You often have to deal with three developers, three contractors … the legal stuff is not as usual," she says. "It's not easy, but that's the way it has to be."

Mr. Germain notes that the end result is a hotel in a good location that is relatively simple to manage, albeit with some shared systems and common areas. Each element has its own identity and branding, with separate entrances and security systems, for example.

He says that Groupe Germain has been working for the past decade to locate in Ottawa, which is a strong and consistent market. Hotel guests are drawn by government business during the year and the capital's many attractions in summertime.

It is hoped that the new Arts Court development will improve and even revitalize the somewhat troubled area around Rideau Street in the eastern part of Ottawa's downtown, Mr. Germain says. "A project like ours will make a difference there, that's for sure."

The redevelopment is timed to coincide with the festivities planned for Canada's 150th birthday in 2017. The art gallery is to open in early 2017, while the hotel and residences are expected to be completed later in the year.

Hotels mix it up

Groupe Germain Hospitalité has established several of its hotels in mixed-use developments that include condominium residences and/or office space:

Hôtel Le Germain Calgary

Opened: February of 2010

Floors: 20

Rooms: 143

Condos: 40

Offices: 87,800 square feet

Alt Hotel Montreal

Opened: March of 2014

Floors: 18

Rooms: 154

Condos: 188

Offices: 75,000 square feet

Alt Hotel Winnipeg

Opening: 2015

Floors: 20

Rooms: 154

Offices: 40,000 square feet

Alt Hotel Ottawa

Opening: 2016

Floors: 23

Rooms: 148

Condos: 164