Shifts in the real estate market – such as declining demand for office and strata developments –have created a rare window of opportunity for hotel development in Vancouver – a city that urgently needs to build 10,000 hotel rooms by 2050 to keep pace with growing demand, according to a new report by Destination Vancouver and the BC Hotel Association.
“Hotel development needs to be seen as a city-building tool, said Royce Chwin, President & CEO of Destination Vancouver. “We’re seeing unprecedented interest for investment in new hotel properties in Vancouver. There is an opening to take swift action, otherwise capital will move wherever conditions are more favourable.”
Destination Vancouver’s 2023 study on the lack of new hotel capacity demonstrated that without new investment, that lack of hotel supply would translate into significant losses to the provincial economy.
Following the publication of that report, Destination Vancouver and the BC Hotel Association formed the Vancouver Hotel Development Task Force to take concrete action on the issue.
Made up of representatives from industry and the City of Vancouver, the goal of the Task Force is to identify and recommend strategies to enable a sustainable and appropriate supply of new hotel development.
“This is about more than hotel rooms – it’s about building a vibrant, resilient city. Hotels are economic engines and social anchors,” said Ingrid Jarrett, co-chair of the Task Force with Chwin and the former CEO of the BCHA. “They support jobs, events, tourism, local businesses, and can enliven neighbourhoods.”
Hotel crunch
Vancouver hotels are operating at near full capacity, with 80% average annual occupancy and up to 95% during peak seasons – well above rates in peer cities. The lack of new capacity makes it increasingly difficult to attract major conferences and marquee events and meet visitor demand.
Compounding the issue has been a marked decline in hotel supply. Between 2002 and 2022, Vancouver saw a net loss of hotel rooms, largely due to hotel closures and conversions (the pandemic removed 550 rooms from the city’s inventory, with purchases by BC Housing and the City of Vancouver to convert those rooms into supportive housing).
Meanwhile, development stalled: just 12 new hotels were built in the last 20 years.
“Vancouver has the same number of hotel rooms as we did 2002,” said Chwin. “There are 22 projects currently in the development pipeline, representing approximately 4,200 rooms, which is encouraging. We’re looking forward to the industry moving ahead with these new projects.”
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