Vancouver City Council to consider policies to catalyze new hotels

The 2018-opened Exchange Hotel (right) and the 2023-opened Azur Hotel (centre) in downtown Vancouver. (Kenneth Chan/Daily Hive)

Without more hotel rooms to replace recently lost capacity and establish a meaningful net gain, one of Vancouver’s largest job-supporting industries, tourism and hospitality, could suffer enormously.

For this reason, ABC Vancouver city councillor Sarah Kirby-Yung is requesting City Council to establish new policies that effectively catalyze much-needed new hotel room supply.

In a new member motion that is expected to be deliberated and approved next week, Kirby-Yung wants City staff to establish targets for tracking new hotel rooms, similar to the municipal government’s 10-year Housing Vancouver targets of catalyzing 72,000 new homes between 2018 and 2027.

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City staff would also identify ways to expedite the review process for new hotel proposal applications. Currently, it is estimated only about 1,100 new rooms are in the various application stages through 2026.

As well, they will consider expanding the 2018-implemented Interim Hotel Development Policy beyond its current geographical limitations in the Downtown South area, and expand the policy’s consideration for mixed-use developments, such as hotel/residential buildings, hotel/office buildings, and office-to-hotel conversions.

The motion cites Destination Vancouver’s (previously known as Tourism Vancouver) warnings in a March 2023 report that the Metro Vancouver region as a whole is facing a shortage of 20,000 hotel rooms over the coming decades, including 10,000 within Vancouver.

This would be equivalent to almost doubling the existing hotel room supply, with the region currently carrying a capacity of about 23,300 rooms across 163 properties, including about 13,300 rooms in 78 properties in Vancouver.

This accounts for the attrition of over 1,000 hotel rooms between 2008 and 2018 within Vancouver due to redevelopments and hotel-to-residential conversions, including some of Vancouver’s previous large quantities of more affordable hotel supply, and a further nearly 600 rooms lost early on in the pandemic from governments acquiring low-end properties for rapid supportive housing for the homeless. Vancouver now has fewer hotel rooms than the lead-up to the Olympics.

If the supply of hotel rooms remains at current levels, Destination Vancouver anticipates real demand for hotel rooms will exceed supply in the summer in Vancouver starting in 2026, the same year the city co-hosts the FIFA World Cup, followed by starting in the summer in the rest of Metro Vancouver by 2028, and every month of the year across the region by 2040.

The shortage of hotel rooms will push up prices, making Vancouver even more unaffordable to visit, especially for lower income individuals such as students and other younger people. According to commercial real estate firm Avison Young, in 2022, Vancouver had the highest average daily rate amongst Canada’s six largest major urban hotel markets.

This worsening shortage will also make Vancouver less competitive in attracting tourism-generating and job-supporting conventions, conferences, concerts, sporting events, and other events, as well as leisure travel.

If the hotel room shortage persists, by 2050, it is anticipated the economic impacts will be $30.6 billion in foregone output, $16.6 billion in forgone GDP, over 168,000 of foregone full-time jobs, and $7.5 billion in foregone tax revenue for all three government levels.

“Without new rooms, the lack of hotel supply in Metro Vancouver will translate into significant losses to the provincial economy,” wrote Kirby-Yung.

“Vancouver’s continued loss of hotel rooms was identified by the tourism sector prior to the pandemic and is due to development policies that provided geographic and zoning restrictions. The high cost of land is also resulting in alternate use of sites including conversion to residential housing, and the high costs of operating properties are also a barrier. Lengthy approval processes, view cone restrictions and stringent shadow protections have created additional challenges.”

The dwindling number of hotel rooms over the past decade has also contributed to the proliferation of legal and illegal short-term rental homes, such as Airbnb. Further regulations on short-term rentals as an added measure to address the housing crisis — beyond the City’s 2017-enacted policies regulating short-term rentals — could limit overall visitor accommodations even further.

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