Net loss of over 1,100 hotel rooms in Vancouver due to condo developments
Vancouver’s tourism sector growth has been experiencing year-over-year records with overnight visitation, but this is not reflected in the city’s hotel accommodations capacity.
A new report by the City of Vancouver states the municipality saw a net loss of 1,105 hotel rooms between 2008 and 2018, with the gains in the years leading to the 2010 Winter Olympics now lost. And in response, new interim measures are being proposed to protect and create capacity.
“In this period, land values have risen substantially for strata, rental residential and office space, resulting in proposals for the conversion or redevelopment of existing hotels, primarily for residential,” reads the report by city staff.
Of the 23,000 hotel rooms that currently exist in Metro Vancouver, 57% are located within the Vancouver. This amounts to 13,925 rooms in the city, down from 15,030 in 2008.
Over the last 10 years, the gains from the construction of 1,457 new hotel rooms were erased by 2,562 hotel room conversions and demolitions. This includes the closure of low-end properties such as the Pacific Palisades Hotel (233 rooms), Coast Plaza Hotel (199 rooms), Empire Landmark Hotel (357 rooms), and Quality Inn Downtown (157 rooms).
This is troubling as the share of the economy that revolves around tourism is growing, but the capacity to support this industry is lacking. The number of annual overnight visitors in the region reached 10.3 million last year – up by 1.5 million from 2014.
The vitality of Vancouver’s cruise ship business and particularly its convention business, which account for many of the recorded overnight stays, depends on the city’s hotel capacity.
“Tourism Vancouver predicts that a continued shortfall in hotel rooms will constrain future growth of the city’s tourism market. Tourism Vancouver has experienced, and is predicting increased challenges in securing room blocks for conferences and tour operator reservations at competitive prices,” continues the report.
“If this trend continues, it will become difficult to reliably secure major citywide conference bookings. Continued lack of accommodation supply, either for hotel rooms or short-term rentals may lead to constrained growth in the leisure tourism and hospitality industry.”
This trend of a decline in hotel capacity could continue, as the report also notes that 1,674 hotel rooms are at risk in the short and medium term for development, mainly to residential.
The report notes that illegal short-term rentals (STRs) like Airbnb have taken on some of the burden from the loss hotel capacity, but this cannot be relied upon due to the city’s new policies on short-term rentals to protect affordable housing.
“While staff acknowledges the benefit STRs provide to the tourism industry, in the face of an affordability crisis and record low vacancy rates, the city had to prioritize housing to people who want to live and work in Vancouver,” reads the report.
To be able to address this shortage immediately, on July 10, City Council will consider a new Interim Hotel Development Policy (IHDP) with a resulting goal of no net loss of hotel rooms.
The IHDP is two-fold, in that it will protect existing hotels and encourage the development of new hotels.
Under the policy, roughly 15 blocks of area in Downtown South would see hotel use added as a conditionally permitted land use. Currently, the outlined area is home to just three hotels – Landis Hotel & Suites (52 rooms), Executive Hotel Vintage Park (98), and Residence Inn by Marriott Vancouver Downtown (201 rooms) – that were built prior to a 1991 City Council decision to remove hotel as an allowable use.
As well, residential units within commercial areas can be converted for hotel use, although there will be restrictions on the scope of such conversions. This conversion policy is being recommended as city staff do not believe it will be detrimental to the housing market, given that a number of housing projects are underway.
“Staff project that there will continue to be significant increases in the downtown stock of rental housing and social housing through the West End Plan policies and other development applications and planning initiatives,” adds the report.
The largest hotel property to open in Vancouver in recent memory was last year’s opening of Parq Vancouver casino resort, which has two luxury Marriott-operated hotels – the JW Marriott and the Douglas, an Autograph Collection – with a combined 517 rooms.
Later this summer, the lower 11 floors of the new Exchange Tower will open as a 202 hotel room property by Executive Hotels & Resorts, which also received approval earlier in the year to build a separate 106-room, 13-storey hotel property on an adjacent site.
And next week, City Council will consider a proposal to redevelop the Northern Electric Company Building at the southwest corner of the intersection of Robson Street and Beatty Street into a mixed-use development with 120 hotel rooms and 125 market residential units.
Two other projects that were proposed recently were a modest 65-room, 11-storey expansion of YWCA Hotel in downtown and a new 438-room hotel complex on the existing site of Park Inn & Suites on West Broadway near Vancouver General Hospital.
Over the longer term, the Westin Bayshore Hotel could be redeveloped as well. Concord Pacific is envisioning a mixed-use development with a massive redevelopment with a new hotel, market residential units, and a new home for the Vancouver Maritime Museum.
If approved, the IHDP will be in effect until the city creates new hotel capacity goals under the upcoming Broadway Corridor Plan and the City Core 2050 plan.
Without a significant surge in hotel capacity, the report states that “this will constrain job growth in the tourism industry and put further pressure on the use of residential homes for short-term rentals,” adding that “Tourism Vancouver is projecting the city will lose our competitive edge when competing for conferences due to challenges securing hotel room blocks at a price comparable to other major centres.”
In 2017, the local tourism industry accounted for $4.8 billion of Metro Vancouver’s economy and supported over 70,000 full-time jobs. Tourism contributes more to the provincial GDP than any other primary resource industry, except oil and gas extraction.
According to the city, on an average per day, a visitor to Vancouver spends more than double what a resident does in local retail, restaurants, and services.
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