Vancouver City Council approves policies to catalyze new hotels | Daily Hive

Vancouver City Council approves new policies to catalyze more hotel projects

Artistic rendering of the existing office building at 1111 West Hastings Street in downtown Vancouver, renovated into Le Germain Hotel Vancouver. (Germain Hotels/Reliance Properties)

Tourism is one of Vancouver’s few strong industries, yet the capacity to support this economic sector that sustains many jobs — which also directly benefits shops, restaurants, services, and other businesses, including many small businesses — is at risk without addressing the growing shortage of hotel rooms.

According to Destination Vancouver, Metro Vancouver will need an additional 20,000 hotel rooms over the coming decades — including 10,000 within the city of Vancouver, where demand is highest. The shortage of hotel rooms is expected to become especially acute later this decade, leading to a sharp rise in average nightly rates, which are already the highest among Canada’s major urban centres, and an inability to attract a broader range of visitors, meetings and conferences, and special events.

If the shortage is not addressed, the city and region as a whole risk losing $30.6 billion in economic output, $16.6 billion in GDP, 168,000 full-time jobs, and $7.5 billion in tax revenue across all three levels of government.

“We are in, I think, a really new paradigm when it comes to the economic future of our city. It has been patently clear that not having enough hotel supply has hobbled the potential of our city,” said ABC city councillor Mike Klassen during today’s Vancouver City Council public meeting.

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For this reason, a majority of City Council approved City of Vancouver staff’s recommended policies for new hotel development. These policies should not be confused with the separate recommendations from Destination Vancouver’s Hotel Development Task Force, which were also released simultaneously last week with City staff’s recommendations ahead of today’s meeting.

There has been close collaboration between City staff and the task force to date, and this will continue. City Council also endorsed the staff’s request to continue working with the task force on zoning updates and other policy changes aimed at accelerating new hotel development.

This was also the first policy matter considered by newly sworn-in city councillors Sean Orr of the COPE party and Lucy Maloney of the OneCity Vancouver party following their by-election victories earlier this month. Both were officially sworn in earlier this morning.

Both Orr and Maloney either voted in opposition or abstained from all components of the hotel development policy update. Meanwhile, the other opposition councillors — Pete Fry of the Green Party and independent councillor Rebecca Bligh — opposed or abstained from voting on some, but not all, aspects of the policy. All ABC councillors present in the meeting voted in favour of both City staff’s recommendations and the major policy amendments put forward by ABC city councillor Sarah Kirby-Yung that provide further flexibility for hotel developments.

In accordance with City staff’s first recommendation, now approved additional density for hotel uses will now be permitted in select areas of the downtown Vancouver peninsula, including the Central Business District, Downtown South, Granville Strip, and along the commercial streets of the West End, as well as other areas of the city including the entire Broadway Plan area, transit-oriented areas near SkyTrain stations (along the Expo, Millennium, and Canada lines), and other commercial high streets. The area around the Canada Line’s Marine Drive Station, within close proximity to Vancouver International Airport, is also specifically noted.

Hotel Development Policy. (City of Vancouver)

The second recommendation by City staff that was approved intends to catalyze more hotels, specifically within the Central Business District.

The downtown Vancouver peninsula is home to 90 per cent of the city’s total hotel room supply, comprising 13,000 rooms across 78 hotel properties. Of that, 43 per cent of the city’s hotel rooms are concentrated within the Central Business District — the core of downtown.

This approved recommendation now provides a three-year temporary period during which the minimum site size required for mixed-use developments within the Central Business District is reduced or removed. The minimum lot size will fall from 50,000 sq. ft. to 18,000 sq. ft., and the minimum commercial floor area ratio (FAR) density will also be reduced from 11.0 FAR to 9.0 FAR to incentivize new hotel projects on mid-sized development sites.

It also provides some new flexibility for converting office buildings in the Central Business District into hotels, given the current high office vacancy rates, especially for older properties.

The third approved recommendation expands opportunities for hotel development within the Broadway Plan area.

This includes locations such as the West 4th Avenue retail strip, Arbutus Street south of West Broadway, the Burrard Street corridor, Burrard Slopes, areas near Granville Island, additional parts of Fairview north of West Broadway and near Vancouver General Hospital, around Vancouver City Hall, along 2nd Avenue near Olympic Village, the Main Street retail strip, the East Broadway corridor, and the Great Northern Way corridor served by SkyTrain’s VCC-Clark Station and the future Great Northern Way-Emily Carr Station. Some of these areas currently contain industrial uses but are being positioned for mixed-use employment development.

As well, select areas of the Burrard Slopes and Mount Pleasant Industrial Area would see greater flexibility for smaller sites in industrial/employment areas.

Hotel Development Policy in the Broadway Plan. (City of Vancouver)

Hotel Development Policy in the Broadway Plan. (City of Vancouver)

The fourth approved recommendation enables City staff to work with the task force on additional zoning regulation changes, such as enabling pod hotels and micro-suites and the consideration of additional density for back-of-house and event spaces within new hotels.

City Council also approved a range of amendments moved forward by Kirby-Yung, including FAR density calculation exclusions across the city for where the policy applies to for the hotel space components of meeting rooms and conference facilities, guest amenity spaces (such as fitness gyms and pools), and back-of-house space required for hotel operations, as well as greater siting flexibilities for hotel projects in the Central Business District, such as on corner sites, and select areas of the Broadway Plan, specifically along 2nd Avenue near Olympic Village.

Currently, there is also a shortage of hotels with suitable and sizeable event spaces, such as larger ballrooms.

“The hotels actually have the ability, I think, to deliver a lot of that interesting character and infill that creates interesting cities. If you look at a lot of older cities, they can adapt and use smaller sites in a way that a lot of larger buildings simply cannot. And so, again, there’s a lot of interest around projects that are moving forward, but they are hung up on with these particular components with the frontage component,” said Kirby-Yung.

“If I was to sum it all up, this is about seizing the opportunity to move forward on the development of desperately needed hotels and some unaddressed blocks that are impeding hotels proposals coming forward and being realized… This Council signalled its intention to support tourism as a really important economic contributor, a creator of jobs, a creative supporting our cultural fabric, our sports, [and] our cultural and business sector. But we need to clear some of these roadblocks and get things moving. We can’t study things for another year.”

An amendment moved by Maloney and seconded by Orr to delay the consideration of Kirby-Yung’s amended policies until May was rejected. Fry expressed some desire to see City staff report back on Kirby-Yung’s amendments, given that they are highly granular and prescriptive.

However, Kirby-Yung emphasized the urgent need to get the ball rolling, citing the significant economic impacts that the growing hotel room shortage is expected to have.

Based on Destination Vancouver’s account, she says Vancouver has the same number of hotel rooms today as it had in 2002.

“Imagine if we had the same amount of housing 23 years ago. Clearly it would be getting more expensive. And clearly the problem has become very acute. We see some of the highest average daily room rates in all of Canada in the country. It means that we are either leaving opportunity on the table. It is very expensive. We have a constrained land base. We have constraints in our built environment,” said Kirby-Yung.

“Without some flexible, modernized, bolder action and policies, we will end up becoming a small leisure type of tourism destination that can’t host the larger conferences, and that is only available to those with means that can visit. And that I don’t think is as good for all of Vancouver. We’ve seen the impact of not moving fast enough.”

She also referred to the task force’s report outlining the need for a range of different hotel types, similar to the range of housing types. This includes smaller boutique hotels, convention hotels, business hotels, mid-tier big-brand hotels, and budget hotels.

Existing Vancouver hotel properties and proposed projects as of March 2025. (City of Vancouver)

According to City staff, there are currently 22 hotel projects in the development pipeline across Vancouver, representing a combined total of about 4,200 guest rooms.

This includes eight active rezoning applications submitted in 2024 and 2025, accounting for 2,100 rooms; six development permit applications with 800 rooms submitted over the past six months — three of which have already been approved; five building permit applications submitted within the past year with 1,100 rooms — including three projects with approved demolition permits; and three projects currently under construction with 200 rooms, including one scheduled for completion in 2025 and two involving conversions of existing buildings.

But Kirby-Yung warned that out of this “rosy” total in the development pipeline, only about 1,300 new guest rooms are guaranteed due to the growing high costs of such projects, especially brand-new purpose-built projects. There is immense uncertainty with the vast majority of the proposals.

For this reason, new hotels created from office conversion projects should be encouraged, along with mixed-use hotel and residential projects, with the market residential uses subsidizing the costs and risks associated with hotel projects.

Destination Vancouver also noted that in addition to the high capital costs of construction and land acquisition and the greater challenges with obtaining loans for hotel projects, operating costs — especially with labour costs — are another major cost pressure.

City staff highlighted that upon the opening of a new hotel, it could take three to five years to ramp up the hotel’s business, as it takes time to build awareness of the availability of this hotel in the accommodations market. During this period, a hotel can operate well below its optimal occupancy level. Furthermore, after about a decade, hotels typically require additional reinvestment, such as in furnishings and renovations.

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