Vancouver needs more new attractions and hotels, says tourism chief

New pavilion structure at FlyOver Canada at Canada Place. (FlyOver Canada)

“Until the pandemic happened, the tourism industry was taken for granted,” Royce Chwin, the CEO of Destination Vancouver, previously known as Tourism Vancouver, said plainly in his address to the Greater Vancouver Board of Trade on Thursday.

Tens of thousands of jobs in Metro Vancouver depend on a vibrant and active tourism and hospitality industry, which of course disappeared overnight upon the sudden onset of the pandemic.

In his address on the current state of the region’s tourism industry and its trajectory, Chwin says other destinations in the world have had a rougher time coming out of the pandemic, in part due to not having what he calls a “balanced” portfolio of where tourism and overnight visitation comes from — a balance of sourcing visitors from domestic, United States transborder, and international markets, and a balance of leisure and business travel.

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He says in pre-pandemic 2019, Metro Vancouver saw a record of 11 million overnight visitors, with 57% being domestic and 43% being US transborder and international, which carries greater value as the foreign market brings in “new money into the economy” as opposed to competing for the same domestic pool.

All things considered, a relatively strong recovery was experienced in 2022, and there is even more to look forward to in 2023, he says.

For 2023, Destination Vancouver is projecting there will be over 10 million overnight visitors, and at least one million cruise passengers on over 300 ship calls at the Canada Place cruise ship terminal, which will be a new record. This follows the relatively strong restart of the cruise ship industry in 2022, when 815,000 cruise passengers were recorded on 307 ship calls.

Hotel occupancy across Metro Vancouver will hover at around 70% throughout the year, but surging over the peak season.

Vancouver International Airport is one of Canada’s fastest recovery airports, with 22 million passengers now in the forecast for 2023 — up from over 17 million in 2022, and gradually returning to the levels of pre-pandemic 2019 when 26.4 million passengers were recorded.

The region’s booked conference business, anchored by Vancouver Convention Centre, has recovered 60% of what was lost from the pandemic.

But he warns there are headwinds that the region must address to not only maintain the tourism industry and all of the jobs and businesses that are supported by it, but also to grow and remain competitive.

Over the short term and for the foreseeable future, public safety is a major concern — particularly in and around the downtown Vancouver peninsula, where there has been a spillover of the homelessness, mental health, and opioids addictions issues of the Downtown Eastside into the surrounding areas of Chinatown, Gastown, and the Central Business District.

“What you might not know about or think about is tying public safety with destination reputation. We have tour operators in Europe right now who have stopped selling Chinatown and Gastown because they are worried about safety,” said Chwin.

“They are worried about what that impact could be on their customers and therefore their business, which is a shame because the businesses in Chinatown and Gastown deserve to have customers come to them. That’s partly why they exist — they don’t exist just on domestic business.”

He says the recently renewed attention of the City of Vancouver, under its newly elected political leadership of Mayor Ken Sim and his ABC Vancouver party, on Chinatown’s issues and the more recent investments by the federal government are a good first step of the many steps that are needed to make meaningful improvements.

“[We need] investments on things to start building community back, and demonstrate that we can take the city back in those places,” he said, emphasizing that all levels of government, businesses, and the wider community need to “keep the foot on the gas.”

“This is going to be a grinding work going forward, but I think if we can continue to do that and see the results… we have to continue to exert the pressure to see the series of changes we need for this destination. You can’t say you’re a ‘world-class global city’ and ‘you’re open for business’ if you’re not applying the pressures to those [struggling] areas, because those businesses will go out of business.”

Chwin was rather pointed on his thoughts on the recent political shift in governing the City, especially in relation to the approach taken so far in addressing and mitigating the social issues stemming from the Downtown Eastside.

“If I may speak boldly, but respectively, changes needed to happen at the City level, and we needed to have different leadership and thinking in place. Clearly, what was going on was not working,” he said.

“The change that has happened was because of the pressure that has been applied from the business community, our communities at large, and from visitors.”

As for over the medium- and long-term, the tourism industry and the jobs and businesses it is able to support will be highly constrained by an absence of new additional hotel room supply.

This was already a highly apparent issue before the pandemic; even in 2018, Metro Vancouver had over 1,100 fewer hotel rooms than the capacity it had maintained just before hosting the 2010 Winter Olympics.

As of right now, there are now 2,000 fewer hotel rooms in Metro Vancouver, including 1,500 within the city of Vancouver. This further shortage increase since 2018 is largely from levels of government buying up older, low-end hotel properties for rapid supportive housing for the homeless at the peak of the pandemic.

With the absence of new additional hotel developments, Metro Vancouver’s available hotel room supply will fall behind real demand every summer starting in 2028. By 2040, the supply-demand imbalance will be throughout the year.

And by 2050, due to the inability to host overnight visitors and gain their spending on hotels, retail, dining, services, and attractions, there will be $20 billion in accumulated direct revenue losses to the economy.

It is anticipated 20,000 more hotel rooms will be needed in Metro Vancouver between now and 2050. A detailed hotel supply study commissioned by Destination Vancouver will be released very shortly.

“The impact is significant, it will be massive. It will be the governor in terms of what we can do in terms of a strong visitor economy,” said Chwin, adding that tourism will plateau out, and the region will lose businesses, events, and activities to other destinations.

“The reality is we are in a challenge of our own making,” and “now we are in a massive multi-decade catch-up mode,” he continued, suggesting previous City leadership over the past decade were “distracted” and overlooked the importance of the things that critically support tourism.

“It aligns with what our new Mayor is saying, and that’s Vancouver needs to be one of the best cities in the world, and we’re open for business,” he said.

“We know that tourism is not the end game, it is a catalyst engine for the development of this city, and going forward.”

Chwin also said there is a “great dearth” of brand new tourism attractions and experiences in Vancouver, and there is now an “opportunity” to turn this around.

The last major attraction that opened in Vancouver was almost exactly a decade ago in 2013, when FlyOver Canada opened within the former IMAX theatre space at Canada Place.

While there is clearly a shortage of major attractions and experiences, Chwin shared that there have been some recent successes with celebrating and marketing Vancouver’s strengths, specifically with the city being added as a Michelin Guide destination starting last summer. He said Michelin approached Vancouver to identify the city’s most notable and worthy culinary offerings — not the other way around, unlike some other cities.

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