BC Business
The Lower Mainland is dealing with a serious hotel shortage.
How important are hotels to a city’s economy? Crucial, I hear from the most unlikely suspects. They help reduce the need for short-term vacation rentals, some provide valuable community meeting spaces, and they’re essential to attract convention and non-convention visitors.
How important are they to the people with money to finance construction? Far down the list on an adjusted Maslow’s hierarchy of needs.
The money-loaners are the most enthusiastic about providing the financing to build places for people to live. That’s a fundamental need, and not going away anytime soon. Next is offices. In spite of all the talk of the coming world order of work-from-homers as a result of the pandemic, office space is being snapped up. Industrial, you can’t get enough of it, what with all the online shopping that needs distribution centres. But hotel rooms? Well, that’s a variable luxury. And it’s one that people have shown they can live without during an economic or worldwide health crisis.
That makes hotels one of the toughest projects for any builder to take on, especially in a region like ours already beset with high land prices, trades shortages, bumpy conditions for materials and city-permitting processes that can be their own form of hazing.
All that is playing into the current hotel situation in the Vancouver region, where there’s a lot of renewed anxiety about the hotel room shortage. It was a hot topic before the pandemic, when tourism and business types were warning that the city was losing 100 rooms a year, that no new supply was coming on, that hotels were at a near zero percent vacancy in peak periods, and that this all had the potential to affect tourism, conventions, sports events and more.
In the meantime, the region lost quite a few mid-range hotel rooms the last two years as the province bought up properties everywhere from the Best Western on Kingsway in Vancouver to Travelodges in Surrey and Chilliwack during the pandemic downturn to use as shelter for homeless people.
Now, almost three years later, it’s a topic again as tourism levels return to Before Times numbers. Reports from Destination Vancouver show that the number of visitors to the region is anywhere from two times to 900 times higher than it was a year ago, depending on which group you’re looking at. (Double the number of locals; 900 times for travellers from Australia, for example.)
One major hotel operator told me they started getting so many bookings in April and May that they had to turn people away because they couldn’t bring back staff fast enough. The city is preparing for some big influxes of visitors in the coming decade, with the Invictus Games in 2025, FIFA World Cup matches in 2026, and possibly the Winter Olympics in 2030. And the current count on hotel rooms is 23,292 in 163 properties in all of Metro Vancouver, with just over 13,000 of those in Vancouver itself.
The mayors of the two biggest cities in the region hyperventilate a little bit when I call them about the situation. In Surrey, I almost can’t get Doug McCallum off the phone as he talks about the desperate need out there if his city is going to keep attracting the kinds of international events to its new sports facilities that the city has been working overtime to lure. Right now, it has two large hotels and then a scattering of smaller motels here and there, for a total of 26 in all of Surrey and Langley, compared to 78 in Vancouver alone. “Sports tourism in a young city like Surrey is critical,” said McCallum as he talked about international softball and cricket tournaments. “But we don’t have the hotels to put these people up. Right now, we’re putting people in Richmond and other places.”
Vancouver Mayor Kennedy Stewart is looking at developing a plan to create 5,000 to 7,000 more hotel rooms as part of his election campaign. (The idea was still being worked on as I type this on a hot summer day.) That’s the number tourism pros have said the city needs to work toward if it’s going to move up in the world rankings for convention organizers.
Stewart is looking at trying to get federal land near the port (remember when there was a plan to build a hotel and casino there 25 years ago?) or at the PNE or, really, anywhere, for new hotels. Maybe some kind of new zoning. Incentives. Using hotel taxes to put money into building new hotels. Something. More details to come later.
“Really, the concern is that it’s hard to make money building hotels, so we need a strategy to do this, like maybe build it into the Vancouver Plan,” said Stewart.
But among all the speculation is some real news buried partway through this story: It looks like some developers are taking the plunge, banking on the extreme shortage and future profits.
At the moment, there are three hotels under construction, four that have been approved, and several more in pre-approval stages, from what I can gather through conversations with various developers and a cruise through the city’s rezoning site.
One—the application for which only went through in late summer—would be for Vancouver’s first of the hipster pod-type hotels that have proliferated in Europe and started popping up in North America. I stayed in one in Seattle, a CitizenM that’s part of a Netherlands chain. Rooms smaller than a dorm room, with a comfy, plushy bed that goes wall to wall, a Plexiglas-encased shower in the corner and just enough room to get from the door to the bed with a teeny sink on one side, and a teeny desk on the other. But then a big fun bar in the centre of the lobby and all kinds of lounging, games-playing, TV-watching, hanging-out “spaces” scattered around that main-floor bar.
In Vancouver, that new entrant is coming from New York-based Moxy and being planned for a site on Seymour Street if it can meet the city’s requirements, which to me sound somewhat pause-inducing. This is the note I got back from the city about whether a pod-style hotel is legal in Vancouver, which I’d been told maybe wasn’t. “There aren’t minimum room sizes for hotels… but there are accessibility and life safety requirements that would govern things like door and corridor widths throughout the building, and specific accessibility requirements for a subset of the rooms (1 in 40) that would require specific clearances. With regards to “pod” hotels, building staff have noted that: “POD hotels may be problematic if they don’t consider accessibility, and don’t have the necessary fire separation between units or sprinkler protection. Each guest ‘room’ would be considered separate from the others and fire spread between them would need to be considered.” So, we’ll see on that one.
Some of the new hotels are stand-alone but others are part of mixed-use developments—another consequence of the intense competition for land, especially downtown. Jon Stovell of Reliance Properties said he’s looking at putting some hotel space into a prime site at Robson and Hornby downtown, but mainly because there’s a city requirement for some kind of commercial in the building. “A stand-alone hotel is tough. Condos underwrite the hotel.”
I haven’t heard about any new hotels yet in the old style, with a lot of big banquet and meeting rooms, the kind that I’ve been to a hundred conventions in. Again, those are difficult to plan and finance. Hotel builders these days are going for the clients who don’t care much about the “star” rating system based on amenities like pools and conference centres and in-house restaurants that hotels used to be ranked by, says architect Ryan Bragg at Perkins+Will, a company that’s approached by a lot of potential hotel developers.
Influenced by the popularity of the Airbnb experience, new hotel builders are sticking to the basics: a room good for sleeping or working in, maybe a cool place to hang out in the lobby. Even the old Four Seasons in the Pacific Centre Mall, now being remodelled, is tearing out much of the meeting-room space that dominated the main floor.
There’s also no sign yet that the idea of a cute boutique hotel in one of Vancouver’s hip, tourist-attracting neighbourhoods—Kits, Mount Pleasant, Commercial Drive—is going to get traction any time soon. There’s a hotel being planned in a condo development at 41st and Oak, but nothing beyond that. So far, the land prices combined with the low number of rooms that would likely be allowed just don’t make any sense to anyone.
So it looks like, for now at least, the pressure on Airbnb-type rentals to make up for that missing-middle hotel is just going to keep increasing.