Pangea Pod Hotel, in Whistler B.C., required a full gut renovation of a former mixed-use building. The concept of pod, or capsule, hotels is becoming increasingly popular in North America, especially in cities with expensive land values.Supplied/Supplied
In Vancouver, where there are too many office buildings and not enough hotels, city council believes it has come up with a “creative” solution.
Last month, it unanimously passed a motion to make it easier for owners of office buildings with vacant floors to convert the space into pod hotels.
Popular in Asia and trending in some North American cities, pod hotels are sometimes described as hotel-hostel hybrids. They typically feature stacked, capsule-like sleep spaces for budget-conscious travellers. Their flexible modularity can be quick to assemble in office buildings that already have shared washrooms and kitchens on each floor.
“We’re short about 10,000 hotel rooms in Vancouver. That’s not a great place to be,” says ABC councillor Sarah Kirby-Yung, who drafted the pod hotel motion. “It’s no surprise our rooms are getting more expensive.”
“The shared accommodation concept can fit into a lot of different existing spaces, whereas traditional hotel rooms, each needing windows and washrooms, might not be right.”
— Russell Kling, co-owner, Pangea Pod Hotel
Last summer, the average Vancouver room rate hit $347, breaking Canadian records. This year, room rates are up again by 7.8 per cent, according to CoStar.
“At the same time,” says Ms. Kirby-Yung, “we’re hearing alarm bells about the surplus of office space. Downtown vacancy rates have soared from a prepandemic rate of 2 per cent to 14 per cent. And we still have another million square feet of new office space coming in.”
Some of those new buildings include BentallGreenOak’s 32-storey B6, Hines’ and Reliance Properties’ 32-storey 1166 West Pender, and Uptown Property Group’s 16-storey Six Seven Five.
Before Ms. Kirby-Yung’s motion was passed, pod hotel developers were challenged by the Vancouver Building Code, which requires cost-prohibitive, full-building seismic upgrades even if only a portion is converted for new use.
“Here’s a situation where we could deal with the surplus of office space and bring some hotels to market more quickly – and provide more affordable options for people. So, we made it clear to city staff we’re looking for a creative way to make it work” – such as a temporary hold on the seismic bylaw – “while longer-term changes to it are considered.”
The structural upgrade exemption is good news for a couple of Vancouver-based developers, who see the economic viability of leasing office space in surplus conditions to accommodate more overnight guests in less space than a traditional hotel.
Some of the 88 pods at Pangea Pod Hotel, where rates range between $50 to $250, depending on the time of year.Supplied/Supplied
“When you have those conditions, it is especially exciting,” says Stanley Dee, founder of Deecorp Properties Ltd., whose $300-million real estate portfolio includes high-end retail and residential assets.
Mr. Dee has been “working to get a pilot pod hotel going” on a floor of a downtown building that’s been vacant for about a year. Now, with a potential fast-tracked permitting process at city hall, he says the project can be completed in about a year.
Deneen Allen, chief executive officer and founder of the Fire Circle, a tourism and hospitality development enterprise that was named 2023 Innovator of the Year at the Canadian Tourism Awards, is looking at converting three vacant Vancouver office spaces to pod hotels.
“We’re anticipating very favourable lease structures” and “higher financial returns” compared with typical small hotel, ground-up builds, she says.
“With this model, obviously, the fact that you’re going into a lease – you don’t have land and building acquisition – your initial capital investment is just so significantly different than it would be for traditional hotel construction. Yet you can still capture very decent rates.
“We’re quite excited,” she adds. “We’re ready to go and we plan to open as many as 120 bed units within the next 18 months.”
Mr. Dee and Ms. Allen have vetted pod hotels around the world. Yet both cite a rare Canadian pod hotel – just three exist in the country – as inspiration for their pod hotel concepts. The upscale Pangea Pod Hotel, in the centre of Whistler, B.C., “is probably the No. 1 pod hotel in North America,” says Mr. Dee.
Pangea launched in 2018, after a 2½-year, $10-million-plus renovation of the top three floors of a four-storey mixed-use building.
The site “required a full-blown gut renovation,” says Pangea’s co-owner Russell Kling. To accommodate the 88-pod hotel’s nearly 70 washroom components, including 16 rainfall showers, “massive upgrades” to the building’s in-out plumbing services were required.
With its double-occupancy pods, two bars and strong focus on interior design, Pangea feels like a chic boutique hotel – at least until the visitor crawls into their couch-size capsule, draws their blackout curtain and determines whether the noise of other guests necessitates use of the free ear plugs.
Pangea’s rates range from $50 to $250, depending on the season. Occupancy rates are on par with the Whistler hotel annual average of around 70 per cent, says Mr. Kling. The City of Vancouver’s pod hotel vision, he adds, is “a move in the right direction.”
For hoteliers who can find “the right vacant office building in the right location at the right lease price,” a pod hotel is a good match. “The shared accommodation concept can fit into a lot of different existing spaces, whereas traditional hotel rooms, each needing windows and washrooms, might not be right.”
Located near Vancouver airport in Richmond, B.C., Panda Pod Hotel features 62 pods.Supplied/Supplied
In Richmond, B.C., near Vancouver International Airport, Sharon Cheung, owner and CEO of Panda Pod Hotel, spent $1-million over the course of a year to convert a 3,000-square-foot former thrift store and condominium presentation centre into her minimalist vision: a 62-pod hotel with seven showers, a storage area with 227 lockers and a small lounge area.
Open for two years, occupancy rates are well below Richmond’s rate of around 80 per cent. In 2023, Panda Pod’s average occupancy was about 33 per cent, with year-round rates averaging around $100.
The company offers franchise opportunities but so far, no Canadian hotelier has inquired. “We’re running on low margins,” says Ms. Cheung. “Canadians haven’t opened up to pod hotels or they don’t know that pod hotels exist.”
But as more people realize they don’t have to spend $400 for a bed to sleep in, says Ms. Cheung, “we’re slowly gaining momentum.”