Amacon’s Block on Robson and Beatty is going through renovations in Vancouver on Jan. 16.Jimmy Jeong/The Globe and Mail
Canada is seeing a surge of hotel construction in major cities, with Vancouver leading the way in new building applications after the tough pandemic years, when hotels seemed like the iffiest of all real estate investments.
There were 294 projects – a total of 38,000 rooms – in the works across the country as of the end of last year, according to development consultancy Lodging Econometrics.
And while Toronto has the largest number under construction – a total of 9,391 rooms, including projects such as the 392-room Curio by Hilton in the Distillery District and the Nobu Hotel and Residences, both due to open this year – new approvals for hotels have slowed down significantly, with only one in the two previous years and the city still processing four applications from 2019 through 2022.
Vancouver is now seen as the most attractive bet by analysts because it leads the way in hotel profits and occupancy, which was almost 80 per cent in October.
“We’ve identified Vancouver as being the No. 1 leader” when it comes to the revenue generated per room, said Alam Pirani, the head of the hotels division at Colliers, a real estate brokerage in Toronto. “We’re seeing things coming back – group businesses, small meetings, everything.”
That’s a reversal of the trend of a decade ago, when several hotel owners in the city converted their properties to rental apartments.
The combination of steadily escalating prices and high occupancy, several international events on the horizon, a drumbeat at Vancouver city council about doing everything possible to fix a much-documented hotel shortage and incoming provincial restrictions on short-term accommodations appear to have worked some magic.
There are now 23 projects and 4,317 rooms in the works, the majority of them in central Vancouver.
Bosa’s Properties has partnered with the Listel Hotel to double the number of rooms and add rental apartments in Vancouver.Jimmy Jeong/The Globe and Mail
Bosa Properties formally announced last week that it is partnering with the owner of the popular Listel Hotel on Robson Street on a new building that will double the number of rooms in the current hotel and, in a first for the city, add rental apartments on top.
Amacon Developments has two projects on the books, one of them a conversion of a medical building at Burrard and Davie streets.
A new company called QWID Capital Partners has started construction on the first-ever hotel in Vancouver’s beleaguered Chinatown, next to the popular Keefer Bar.
Langley-based Marcon Construction is about to go to council to seek approval for one of the largest hotel projects proposed in Vancouver in a decade – 32 storeys, 578 rooms – on Pender Street, a couple of blocks from the massive new Amazon-leased office tower at the former main post office.
And Deecorp Properties, a company that owns a lot of land in Vancouver that has seen little redevelopment, has proposed two hotel buildings for a site near Granville and Davie streets.
The building boom is being welcomed by city councillors, the tourism sector, the restaurant industry – and Chinatown, where people are thrilled it will be getting its first hotel.
“For us, it’s exciting. It will really bring visitors and attract people to the neighbourhood,” said Jordan Eng, president of the Vancouver Chinatown Business Improvement Association.
Mr. Pirani said many of the new hotel developments throughout the country, including those in Vancouver, are predominantly boutique hotels and “focused service” hotels – smaller, with few amenities.
But projects such as the Marcon proposal are the big, old-fashioned kind, with banquet and conference rooms. The redeveloped Listel Hotel will have meeting rooms, a swimming pool, a Japanese-inspired plunge pool, a fitness centre and its usual high level of staffing, said John Nicholson, vice-president of the Listel Hospitality Group.
As many other hotel developers have done, Listel and Bosa Properties have planned a project that combines hotel rooms with long-term housing to help smooth out any hotel-revenue bumps.
“Rental is easier to finance than all hotel,” said Marc Ricou, a vice-president at Bosa. “Hotels are quite economically sensitive, so it’s a way to diversify and reduce the risk.”
Additionally, Listel decided that rentals were a safer option than condos in today’s market, Mr. Nicholson said.
He said one of the big impetuses for Listel to redevelop was when the plan for the West End neighbourhood, which encompasses Robson Street, changed the development potential of the site in 2011. That immediately tripled the hotel’s tax bill and got the owners thinking of going bigger.
There are now 23 projects and 4,317 rooms in the works, the majority of them in central Vancouver.Henriquez Partners Architects
Analysts say there are many other reasons hotels have become popular again.
They were already at high occupancy even before the pandemic, in part because some – the Palisades on Robson, the Coast Plaza Hotel on Davie and the Plaza Hotel near city hall, for example – had been converted into rental apartments in the previous decade.
Then, during the pandemic, several mid- or low-priced hotels, such as the Best Western on Kingsway and the Patricia Hotel on Hastings, were purchased by the province to house homeless people.
An inventory done by Destination Vancouver in early 2022 showed the region had a total of 23,333 rooms, with about half of those in the central downtown. It estimated that another 20,000 were needed.
University of British Columbia adjunct marketing professor Jarrett Vaughan said hotel developers have also likely been encouraged by the province’s aggressive crackdown on short-term rentals, as well as the return of high occupancy and high prices in the past year.
But he said they’re developing different kinds of projects. Instead of traditional hotels, they’re focusing on visitors’ desires to have interesting local experiences and meals or services such as spas and wellness centres.
Many developers are also incorporating hotels into multiuse projects, sometimes as part of city requirements for commercial space, sometimes to expand the range of their portfolios.
Developers are also increasingly becoming hotel managers, unlike the days when they relied almost exclusively on condo sales.
“It’s a very intensive business, but once you build out and restructure, the business begins to grow,” said Stepan Vdovine, a vice-president at Amacon.
And, most importantly, hotel rates are pleasantly high.
That may not be welcome news for potential visitors, who are increasingly less likely to find anything even moderately priced in central Vancouver.
Developers and analysts say the budget option is increasingly unlikely.
“Vancouver and Toronto are two markets where it’s hard to justify building those,” Mr. Pirani said.
Instead, tourists looking for cheaper accommodations will have to go to the suburbs, he said. And there will be more options for them as limited-service models from the big chains, such as Holiday Inn Express or Home2 Suites by Hilton, take over there.
Unless, of course, visitors choose Vancouver’s historic, city-owned 2400 Motel on Kingsway, currently renting for as little as $150 a night.
Editor’s note: This article has been updated to clarify that boutique hotels and "focused service" hotels are two different types of accommodation. Due to an editing error, a previous version incorrectly stated they are synonymous.