Vancouver hotelier questions new hotel report

According to a recent report done by Destination Vancouver, Metro Vancouver needs 20,000 new hotel rooms by 2050 in order to meet demand. With about half of those rooms needed in the city of Vancouver.

The data shows hotel room demand is expected to return to pre-pandemic levels by 2025, then increase by an average of 2.7 per cent per year, reaching 10.7 million hotel room nights in 2040, and 13.9 million by 2050.

While he understands the need for development, Hamir Bansal, a senior vice president with Colliers hotels questions where the space for all these new rooms will be found.

“The issue is the cost of land is so expensive, and the cost of construction on top that is expensive too. So cost of construction and build is so high that it won’t match the average daily rate,” Bansal told CityNews in an interview.

“I don’t see anywhere this can go in Vancouver, there’s more condominiums than hotels. Developers want to use the land [available] to build condominiums, that’s where the biggest margin is. I don’t think this is going to happen,” he said.

To make it happen, he believes hotels would have to charge astronomical prices to offset the costs associated.

“People probably have to come up with $1000 a night, or $500, $600, or $700 to stay in downtown Vancouver.”

“The only way to do it is with multi-purpose hotels, like with apartments, offices and a hotel all in one. Where the cost isn’t just purely on the hotel,” he explained.

Destination Vancouver says demand in the city could exceed supply by summer 2026, while the rest of Metro Vancouver will be short by 2028, and by 2040, the region will face year-round shortages.

“Metro Vancouver’s infrastructure is not keeping up in delivering on our global profile,” said Royce Chwin, Destination Vancouver’s president and CEO, in a written statement.

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There are several big international sporting events scheduled to take place in the coming years, including the Laver Cup in tennis in 2023, the Grey Cup in 2024, the Invictus Games in 2025, and the FIFA World Cup, the world’s largest single sports event, in 2026.

According to an estimate, Vancouver had 13,290 hotel rooms in 2022, which is roughly 12.8 per cent less than the high in 2002, while the rest of Metro Vancouver had about 10,000 rooms.

A scarcity of hotel rooms in Metro Vancouver may result in $16.6 billion in lost gross domestic product (GDP) and $30.6 billion in lost productivity between 2022 and 2050 if no additional hotel investment is made, the analysis shows.

Another idea Bansal entertained to meet the forecasted demand was the idea of Metro Vancouver city’s relaxing the rules with short-term stays.

“If you can’t build the hotels, you should relax the rules with Airbnb and rental buildings. Because if hotels are 100 per cent booked, where are people going to stay?”

“I think that’s where you can plug-in some of that demand,” he said.