Destination Vancouver and BCHA aim to foster new hotel development

To build the 10,000 hotel rooms Vancouver urgently needs by 2050 to keep pace with growing demand, the report says how to meet this target while boosting jobs, animating neighbourhoods, and unlocking billions in economic activity. Shifts in the real estate market, such as declining demand for office and strata developments—have created a rare window of opportunity for hotel development.

"Hotel development needs to be seen as a city-building tool, says Royce Chwin, president and CEO of Destination Vancouver. "We're seeing unprecedented interest for investment in new hotel properties in Vancouver. There is an opening to take swift action, otherwise capital will move wherever conditions are more favourable."

Destination Vancouver's 2023 study on the lack of new hotel capacity demonstrated that without new investment, lack of hotel supply would translate into significant losses to the provincial economy.

Following the publication of that report, Destination Vancouver and BCHA formed the Vancouver Hotel Development Task Force to take concrete action on the issue. Made up of representatives from industry and the City of Vancouver, the goal of the Task Force is to identify and recommend strategies to enable a sustainable and appropriate supply of new hotel development.

"This is about more than hotel rooms—it's about building a vibrant, resilient city. Hotels are economic engines and social anchors," says Ingrid Jarrett, co-chair, Task Force and former CEO, BC Hotel Association. "They support jobs, events, tourism, local businesses, and can enliven neighbourhoods."

This new report was commissioned by the Task Force and was undertaken in parallel with a report city staff have been preparing for presentation to Council on April 15.

Hotel crunch threatens growth

Vancouver hotels are operating at near full capacity, with 80 per cent average annual occupancy and up to 95 per cent during peak seasons—well above rates in peer cities. The lack of new capacity makes it increasingly difficult to attract major conferences and marquee events and meet visitor demand.

Compounding the issue has been a marked decline in hotel supply. Between 2002 and 2022, Vancouver saw a net loss of hotel rooms, largely due to hotel closures and conversions (the pandemic removed 550 rooms from the city's inventory, with purchases by BC Housing and the City of Vancouver to convert those rooms into supportive housing).

Meanwhile, development stalled: just 12 new hotels were built in the last 20 years.

"Vancouver has the same number of hotel rooms as we did 2002," says Chwin. "There are 22 projects currently in the development pipeline, representing approximately 4,200 rooms, which is encouraging. We're looking forward to the industry moving ahead with these new projects."

Five hotel development scenarios tailored to Vancouver's neighbourhoods and market needs are detailed in the report. Each scenario offers a scalable model to deliver a mix of price points, hotel types, and community benefits across the city.

• The Event Space: Large, luxury hotels with meeting and event spaces.
• The Big Brand: Large full-service hotels at an upper mid-market price point located near transit and attractions.
• The Familiar: These are limited-service, extended-stay hotels in local commercial districts.
• The Basics: Modern, budget-friendly options that cater to young people.
• The Urban Resort: High-end, boutique hotels offering unique local experiences.

Massive economic impact within reach

If the needed 10,000 new hotel rooms are built, the report forecasts:

• 5,450 direct local hospitality jobs.
• Up to 8,000 indirect jobs in retail, events, and services.
• $125 million in annual municipal tax revenue.
• $78 million in provincial tax revenue.

To overcome development barriers, the report outlines recommendations, including:

1. Deferring development charges.
2. Pre-zoning for hotel use in transit-oriented areas.
3. Creative solutions for parking and loading.
4. Pairing hotels with residential developments.
5. Building strategic partnerships to reduce risk and boost demand.

Although this report is focused on hotel development in Vancouver, both the methodology and many of the opportunities identified are likely to apply across other municipalities experiencing a hotel shortage.

Report: Hotel Community Impact Assessment