- What Vancouver is seeing a surge in hotel construction
- Why Long-term shortages in hotel rooms coupled with a number of major upcoming events are spurring renewed interest
- What next About 17 hotels are currently in the pipeline
Vancouver is seeing a boom in hotel construction as developers seek to diversify their portfolios and look to take advantage of major upcoming events in the West Coast city.
The region has about 17 projects in the pipeline, said Royce Chwin, chief executive and president of Destination Vancouver, a member-led tourism sector organization. That’s up from just a handful several years ago.
The pace picked up after Destination Vancouver sounded the alarm about the shortage of hotel space in the city. In a March 2023 report, accounting firm MNP warned that 20,000 new hotel rooms were needed in the region by 2050 or the province could take an economic hit in the billions of dollars.
“Developers started to inquire, ‘What is the situation? Can we build there? Is there available land?’ and that’s when we formed the hotel development task force,” Chwin told Green Street News. “To help inform the development policy for the city as it relates to hotel builds.”
Much of the interest follows years of pent-up demand, he said, which has left the city lagging behind in terms of available lodging, despite its international profile.
After the 2010 Vancouver Olympics interest in hotel investment began to wane even though tourism steadily increased. As a result, Metro Vancouver’s hotel supply contracted by 2,000 units, with 1,500 of the lost rooms in Vancouver proper.
Demand ushering in opportunity
Now, with matches for the FIFA 2026 World Cup, Invictus Games, Grey Cup and numerous marquee concerts on the horizon, the need for more accommodation in the city has developers seeing opportunities.
“Vancouver is bringing the demand for people who need places to stay,” Chwin said.
The results of the increased activity in new hotels will soon be felt across the region said Laura Baxter, director of hospitality analytics, Canada for CoStar.
“We’re seeing over 1,000 rooms that are expected to open in 2026 alone,” she said. “And that’s across Greater Vancouver.”
About 315 rooms are expected to open in 2025, and Baxter said the trend shows a “turnaround” in what’s been taking place over the last 15 years. The lack of rooms does lead to higher occupancy rates and ultimately increases the cost of renting a hotel room.
Attractive alternative
The switch also comes as developers and property owners aren’t getting the returns they want on other assets, particularly office properties. Office vacancies in Q2 rose for a sixth consecutive quarter, reaching 8.9%, according to Colliers.
Carrie Russell, senior managing partner at HVS in Vancouver, said such figures have led to wandering eyes for these asset holders.
“Now they’re looking to the hotel world to see if there’s a feasible project on their sites for hotel development,” she said.
“I think the gap between hotel and other uses is definitely closing,” she said. “I don’t think hotel is way better; I think hotel is now competitive with those other asset classes.”
Bosa Properties is among those expanding its reach further into the lodging sector. Already having owned a hotel in Metro Vancouver for a decade, the company has other projects in the works. One is a partial office building development it acquired and now aims to turn completely into a hotel.
Operating under the Hilton brand, the project’s two towers will serve different purposes. One will be geared toward extended stays for those needing to be nearby Vancouver General Hospital, and the other will be a conventional hotel aimed at business and tourism.
Marc Ricou, executive vice president of commercial and residential properties for Bosa Properties, said already owning a hotel has given the company some “comfort” with the asset class.
Concerns over the lagging performance of office space also contributed to the company looking at potential in the hotel sector.
“It does open up opportunities for us. We are looking at a couple potential hotel opportunities, but there is a limit on how much we can do in the space,” Ricou said. “They are complex projects. They are challenging to get off the ground in terms of financing and getting an acceptable rate of return.”
Zone of interest
Zoning has also played a role amid stagnation in the office sector. Land zoned as commercial can have hotels built on it, but not residential development.
The conflict between residential and commercial zoning also has played out in the city in other forms.
On May 1, the province introduced new policies meant to further curb short-term rental use over concerns the rentals were contributing to the housing crisis. Short-term renters in many municipalities are now only allowed to let out their principal residence.
Tight restrictions aren’t unique to B.C., as many regions from Spain to New York City have introduced more stringent policies around short-term rentals.
But Ricou said he doesn’t think the policy changes had much affect on the hotel demand or appetite from developers to build them.
“I don’t know that it had a material impact,” Ricou said. “We’ve had pretty healthy occupancy and room rate levels the last couple of years.”
Chwin said municipal regulations in Metro Vancouver had already stemmed the use of short-term rentals, which resulted in the new provincial regulations having limited impact.
