- What With a tight hotel market in Vancouver, investors are renovating existing stock
- Why New builds can take years to come to fruition
- What next Vancouver needs 20,000 new hotel rooms by 2050, the city’s tourism authority says
As demand for hotel space increases in Vancouver, some investors are picking up older assets and renovating them to take advantage of the city’s tight lodging market.
Vancouver has lost about 2,000 hotel rooms since the 2010 Olympics, and in 2023, Destination Vancouver, the local tourism authority, warned the city needed 20,000 new hotel rooms by 2050 or it could lose out on billions in revenue in the coming decades.
The city sees demand for hotel rooms come from a few fronts. The cruise ship season brings major demand to the city, said Steven Chen, a broker on NAI Commercial’s hotel investment team. As well as part of an increasingly popular trend, corporate travellers tend to tack on more time in the city when they visit for work. The city will also host World Cup matches next year.
Those circumstances have created a hot hotel market that investors are trying to get in on, Chen said.
“We’re seeing … all this new demand in the market, we just don’t have enough rooms,” he said. “That’s why we have this huge spike in occupancy.”
Renovation adds value
Although there are major builds taking place, such as a 400-room project from Marriott in the city’s core, those builds take time. Renovating existing hotels has become an attractive option for large investors. It particularly makes sense with the condo market having a tough time.
Bosa Properties is one firm in the midst of such an investment pivot. The company has owned a hotel in Metro Vancouver for more than a decade, but in recent years has launched more hotel projects and, in November, decided to step up its presence with the acquisition of the Best Western Plus Burnaby Hotel.
Marc Ricou, Bosa’s executive vice president of commercial and residential properties for the company, said the newest purchase had the right ring to it.
“We’ll operate as a more accessible price point hotel,” Ricou said. “We expect it to be really well positioned in that market for [sports] tournaments and so forth.”
Bosa had initially considered a new development for the site, but the company ultimately decided on a $6.1m renovation of the hotel instead. The state of Vancouver’s hotel market meant that keeping it a hotel was the most sensible option, Chen said, especially when an extra $40/night can be charged after a renovation.
“That’s sort of a testament to the current hotel market right now,” he said. “We’re in such a shortage of rooms, tearing it down doesn’t make sense.”
A larger trend
Solterra Development is another firm that has historically focused on townhouses, condos and business parks but is now getting in on the hotel renovation play.
The company purchased a 67-room hotel in Vancouver, formerly known as the Clifton Hotel, and is now operating it as single-room occupancy apartments with plans to renovate, according to Business in Vancouver.
But it’s not just a Vancouver trend.
Andrew Lobas, a partner at Build It in Calgary, said similar renovations are taking place in the city as investors transform office space. He said managing expectations for clients is one of the keys to tackling a renovation.
“Building from scratch versus a reno are two very different things,” Lobas said. “You need to be able to be agile, do things on the fly and provide knowledge based on previous expertise in hospitality.”
Shorter timelines are a reason investors choose to renovate instead, he said, pointing to the Kenrick Hotel in Banff where his company just turned around 85 rooms in six months.
