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Soaring Vancouver hotel prices underpin need for new development

Tourist visits are increasing by more than 20 per cent year-over-year in recent months
Zeidler Architecture recently released renderings for its proposed hotel at 901 West Broadway

The rapid increase in visitors to B.C. underscores the need for more hotel development in the city.

Avison Young today released its Canada Hotel Market Report, which found Vancouver's 2023 average daily room rate for hotels was a Canada-high $266.59, up 13.8 per cent from 2022.

While Metro Vancouver's hotel sector is in its slow season until the end of March, the expectation is that by summer, the province could once again be breaking records for having the most expensive average hotel room prices ever recorded in a major city in Canada.

Back in July 2023, Vancouver hotel rooms charged an average $347.08 daily rate, according to CoStar, a global provider of real estate data, analytics and news. That was the highest figure that CoStar had ever recorded for a major city in Canada.

In at least the past two calendar years, the cheapest three months to visit Vancouver were, in order, January, February and March, according to CoStar's data for average hotel room rates.

That does not mean rooms in those months are cheap.

Toronto barely nudged out Vancouver as the Canadian city with the highest hotel prices in January by a mere $0.43.

Visitors to Canada's largest city faced an average daily room rate of $203.70, compared with an average $203.27 room rate in Vancouver, according to CoStar.

Summer months tend to be the most expensive, although upcoming events, such as the Dec. 6, 7 and 8 Taylor Swift concerts at BC Place, can skew prices.

A Glacier Media investigation in February found that rates for Vancouver hotel rooms normally priced at less than $200 were being marketed for between $1,000 and $2,000 apiece on dates when Swift has Vancouver concerts.

Demand is rapidly increasing for hotel rooms even when large events are not taking place because, on a year-over-year basis, travel to Canada through B.C. has been trending upward.

In December, there was a 25.1-per-cent, year-over-year increase in the number of visits by foreign nationals to Canada through B.C. entry points.

It follows many months of soaring numbers of foreign visitors, compared to a year earlier. The year-over-year spike in foreign visitors in November was 20.98 per cent, which followed year-over-year spikes of 26.16 per cent in October, 38.18 per cent in September and 37.52 per cent in August.

The number of these visitors in December was about 5.5 per cent below the number in December 2019, but if current growth trends continue, all-time-high numbers of visitors are set to arrive in the province.

Domestic travel is also strong.

Vancouver International Airport data for 2023 found that the hub saw a record-high number of domestic passengers who either boarded or disembarked flights in 2023. That emphasizes what Vancouver Airport Authority CEO Tamara Vrooman has been saying for years: that domestic travel has returned much faster than has international travel.

Regardless of whether the visitors are domestic or foreign, the region needs a hotel building boom, according to Destination Vancouver CEO Royce Chwin.

His organization last year estimated in its Economic Analysis of Hotel Supply and Projected Demand in Metro Vancouver study that the region needs 20,000 new hotel rooms by 2050, while 10,000 of those rooms will be needed in the city of Vancouver.

Developers are savvy to this demand.

National architecture firm, Zeidler Architecture on Feb. 23 released to media designs for its proposed hotel at 901 West Broadway, a venture led by Hallmark Hospitality.

Zeidler submitted a development application in December and has since refined its designs.

Located at northwest corner of West Broadway and Laurel Street, the proposed hotel could become one of the first projects built as part of the city's Broadway Plan, which aims to transform the Broadway corridor into a high-density neighbourhood.

The 901 West Broadway project aims to create a 12-storey tower with 151 guest rooms and a three-level parkade.

It comes on the heels of Musson Cattell Mackey Architects, on behalf of Deecorp Properties, last year submitting a rezoning application to the city for a 35-storey, 460-room hotel on the northwest corner of Granville and Davie streets.

That project is set to be at 717 Davie Street – a street address that does not currently exist, but which would be where the Cold Tea Restaurant has operated since mid-2020.

Amacon is building a 120-room hotel at 150 Robson Street.

Some other potential future Vancouver projects include: 
• a 32-storey, 578-room tower at 516-534 West Pender Street, which Marcon aims to build after navigating a rezoning process;
• a 30-storey, 393-room tower at 848 Seymour Street that involves Paul Y. Construction, Forme Development and Perkins & Will Architects; and
• an office building at 1144 Burrard Street that Amacon may convert into a hotel.

The city's priciest hotel transaction in 2023, according to Avison Young, was the GEC Granville/Hotel Residence (formerly Best Western Plus Downtown) for $70 million in November. That priced each room at about $489,500. The buyer in that transaction was only identified at the time as a “local hotelier and prominent real estate developer.”

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