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Moreover, the high room rates in Vancouver are due to not only the hotel room shortage, but also the larger proportion of luxury hotel offerings compared to other cities.

Although market demand now favours hotel development, there are major cost and regulatory challenges that may hinder the creation of new hotel supply.

Jointly developed by Destination Vancouver and the B.C. Hotel Association, through their Hotel Development Task Force, in collaboration with Cascadia Partners Strategy Consulting, a new report released on Wednesday outlines not only the number of new hotel rooms required, but also the types of hotel supply needed in Vancouver. It presents a practical framework for feasibly delivering a diverse range of hotel types.

A highly detailed approach — taking into deep consideration the pro-forma — was taken to improve the financial feasibility of new hotel developments. This work was informed by the participation of prominent developers — including Concord Pacific, Hudson Pacific Properties, Bosa Properties, and Wall Financial Corporation — as well as leading architectural firms such as Arcadis Architects, Arno Matis Architecture, and Boniface Oleksiuk Politano Architects.

They also worked with JW Marriott Parq Vancouver, Silver Birch Hotels, Fairmont Pacific Rim, and Listel Hospitality Group.

The report includes policy recommendations for the City of Vancouver, with Vancouver City Council also set to consider a range of initial hotel development policy updates by City staff next week.

“Hotel development needs to be seen as a city-building tool. 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,” said Royce Chwin, president and CEO of Destination Vancouver, in a statement.

Five types of hotels needed

According to the report, there are five hotel type models to drive growth in Vancouver.

“The Big Brand” hotel type is projected to be the dominant category of future hotel development, representing approximately 45 per cent of new capacity. These properties, typically offering 200 to 300 guest rooms and classified as three- or four-star hotels, would be located primarily in downtown Vancouver or near stadiums and SkyTrain stations within transit-oriented development areas across the city. This hotel type addresses the need for upper mid-tier price point options with easy access to attractions and event venues. Examples include the Best Western Chateau Granville and Tempo by Hilton New York Times Square.

Following this is “The Familiar” hotel type, which could account for up to 25 per cent of future new capacity. These hotels cater to extended-stay guests, featuring more in-suite amenities such as kitchenettes while offering fewer shared amenities. Typically comprising around 150 suites, they are well-suited to areas near innovation hubs, commercial corridors, hospitals, and post-secondary institutions. Notable examples include Quest Apartment Hotels and Residence Inn Vancouver by Marriott.

The third-largest category is “The Event Space” hotel type, anticipated to account for up to 15 per cent of future capacity. These are larger luxury hotels with approximately 450 guest rooms, located in central downtown areas or scenic locations offering views. Designed with extensive amenities and meeting facilities, these hotels are particularly valuable for the conference and events market. A key recommendation is the inclusion of 20,000 sq. ft. pillar-free ballrooms to address the current shortage of integrated convention and meeting space. Examples include the Hyatt Regency Vancouver and Fairmont Pacific Rim Hotel.

“The Basic” no-frills hotel type is expected to represent up to 10 per cent of new hotel capacity. These are small-scale, limited-service, budget-friendly accommodations, typically offering around 75 guest rooms. Ideal locations include areas near sports venues, the PNE fairgrounds, and commercial streets. Examples include Coast Metro Vancouver Hotel and Pangea Pod Hotel.

Finally, “The Urban Resort” boutique hotel type is projected to comprise up to five per cent of future capacity. These unique, high-character properties, with around 50 guest rooms, are best suited to iconic Vancouver locations and historic districts. Recommended sites include areas near Stanley Park in the West End, as well as Kitsilano Beach, Jericho Beach, and Pacific Spirit Regional Park. Notable examples are the Sylvia Hotel overlooking English Bay and Hotel Sommerro in Oslo.

The report offers a wide range of recommendations aimed at improving the financial feasibility of new hotel developments. These include reducing the size of guest rooms and amenity offerings in certain hotel types, utilizing wood-frame construction for smaller projects to lower building costs, and coming up with creative solutions for vehicle parking and loading needs and other design challenges.

It also suggests increasing building density through added height, enabling mixed-use developments that combine hotel space with residential units above to help offset costs. Additional policy recommendations include pre-zoning for increased hotel density and deferring municipal development cost charges until the end of construction, a measure that could save developers millions in loan interest payments.

High land costs pose a significant challenge for hotel developments, particularly in downtown Vancouver. However, areas within the City’s Broadway Plan — especially those near future SkyTrain stations — offer a promising alternative. Encouragingly, the development of new hotels is also a key focus of the Broadway Plan.

Beyond construction and land costs, the report also considers the escalating operating costs of hotels, with the recent upward trend in staffing wages being the “primary cost for most hotels” — making up about 50 per cent of annual operating costs for full-service hotels. Labour cost increases are reducing the already-thin profit margins of hotel projects, and this is also made evident by some tense, protracted collective agreement disputes in recent years.

“Labour costs are the primary cost centre for hotels and are rising rapidly, meaning they can have a big impact on overall hotel profitability,” with the report suggesting the possibility of using technology and equipment to lower staffing costs in some hotel types.

Vancouver has fewer hotel rooms per capita compared to other major cities

According to a previous report by Destination Vancouver in early 2022, Metro Vancouver will see an acute hotel room shortage starting later this decade. There is a need for 20,000 additional hotel rooms across Metro Vancouver over the coming decades, including 10,000 within the city of Vancouver where demand is highest. The new report by the task force builds on the forecast of the 2022 report.

If these 10,000 new rooms are achieved within Vancouver, it would support about 5,500 direct local jobs and up to 8,000 indirect jobs in retail, events, and services. It would also provide the municipal government with $125 million in additional tax revenue, and the provincial government with $78 million in additional tax revenue.

Currently, Metro Vancouver has a hotel room supply of about 24,000 guest rooms, including roughly 13,000 within Vancouver, with 90 per cent of the city’s supply concentrated within the downtown peninsula.

Over the past two decades, only 12 new hotels — offering a combined total of approximately 1,900 guest rooms — have been built in Vancouver, primarily as part of mixed-use residential developments. Due to intense competition for land, hotel development in Vancouver has lagged significantly behind other cities. In contrast, during the same period, Seattle added over 6,500 hotel rooms, Calgary nearly 6,000, Montreal over 5,000, Toronto nearly 5,000, and Portland around 4,500.

Moreover, Vancouver has approximately eight hotel rooms per 1,000 resident — significantly fewer than many comparable cities. Seattle has 16 rooms per 1,000 residents, Calgary has 11, Toronto has 10, and Portland has over 12, but Montreal has over six.

Between 2008 and 2018, Vancouver lost approximately 1,100 hotel rooms due to redevelopments and conversions for residential uses. An additional 500 rooms were lost during the early years of the pandemic, as older, budget-friendly hotels were acquired by provincial and municipal governments for rapid conversion into supportive housing.

As of March 2025, the municipal government is processing and reviewing 22 hotel development proposals, representing a combined total of about 4,200 hotel rooms, with about 60 per cent representing brand new-build construction and the remaining 40 per cent representing the conversion of commercial space or additions and changes to existing hotels.

Without a significant increase in hotel room supply, Vancouver lacks the capacity to host multiple large events at the same time — especially during the busy summer season, when tourism peaks and the cruise ship season is in full swing. The city’s ability to accommodate additional major events during this period is particularly limited.

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