The diminishing stock of hotel rooms in Vancouver will soon have its most prominent example with the demolition of the landmark Four Seasons hotel adjacent to Pacific Centre.
The 372-room hotel’s closure five years ago in anticipation of renovations became permanent in January with Cadillac Fairview’s confirmation of plans to demolish the 49-year-old tower and replace the 30-storey structure with what it called a new mixed-use development “that will complement our world-class shopping centre and surrounding office complexes.”
Destination Vancouver CEO Royce Chwin is part of a working group tasked with identifying how to lure hotel management companies or owners as well as which locations in the region would be ideal for new hotels.
“We need to add rooms to our Vancouver inventory, not take them away,” he said. “We’ve been very successful in attracting visitors to Vancouver but limited hotel supply is an-going obstacle to meeting that demand.”
Advocacy efforts are starting to pay off, however.
“Since we’ve raised the alarm on the issue, there’s been a significant uptick in interest and willingness to invest in Vancouver,” Chwin said.
U.S.-based hospitality market research firm Lodging Econometrics counted a record-high 59 hotel projects underway across the province this past summer, which are poised to add 8,439 new rooms to the B.C. market if all complete.
Data presented by HVS Canada at the Western Canadian Lodging Conference at the end of October indicated that just a fraction of those rooms are under construction right now, however.
HVS figures showed 30 projects with 5,500 rooms proposed for the Vancouver market, but just two projects under construction with 163 rooms.
Similarly, 15 hotels with a potential 3,500 rooms are proposed for the market area around Vancouver International Airport in Richmond, but just one project totalling 112 rooms is under construction.
While the new tower Cadillac Fairview plans will create job space in the region’s core, it adds to a long-term loss of rooms in a market where it’s notoriously difficult to build and operate new rooms.
Two years ago, a report MNP prepared for Destination Vancouver noted that Vancouver had 13,290 hotel rooms in 2022, down from 15,242 rooms in 2002 – a 13 per cent drop.
The decline was even greater in the rest of Metro Vancouver, with room counts peaking at 14,424 rooms in 2011 before declining to 10,200 rooms in 2022 – a 29 per cent drop in just 10 years.
Yet tourism is rebounding, with global business travel exceeding pre-pandemic levels by 6.2 per cent last year, according to the World Travel and Tourism Council. A hybrid ethos means many travellers are also making the most of their time away, combining leisure travel with business as part of a hybrid “bleisure” experience.
Two years ago, MNP forecast that demand for rooms in the region would begin exceeding supply in 2026, coinciding with major drivers of visitation and hotel bookings such as the FIFA World Cup.
With occupancies rising, the warnings are coming true.
High construction costs, among other factors, make downtown Vancouver a challenging market for the most experienced operators, however. According to Bosa Properties Inc., which has hotel projects on the books in both downtown and the Broadway corridor, the all-in cost of building a four-star hotel in downtown Vancouver is now $900,000 a room.
This has driven much new hotel development towards the suburbs, both Richmond with its proximity to Vancouver International Airport, but also the Metrotown area of Burnaby, home to one of the province’s biggest shopping centres and served by rapid transit that will soon run from the region’s core east to Langley.
The latest example in the area was Thind Properties’ sale of a 10-storey commercial podium at its Highline development to Mundi Hotel Enterprises Inc. of Kamloops for partial conversion to hotel use. Originally slated for office space, the 70,000-square-foot property won city approval in November for completion as a 159-room Hyatt Place hotel. Opening is scheduled for later this year.
It’s a rare example of an office-to-hotel conversion in the Vancouver market, yet reflects the right-sizing of office supply as local demand has shifted with the normalization of markets over the past year.
“This transformative project highlights the growing trend of repurposing mixed-use developments to meet evolving market demands, particularly in the hospitality sector,” said CFO Capital, which arranged acquisition financing for the transaction. “With its prime location and modern infrastructure, it is poised to become a standout hotel destination, contributing to the dynamic urban fabric of Burnaby.”
The plans are a direct counterpoint to Cadillac Fairview’s move, underscoring the evolving landscape for hotel development in the Lower Mainland.
Developers see opportunities in hotels relative to other asset classes, with the Deloitte 2025 Commercial Real Estate Outlook report ranking hotels fifth most-favoured out of 14 asset types, up from twelfth place in 2023 and 2024.
“Projects that were proposed, either to be resi[dential] or mixed-[use], you’ve seen some of the developers going back to the municipalities for permission to turn a portion of those buildings into hotels,” David Ferguson, director of development with Coast Hotels, told the Western Canadian Lodging Conference.
Yet high construction costs in the Lower Mainland has put the emphasis on more affordable locations. This has focused attention on conversion opportunities in the core leaving suburban locations to attract new builds, often within mixed-use projects.
“If you’re a group looking to expand your hotel portfolio in B.C., and specifically for markets like Vancouver … you’ll probably be looking at already-operating assets, conversions,” Duncan Chiu, senior director, lodging development, for Marriott International in Western Canada, told the lodging conference.
Construction risk makes already-operating assets the preferred course for Marriott, but it willingly stepped up to partner with Synvest Capital Corp. on the transformation of 576 Seymour St., a century-old office property that’s undergoing conversion to a 73-room hotel set to open as the Arts & Crafts Hotel next year.
“We saw this as an opportunity,” Chiu said, noting the fact that construction was in progress allayed some of its usual concerns.
A few blocks away, 36 rooms are under development as Otto’s House in 30,000 square feet of former office space at 225 Smithe St.
Vancouver’s office market remains in good shape versus markets such as Calgary, where office conversions and demolitions have the backing of municipal incentive programs. Tweaks to the commercial supply in Vancouver don’t herald tough times so much as simple economics.
Repurposing space is often easier than building from scratch, James Scott of PBA Group told the lodging conference.
“Time is money,” he said. “There are slight savings with the cost of a conversion versus a new build. Those are a factor for us, but as a key driver it’s not the biggest one.”
Rather, working with an existing building – as PBA is doing with the former Canadian Centre at 833 4th Ave. SW in Calgary – avoids the delays and risk inherent in the entitlement process as well as the cost of excavation and the other costs of putting up a tower.
By working within an existing structure, PBA expects to bring a 226-room Element Hotel by Westin to fruition faster, and for a fifth less than a new build.
With files from Glen Korstrom
