To close the gap between current supply and projected demand, 20,000 new hotel rooms are needed in Metro Vancouver by 2050; with 10,000 of those new hotel rooms necessary just in Vancouver.
According to a new study Economic Analysis of Hotel Supply and Projected Demand in Metro Vancouver, 2023 to 2050, released by Destination Vancouver, without new investment, the lack of hotel supply in Metro Vancouver will translate into significant losses to the provincial economy. Between 2022 and 2050, the cumulative economic impacts are projected to be:
$30.6 billion in foregone output.
$16.6 billion in forgone GDP.
168,000+ FTEs of foregone employment.
$7.5 billion in foregone tax revenue for all three levels of government.
"Metro Vancouver's infrastructure is not keeping up in delivering on our global profile," says Royce Chwin, Destination Vancouver's president and CEO. "This is critical because on our doorstep over the next few years are tennis's Laver Cup, the Invictus Games, next year's Grey Cup and in 2026 we're a Host City for the world's largest single sport event, the FIFA World Cup."
If the supply of hotel rooms remains at current levels, demand will exceed supply by:
2026: in the summer months in the City of Vancouver.
2028: in the summer months in the rest of Metro Vancouver.
2040: every month of the year across Metro Vancouver.
Cities of a comparable profile have been building new hotels at a steady pace. At the same time, Vancouver's hotel supply has been contracting; Metro Vancouver is down roughly 2000 rooms since 2010, with 1500 of those rooms lost in Vancouver. The pandemic removed an additional 550 rooms from the city's inventory, with purchases by BC Housing and City of Vancouver which converted those rooms to supportive housing.
This is an issue Destination Vancouver has identified and has actively been working on for close to a decade. The precursor to this report (published in 2019) included projections from 2022 to 2030, which is now too short a planning horizon for development timelines. The projections in this new report are in line with the planning horizons of the Vancouver Plan and the Broadway Plan.
The City of Vancouver did pass an interim hotel development policy in 2018 but it is just a policy statement. To make a tangible impact on the hotel inventory, substantial new investment is needed, both to mitigate loss through redevelopment and to encourage new development. Existing development applications and permits for additional hotel capacity submitted to the City of Vancouver are insufficient to replace the losses. And the total estimate of approximately 1,100 new rooms in rezoning, planning, or permitting stages through to 2026 is by no means guaranteed.
"This is crucial for our global destination competitiveness," says Chwin. "Lack of available hotel rooms will make visiting Vancouver even more expensive, and the city will be less competitive in attracting major conferences, large sporting events and leisure group travel. Vancouver is running short on time to prepare for the influx of visitors and the economic impact they contribute to the city. Those visitors will just go elsewhere."
Vancouver is the gateway to the rest of the province and this lack of capacity may mean visitors avoid BC altogether, instead choosing other parts of Canada for their travel. This in turn deprives smaller cities and towns in our province of the positive economic benefit that those visitors would bring.
Report: Economic Analysis of Hotel Supply and Projected Demand in Metro Vancouver, 2023 to 2050.