How dire is Vancouver’s ‘hotel supply crisis?’

If you’ve been paying attention to Vancouver’s city council over the last year, the odds are good that you have heard the term “hotel supply crisis.” 

On its face, the concept seems simple enough: Tourism is an enormous part of the city’s local economy. As such, the availability of hotel rooms is, presumably, incredibly important. 

If you ask industry experts like Destination Vancouver, it is so important that the hotel stock deficit must be addressed by building at least 10,000 new rooms by 2050. Failure to do so, and British Columbia could forgo upwards of $16.6 billion in forgone GDP and significant impacts to potential employment in the sector and up to $7.5 billion in foregone tax revenue. 

This is all according to a Destination Vancouver report, penned by the accounting firm MNP in 2022, which has become the foundation for the city’s current hotel development policy. 

Looking at the volume of recent hotel project approvals, it would seem that the ABC Party majority council took this word of caution to heart. 

In a written statement to Vancity Lookout, the City of Vancouver confirmed that they have a total of 38 hotel projects in the pipeline (amounting to 7,470 rooms total), with council approving 22 hotel projects in the last year alone. 

But some critics are concerned about where valuable city resources are going and whether the limited hotel supply is as crucial an issue as the industry has claimed.

With seemingly no end in sight to the hotel projects coming down the pipeline, Vancity Lookout wanted to dig deeper into the crisis and the efforts made to alleviate it. 

At the time the report was published, a Destination Vancouver media release noted that “Vancouver’s hotel supply has been contracting,” stating that Metro Vancouver is down by roughly 2,000 rooms since 2010, with Vancouver itself making up 1,500 of those rooms. 

The report was released at a time when development was “stalling,” according to the group, citing the (limited) construction of just 12 new hotels in 20 years. 

Destination Vancouver cautioned of the city’s inability to compete globally for “major conferences and large sporting events.”

In essence, the report argues that without significant additional supply, Vancouver would be unable to accommodate an influx of visitors over the next several decades, leading many tourists to avoid the area altogether and resulting in huge economic losses. 

Vancouver’s occupancy rate averages at 78 to 87 per cent annually, with some reports citing figures upwards of 90 per cent during peak seasons and major events. 

“The [occupancy] statistics that you’ve seen in the [Destination Vancouver] report are actually very accurate,” Kimberly Thomas-Francois, associate professor in the Faculty of Adventure, Culinary Arts and Tourism at Thompson Rivers University, told Vancity Lookout. “Vancouver has consistently had higher occupancy rates than all the other cities [in Canada].”

In an ideal market, she said, we would see hotel occupancy rates hover between 65 and 75 per cent. “By the time you start getting to 80 per cent… you are no longer negotiating price. The customers are going to have to take what is [being offered].” 

Generally speaking, the fewer rooms available, the higher the prices will be, said Thomas-Francois. “If you look at it from a developmental point of view, you’re actually wasting a lot of tourist dollars inviting people who just cannot come because there is no room… but for the individual hotel, [high occupancy rates] means good business.”

Another consequence of this, she said, is that lower-quality rooms end up going for a lot more. A three-star hotel in Vancouver will end up costing the same amount as a five-star hotel elsewhere, for example. 

Vancouver for years has fairly consistently boasted the highest daily room rate in the country, averaging $335.74 per night last year, followed by Montreal at $306.47, Toronto at $269.64 and Calgary at $248.77. 

In 2025, the new Hotel Development Policy offered developers significant additional height and density for most hotel projects, reduced the floor space requirement for mixed residential and hotel projects, and fast-tracked approvals via the Official Development Plan, allowing larger hotel projects to advance without public hearings. 

It also reduced community amenity contributions (CACs), allowing developers to exclude the cost of conference facilities, pools, fitness areas, and business centres from CAC calculations. 

“What really caught our attention was [the ABC Party’s decision]… to move a policy that eased a path for developers to shift to hotel development at a time when they didn’t really need the assistance,” Michelle Travis, research director with Unite Here Local 40, told Vancity Lookout. 

Unite Here Local 40 is a union that represents hotel and hospitality workers in B.C. They have been some of the most vocal critics of the hotel development push. The union views the focus on approving additional hotel stock as a misguided priority, particularly at a time when the city should be instead focused on making housing more affordable. 

 “I don’t think we’re getting the community benefit that this city deserves,” Travis added. 

A Unite Here Local 40 press release stated that the city’s density bonus was approved based on “an unreasonable interpretation of provincial law.” 

Unlike traditional density bonuses, which are often used to secure affordable housing, the group claims that the new provision “rewards hotels for building commercial spaces that primarily generate revenue” for the hotel itself. In July, the union announced that it is seeking a judicial review of the city’s decision. 

While the conventional laws of supply and demand suggest that more rooms equal lower prices, the answer is much more complicated.  

The affordability of hotel rooms depends on several factors beyond supply alone: Fluctuations due to major global events (like a pandemic), broader economic cycles, seasonal demand, natural disasters, fuel costs, and the complicating variable of Airbnb in the sector can all play a part. 

“Demand [and marketing] for the destination would also be a factor,” said Thomas-Francois. “We know that Vancouver is very highly ranked.”

Some more desirable markets see prices and occupancy rates relatively unaffected by the hotel stock. New York City maintained occupancy above 84 per cent and an average daily rate of US $333, with nearly five times as many hotel rooms as Greater Vancouver. 

O’ahu in Hawaii has about 5,000 more hotels, yet maintains comparable daily room rates and occupancy rates to Vancouver. 

Downtown Toronto has periodically also reported Canada's highest average daily room rate in recent years, despite having nearly double the number of hotel rooms as Downtown Vancouver. 

“While generally the law of supply and demand works, and it should somewhat [cause] a dent in the cost of rooms… if you look at New York and so on, even though there is an increase in rooms available… it depends on how popular the destination is,” said Thomas-Francois. 

It is unclear exactly what the impact of additional hotel stock alone would be on daily room rates in Vancouver. However, Travis is skeptical that reducing room rates is part of the goal of increasing hotel stock. 

“I think there’s a lot of lip service to [bringing down price]… but they’re still going to raise their prices when there are big events coming to town,” she said.  

While a subsequent Destination Vancouver report outlines five types of hotel developments required for a robust tourism sector, including “mid-market” and “budget-friendly” options, it is unclear how many of the in-stream hotels, those that have been approved and have applications submitted to the city, fall into these categories. 

When Vancity Lookout asked the City of Vancouver how many of the recently approved hotel projects were “budget-friendly” projects, it responded that 11 hotel projects in the pipeline are located outside of the downtown core, “where rates are generally lower.”  

It added, “However, hotel owners and operators set their own prices, so the City cannot predict how many hotels will fall within a specific range.” 

Many critics of the hotel supply crisis point to the continued availability of rooms during the FIFA World Cup, despite repeated warnings from the industry that Vancouver would not be able to support such a large influx of tourists. 

“There was an extraordinary amount of hype that went into the World Cup in the months and years leading up to it,” said Travis. “It just didn’t make reality.” 

Some hotels tried charging upwards of $2,500 per night during the World Cup, only to have to lower their rates again when the demand did not manifest, Travis explained. 

While she acknowledged FIFA’s cancelling of 15,000 rooms in the months leading up to the games likely contributed to vacancies, she argued that “we’ve had two of the biggest international events with the World Cup and the Olympics… we had more than enough hotel rooms, so supply wasn’t the issue…Hotels got greedy and charged a lot of money.” 

Many travellers likely avoided Vancouver hotel rooms altogether. “People adjust,” Thomas-Francois said. “They realize the price is extremely high… so they [decide] to commute into the destination.” 

A combination of tourists opting for lodging in areas like Richmond and Burnaby, as well as using Airbnb, likely contributed to what amounted to an estimated decrease of 20 to 30 per cent occupancy during the World Cup compared with the same time last year. 

While most of the experts Vancity Lookout spoke with conceded that some hotel construction is likely necessary, there were concerns around council’s priorities. 

“It’s striking to me how little concern there is for meeting aggressive, ambitious targets for real affordable housing in the city,” said Travis. “Many of our workers can’t even afford to live in the city that they work in.”

A recent report ranked Vancouver as the fifth-least-affordable city in the world. Even with some cooling in the rental market, housing affordability in particular is still dire. Vancouver has the most unaffordable housing market in Canada, three times worse relative to median income than Edmonton (the most affordable city in the country). 

As the city has made it easier to construct hotels, Travis said more developers will pivot away from needed rental housing. 

“There are instances of projects that have been approved for rental use, and then the developer decides to shift gears and turn it into a hotel… because they’ll make more money from it,” said Travis, citing a development at Macdonald and West 16th that was originally slated for a five-story rental tower and has since shifted to a six-story hotel.  

In cases like “Myron Manor,” the city approved the construction of a long-term-stay hotel in place of existing affordable rental stock.

“That was a whole set of affordable, well-sized apartment units that are now being replaced by a hotel,” said urban planning expert Andy Yan. “People have talked about how devastating this is towards their lives, and yet the city doesn’t seem really interested in dealing with this consequence.”  

For Yan, it is undeniable that tourism is an important part of the local economy. But he said it is unclear whether all the hotel projects approved by the city will result in actual hotels. 

“How [many of these hotel projects] are actually going to turn into real projects or are they used as evaluations for the land?”

Particularly amid the decreased profitability of residential and office developments, there is a strong incentive for developers to purchase and flip the land to someone else who may not develop it into the intended project, Yan said. “That has an effect towards driving up prices.”

“That’s really the question: Are we creating a paper city as opposed to one that actually has hotel rooms, much less residential units?” 

As Destination Vancouver highlights, a variety of hotel types are needed to effectively support growth in this sector of the economy and provide affordable options, including budget hotels.

“The wise political policy to implement is to have a broad spectrum of different types of rooms… [along with] a decent mix of residential housing,” said Thomas-Francois. But whether the hotel stock that actually gets built will include a mix of affordable options, remains to be seen.

Unite Here Local 40 has called for a pause on new hotel development approvals until an independent review is completed to determine whether the targets laid out by Destination Vancouver and adopted by the city are justified. 

“We’re not against hotel development, but the city has not been very thoughtful about thinking through benchmarking,” said Travis. “If 7,000 to 8,000 rooms have been approved during ABC’s term… if they all move forward at the same time, what impact does that have on the market? On the workers?” 

For Yan, he hopes that council will start to think more thoughtfully about how developments fit within the greater system of how the city functions, including housing, transportation and electrical infrastructure, as well as visitor infrastructure. “There’s a tendency [of this city council] to focus more on the art of the deal as opposed to community making,” he said. 

“That’s an ongoing challenge as they approve a certain number of residential and hotel [projects],” said Yan. “Have they really thought about the systemic nature of the city?” 

Vancity Lookout reached out to Destination Vancouver for an interview and sent questions regarding the economic assumptions made in their report and their response to the city’s rapid hotel project approval. They were not available in time for publication.