Vancouver Hotel Market Shows Growing Interest but Projects 'Slow to Get Off the Ground'
The Kalido Hospitality Group is preparing to open 19 loft-style suites on the top floor of a historic building in Vancouver's Gastown, known as 'Block House.' These suites feature kitchenettes or full kitchens, creating a mini-apartment feel. The brick-and-stone Commercial Block building, constructed in 1893, originally served as a trading hub for wholesale merchants and distribution businesses.
Historic Transformation and New Additions
Kalido managing partner Javier Cepeda expressed enthusiasm for the architectural beauty of the building, highlighting its brick and beams dating back to 1893. This project is one of the newest additions to Vancouver's hotels, coinciding with the city's preparation for an influx of thousands of soccer fans for the World Cup in mid-June.
However, while projects like Block House signal growing interest in developing more hotel rooms in Vancouver, experts note that the number of projects actually under construction remains low. Carrie Russell, senior managing partner at HVS, a hotel consulting and appraisal firm, has identified 42 sites in the city considered for hotel development.
Development Activity and Challenges
Russell stated that there hasn't been this much interest and activity in downtown Vancouver hotels since the 1990s, with many proposals, applications, and approvals underway. In addition to Kalido's Block House suites opening soon, other projects include the Arden Hotel on Burrard Street, an office-building conversion adding over 60 rooms set to open in May, and the dual-branded Element/Moxy Hotel and proposed Unbound Collection Hotel, which have broken ground downtown.
Despite this interest, Russell explained that hotels require more equity to develop than other real estate classes, with developers needing to put 30 to 40 percent equity into a project. This has led to projects being 'slow to get off the ground,' even as developers initially turned to hotels due to reduced demand for office and condo projects.
Market Performance and Future Outlook
Some projects, such as the Arts and Crafts Hotel on Seymour Street slated to add 73 rooms, may miss the World Cup opening, having been scheduled for 2026 but likely delayed. Nevertheless, the trend in hotel development is encouraging. According to commercial real estate adviser Avison Young, Vancouver was one of Canada's strongest-performing hotel markets in recent data, with an occupancy rate of 78.4 percent, an average daily rate of $284, and revenue-per-available-room of $223.
Toronto followed with an occupancy rate of 75.6 percent, an average daily rate of $260, and revenue-per-available-room of $197. This strong performance underscores the potential for growth, but the high equity requirements and construction delays continue to pose challenges for rapid development in Vancouver's hotel sector.
