Strong tourist, corporate and convention travel is fuelling a boom for hoteliers in Metro Vancouver.
“Vancouver had a really fantastic January-through-May period relative to last year,” said David Ferguson, senior associate with hotel industry data-collector PKF Consulting Inc.
“Revenue per available room night is up 16.5% over last year, which is almost an unheard of growth rate.”
Occupancy at Metro Vancouver hotels was 66.3% in the January- through-May period, compared with only 60.3% occupancy in those same months last year, according to PKF statistics.
Average room rates are up 6%, to $134.24.
Ferguson estimates that Metro Vancouver occupancy will continue to rise because the June- through-September period is traditionally strong for tourism and conventions.
From August 10 to 14, for example, about 16,000 delegates with the Special Interest Group on Graphics and Interactive Technologies, or SIGGRAPH, digital arts and graphics show are coming to town in what could be Vancouver's biggest convention.
A small jump in occupancy when the rate nears 70% can have a big effect on hotel profit, said Coast Hotels CEO Robert Pratt.
“The hotel business has quite a bit of overhead,” explained Pratt, whose company operates 40 hotels, mostly in B.C., Alberta and the U.S. “Once you get to the point where you're covering your overhead, the only increase in expenses is variable costs, which is quite low. So, once you get into the [high 60% occupancy range] it really favours the bottom line.”
A July Scotiabank report explained that strong occupancy at Metro Vancouver hotels stems partly from a mere 1% rise in additional supply in the past year.
The only new hotel in Vancouver during the past year is the 75-room Hotel Blu Vancouver, which opened June 1 at 177 Robson Street.
That hotel's general manager, Kanat Kantman, told BIV that occupancy at his hotel has been in the 70% range so far. That exceeds expectations, given that it is both a new hotel and not part of a large brand.
Pratt, meanwhile, has been watching from his office window to see the under-construction Trump Tower rise. That 63-storey tower is expected to have a 147-room Trump-branded hotel when it is complete in late 2016.
Any new supply creates a ripple effect, he said, so even though the Trump hotel will be high-end, it will still affect Pratt's mid-range hotel because it will eat up some demand in the market.
Other new Vancouver hotels have yet to break ground.
Paragon Gaming awaits a development permit to build two hotels: a 343-room JW Marriott hotel and a 205-room project, adjoining BC Place, with the Mariott Autograph Collection brand.
There are rumours that BC Investment Management Corp. (BCIMC) will build a hotel when it redevelops its Canada Post site on Georgia Street. BCIMC, which bought that prominent location for a rumoured $160 million last year, owns both the 42-hotel Delta Hotels and Resorts and SilverBirch Hotels and Resorts, which operates more than 20 hotels.
“Vancouver's hotel sector is pointed in the right direction but we're not where we were before the 2008 economic crisis,” said Tyne Hospitality Services Ltd. president and hotel real estate broker Angus Wilkinson.
He said recent hotel transactions have been rare because many sellers have unrealistic valuations on their properties.
Bosa Development principals Nat and Flora Bosa bought Victoria's iconic Empress hotel for an undisclosed amount from Ivanhoé Cambridge in June.
That followed RPB Holdings selling its Best Western Sands Hotel on Davie Street for $31 million to unnamed buyers, who own other property in that block and are said to be assembling all lots in that block for redevelopment, Wilkinson said.
He believes Howe Street's 157-room Inn at False Creek will sell this fall to a buyer who wants to convert the site to condos.
