Kelowna hotel sector reaping rewards from city’s robust economy


Spanish flair

Thompson Okanagan hotel prospects exuded a warm glow during an overview of markets across Canada at the Western Canadian Lodging Conference in Vancouver last November.

“There hasn’t been a lot of new supply growth in the region, so after more than 10 years of sub-60 occupancy, we’re finally seeing this area breaking through the 60% mark,” said Carrie Russell, managing director of valuation and advisory firm HVS Canada.

Rising domestic traffic drawn by the region’s wineries and recreational offerings, not to mention a robust economy, meant that revenue per available room (RevPAR) rose almost 10% in 2016 and 7.5% in 2017. Russell expects another 5% boost in 2018 as room counts remain virtually unchanged. While a new 120-room Holiday Inn Express opened on Highway 97 north of downtown Kelowna last year, little else will be completed before 2019.

Several projects are in the planning stages, however, such as Westcorp Property Management Inc.’s planned replacement for the Willow Inn, which closed in 2007 and was demolished in 2009. Westcorp bought the property in 2003 and is now seeking Kelowna’s permission to build a 32-storey tower soaring 425 feet above Okanagan Lake.

The lead designer is Barcelona-based GCA Architects, which is working with IBI Group to prepare plans for a 172-room hotel with 49 residences and a restaurant sandwiched between the two sections.

City staff say there’s no timeline for approval, but a visit to Kelowna last week found the idea to be a matter of chatter among locals.

The project would take 30 months to build, Westcorp says, and follow in the footsteps of such Vancouver landmarks as the Fairmont Pacific Rim, Hotel Georgia and Shangri-La with their combination of hospitality and private residences.


Driving around Kelowna last week, the ongoing pace of development from the University of British Columbia campus south to Sunset Drive on the lakeshore was remarkable. Job growth in the city is running approximately 8%, driving demand for housing from working-age people as well as those with an eye on retirement.

Canada Mortgage and Housing Corp. (CMHC) reports 3,577 housing starts in Kelowna and area last year, a 63% increase from the previous year. Multifamily starts drove the increase, rising 88%.

Justin O’Connor, president of the Central Okanagan chapter of the Canadian Home Builders’ Association, said the construction isn’t speculative.

Whether it’s the expansive 2,800-home Wilden development Blenk Development Corp. is overseeing on 2,000 acres northwest of downtown or projects such as 1151 Sunset Drive – a 127-unit tower revived in 2016 after eight years on hold – development is transforming the city as companies and people migrate from more expensive locations.

O’Connor says that, according to local real estate board reports, 20% of buyers in the region are from the Lower Mainland. Buyers from the Prairies represent less than 10%. The latest provincial data indicates foreign buyers participated in just 1.7% of transactions in Kelowna last year.

“There’s a lot of reasons people want to be here,” O’Connor said. “Population growth is a pretty big point.”

Yet redevelopment has also brought land assemblies of the sort common along Vancouver arterials. Single-family properties north of the downtown core toward the industrial zone dominated by the Andrew Peller Ltd., BC Tree Fruits and Sun-Rype Products Ltd. plants are fenced off and bear application notices.

Passing an assembly on Clement Avenue where Regina-based Anagram Properties Inc. plans a 58-unit rental project, the driver of the airport shuttle said pushback against the demolition of older single-family properties is non-existent because locals recognize that people need housing.

Kelowna posted a 0.2% vacancy rate in the latest CMHC rental market survey and, with an estimated 1,900 homeless people, its per capita homelessness rate exceeds Vancouver’s. •