Vancouver is on course to face a critical hotel room shortage by the summer of 2026, as the city’s tourism and events sector outpaces the available accommodation supply.
With hotel occupancy rates already among the highest in North America, city officials and developers are now racing to increase capacity before the shortfall begins to impact revenue and event hosting.
Occupancy rates highlight growing demand
Hotels across Vancouver currently operate at around 80% occupancy throughout the year, rising to 95% in peak travel months. These figures significantly surpass those in other West Coast cities—San Francisco averages 62.8%, while Seattle reports 70.3%.
The pressure on available rooms is reflected in prices, with average nightly rates in downtown Vancouver reaching $422 during the summer, nearly double the national average.
The shortage stems from long-standing stagnation in hotel development. Between 2002 and 2022, the city lost more rooms than it added, with just 12 new hotels opening in two decades.
The pandemic accelerated this decline, as around 550 rooms were repurposed for supportive housing.
Royce Chwin, CEO of Destination Vancouver, said the city has not increased its hotel stock since 2002, warning that failure to act could see investors look to more favourable markets.
Economic impact projected to be substantial
A report by Destination Vancouver forecasts severe consequences if the shortage continues. By 2050, the region could forfeit up to $30.6 billion in economic output, with losses including $16.6 billion in GDP, 168,000 jobs, and $7.5 billion in tax revenue across all levels of government.
The situation has shifted market dynamics in favour of hotel construction. With reduced demand for office and residential projects, developers are turning to hospitality. Construction began in May 2025 on a 30-storey Marriott hotel at Seymour Street—the city’s first major hotel project in years. Scheduled to open in 2028, it will combine the Moxy and Element brands, offering 390 rooms.
Twenty-two other projects, representing 4,200 potential rooms, are currently in the development pipeline.
However, many are stalled by rising construction costs and limited financing, making progress uneven.
Policy changes aim to unlock hotel supply
To address the issue, Vancouver City Council approved a package of new policies in April 2025 aimed at accelerating hotel construction.
These include increased density allowances in the Central Business District—home to nearly half the city’s hotel rooms—along with looser regulations on mixed-use projects and office-to-hotel conversions.
Story ContinuesDevelopers now have a three-year window with reduced site size requirements, particularly targeting mid-sized downtown lots.
The city's Hotel Development Task Force has also outlined the types of accommodation most urgently needed: large hotels with event space, mid-range options near public transit, extended-stay facilities, affordable rooms for younger travellers, and smaller boutique resorts.
Despite these initiatives, no new hotels are expected to open before 2026. Industry observers forecast that supply will continue to fall short of demand, with Metro Vancouver likely to face ongoing accommodation pressure through to 2040.
Vancouver’s hotel capacity has become a key factor in its ability to remain competitive as a global travel and events destination.
While recent policy shifts and construction starts mark progress, stakeholders warn that the city must move quickly to prevent long-term economic repercussions linked to the persistent room shortage.
"Vancouver hotel shortage prompts urgent push for new developments" was originally created and published by Hotel Management Network, a GlobalData owned brand.
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