Vancouver’s number of hotel rooms will grow 35 percent between now and 2020. One hotel was completed in January and seven more are on the horizon. All said, 957 rooms will bolster the city’s current total of 2,738.
That’s good news for a lot of people. Local officials hope to see more travelers stay in the area. Nearby restaurants, cafes and bars might expect more tabs picked up by out-of-towners.
“I think it’s big news for the community as a whole,” said Jacob Schmidt, a spokesman for local tourism organization Visit Vancouver USA. “You’ve got competition between old properties and new properties. Consumers can have more choices and more selection. Obviously, to some extent, new supply can generate some of the demand, but not always.”
That is the question. Between the proposed Hotel Indigo, The AC by Marriott, and a hotel addition to the Ilani Casino Resort, which Visit Vancouver includes in its projections, there is little doubt hotel developers are planning big investments. But will there be enough demand?
Occupancy rates
Four hotels have been approved to be built in the next four years, according to Visit Vancouver USA. Three more are either going through the permitting process or recently announced, such as the 84-acre development The Columbia Palisades. Among those hotels are familiar brands Holiday Inn Express and Residence Inn by Marriott, and a relative newcomer in Tru by Hilton, whose only other location is in Oklahoma.
Developers say the rise is part of the ebb and flow of real estate and the economy; and this boom just offsets the recent recession that put many hotel projects in stasis.
“The lenders did not really lend a lot, which really kept additional supply down,” said Rick Takach, president and CEO of Vesta Hospitality, who will build the 150-room The AC by Marriott on the Vancouver Waterfront. “There’s a lot of lending capacity. People are out borrowing and building new hotels, that’s happening all over the country. … It’s been a lender-friendly environment for new developers for a few years now.”
Like hotel construction, tourism is usually seen as a canary in the economic coal mine. When money is tight, the travel budget shrinks. That much was clear when occupancy rates in Vancouver hit the floor with 43.6 percent in 2009.
It has shot back up in recent years. October 2016 boasted a 73.9 percent room occupancy rate — in Washington, only King County’s rate was greater, Visit Vancouver USA said. It dropped half a percent from October 2015.
“Occupancy is big just because the more people stay here, the more visitation we have and the more people we have more people eating and shopping here,” Schmidt said.
But with the bonanza occurring here, some wonder whether occupancy rates are going to take a hit. Even if Clark County sees a reliable stream of visitors, hotels fighting for those dollars might make for a textbook economics lessons: rates dive and overhead costs, such as labor costs, are trimmed.
“It’s going to be a huge impact for everybody,” said Takach, whose company also owns the Homewood Suites by Hilton at 701 S.E. Columbia Shores Blvd. “A lot of people say that will drive more business into the market; it may. I have a tendency to think the other way. You never know.”
Complicating the matter may be the surging hotel scene in the rest of the metro area. Portland will reportedly add 3,000 new rooms, amounting to 40 percent growth, between 2016 and 2020. Hillsboro, Ore., is bursting with hotels as well. Vancouver’s ability to pick up leftover travelers may take a hit.
“We’re seeing it already,” said Mike McLeod, general manager of the Hilton Vancouver Washington. In the past, the hotel has rented its 30,000-square-foot convention space to businesses who found Portland too expensive. Portland’s own spike in hotel inventory has lowered rates and made it more affordable.
“Because of the prices they were getting quoted or the availability, they would look outside of Portland,” McLeod said. “We benefitted from that. We’re starting to see that happen a little less in the last 24 months because hotels over there are realizing they have more inventory coming. It’s kind of a ripple effect.”
Schmidt points to other measurements of Vancouver’s potential with travelers. Visitor spending in Clark County has grown steadily in the past five years, according to tourism impact studies conducted by the consulting firm Dean Runyan Associates and commissioned by the Washington Tourism Alliance. In that same window, hotel rates in Vancouver rose from an average $93 per night to $110. Vancouver hotels may benefit in this respect, since this market’s average daily rate remains a bit lower than Portland or Hillsboro.
Boutique or business
Some developers argue the new hotels won’t cannibalize each others’ business. Similar to the way General Motors targets specific consumers with different brands — Cadillac or Buick — hotel chains hope to appeal to different travelers.
Dean Kirkland of Kirkland Development will build Hotel Indigo on the waterfront. Hotel Indigo is a brand catering to the hip, upscale travelers to the Portland-metro area. The $60 million project will include a six-story hotel and 10 stories of condominiums.
“That will be our most ambitious (project),” he said. “That project will be like the Hyatt of Vancouver. It will be very, very nice. It’s on property that faces south waterfront. That venue, with developers putting together projects on the south waterfront, will change the way people view Vancouver.”
He said it won’t compete with his other two hotel projects: the recently completed Candlewood Suites and the in-progress Holiday Inn Express, both on Southeast 192nd Avenue. Both of those inns are aimed at people traveling for business.
In fact, the businesses headquartered along the Vancouver-Camas border will likely provide those hotels’ foundation, he said. Like an individual’s tourism budget, companies are more inclined to send employees out on business when the economy is strong.
“We looked at WaferTech, we looked at PeaceHealth, we looked at Integra, at Fisher Investments, at the Banfield Pet Hospital, Clark College — all of those were factors of a study that showed strength in hospitality (there),” Kirkland said.
There is even a difference between Candlewood Suites and the Holiday Inn Express. The former is an extended-stay hotel, with amenities such as a small kitchen for business travelers expecting to stay for days, even weeks. Rooms at the Holiday Inn Express, which will serve breakfast, have only refrigerators, and are aimed at travelers who are only staying a few nights.
But business travel could become more popular along the waterfront. The Hilton Vancouver Washington usually books its convention center years in advance. Those bookings dipped when the Red Lion Inn at The Quay closed in fall 2015 and businesses worried about room scarcity.
Waterfront hotels could alleviate that, McLeod said, and grow.
“My understanding is there were a number of groups that quit booking Vancouver even before the Red Lion closed because of the rumors of it closing for so long. They were leery of that,” he said. “There are some that are starting to book again for the future, with their fingers crossed that something will be open.”
