It’s a common strategy, according to General Manager Mike McLeod, for a hotel like the Hilton Vancouver Washington to look more fervently to book conventions and large events when competition is on the rise. The hope is to fill rooms with event attendees.
That strategy may become more important in the coming years if three more hotels rise, seemingly shoulder-to-shoulder, in Vancouver’s downtown and waterfront areas.
“Typically what we see in bigger hotels is a focus on putting more groups on the books,” he said. “Because obviously that will be something in our hand that’s contracted, and that’s typically what hotels do to prepare” for more competition.
If developers have their way, The AC by Marriott, Hotel Indigo and Hyatt Place will start construction soon, bringing 400 new hotel rooms. The hotels would all be clustered within walking distance.
While the hotel projects still have to get through the permitting process, they already have cleared major hurdles in development. But could four hotels profitably coexist? It depends on whom you ask.
Conventional wisdom
When asked whether they could work together, representatives from these respective hotels gave answers that ran the gamut of indifferent to concerned to optimistic.
For the Hilton Vancouver Washington, which has been the only full-service hotel downtown after the closure of the 160-room Red Lion Hotel at the Quay two years ago, bringing another hotel online could bolster the area’s inventory and make the whole area more marketable for bigger events, McLeod said. But there could be a tipping point.
“Another hotel would be OK,” he said. “Three hotels coming online all at once, I’m not sure we have quite enough occupancy to support that yet. It’s hard to say down the road, but the waterfront should be another demand generator for us.”
It’s a different story for hotel developers at the waterfront. Two separate redevelopment projects pursued by the Port of Vancouver and Columbia Waterfront LLC include large hotels, the developers of which have diametrically opposed outlooks. A third would be built at the foot of the city.
“If all three of these get built, it will substantially impact the downtown market and somebody will get hurt,” said Rick Takach, whose company, Vesta Hospitality, is the driving force behind The AC by Marriott. “Somebody won’t stay in business.”
The AC by Marriott is a six-story, 160-room hotel proposed to be built at Terminal 1, a stretch of the waterfront to be redeveloped by the Port of Vancouver.
Vesta is known locally for owning and operating Homewood Suites along Columbia Shores Boulevard near Beaches and McMenamins, as well as two other hotels near Portland International Airport. Since its founding in 1996, the company has built, bought and sold nearly 50 hotels.
Takach bases his prediction on the hotel industry’s vulnerability to economic cycles. A strong economy will buoy tourism in a place, which then adds hotels to meet growing demand. Inevitably, though, an economic downturn arrives and people cut back on travel.
“Hotels are doing well, but it’s cyclical. We’re due for a correction,” he said. “Travel is good because people want to travel and they have to, but if you have a major event (like a downturn), you have to ride out those periods of time.”
Strong demand
The demand has been there recently. According to local tourism agency Visit Vancouver USA, hotel room occupancy rates in Clark County hit bottom in 2009 with 43.6 percent, but have risen to 73.9 percent in October.
Likewise, local visitors spent $472.5 million in 2016, including $17.6 million on lodging taxes, the tourism agency said. This is a 4.7 percent increase from the year before.
That’s the sort of demand that has Dean Kirkland, the man behind the Hotel Indigo, feeling optimistic.
“I absolutely think it’s time, and I think there’s room,” said Kirkland, head of Kirkland Development, which also operates the new Holiday Inn Express Suites and Candlewood Suites hotels on Southeast 192nd Avenue.
Hotel Indigo would be built at The Waterfront Vancouver, a 30-acre swath of land just west of Terminal 1. The hotel couples with Kirkland Tower to provide 120 hotel rooms, more than 30 condominiums and 20,000 square feet of restaurant and retail space.
“I think that whole experience is going to set us apart,” Kirkland said. “That experience will bring people back over and over again.”
Similarly, the developers behind Hyatt Place, a third hotel proposed one block southeast of the Hilton, are optimistic. Alkesh Patel’s company Evergreen Hospitality would develop the four-story, 120-room hotel with around 5,000 square feet of retail space. Patel said he believes all three hotels will be built and thrive off the renewed interest in the waterfront.
“Absolutely. You’ve got $1 billion development happening on the waterfront and new corporate companies moving in, new offices moving in. Vancouver doesn’t have enough supply, you know?” Patel said.
Waiting game
For now, none of these new hotels have started construction. None have cleared the permitting process, in fact, but developers are all assured their respective projects will become a reality.
The AC by Marriott was the first to be announced, but it has had to wait for the Port of Vancouver to get its redevelopment master plan approved by the Vancouver City Council. The council approved it June 19, and Takach said he hopes to get a deal signed in July.
“I would be really, really surprised if it doesn’t get done very, very soon,” he said.
Hotel Indigo is all but approved for its location at The Waterfront Vancouver, the 21-block mixed-use development that broke ground last year. Kirkland said the hotel is “knee deep” in funding negotiations and he hopes to start construction sometime this winter “depending on how the process comes together.”
And Hyatt Place, according to Patel, is just waiting for approval from the city of Vancouver. It filed for permits in December and has secured some financing, he said.
“If they issue the permit today, we’ll start building tomorrow,” he said. “We are at their mercy right now. Hopefully in the next six months we can get our permits. It looks like with the current schedule, the groundbreaking will not happen until early next year.”
There is a question of whether lenders who would finance these projects are as optimistic as the developers, said Tom Morone, managing director of CHMWarnick. The firm is contracted with the city of Vancouver to help manage its asset, the Hilton, and he said lenders don’t have a habit of taking risks with their investments.
“The timing on any of these hotels remains somewhat suspect, right?” he said. “We’re not really sure when any of them are coming online. They’ve been announced, but until they’re financed, we don’t know if there’s one, two or three hotels.”
