Vancouver is facing a major hotel shortage. At the current rate, demand will exceed supply by the summer of 2026 – unless the city acts fast.
Works have just begun on Vancouver’s first major hotel project in years – a 30-storey Marriott tower on Seymour Street that broke ground in May 2025. Vancouver – Canada’s most expensive hotel market – is struggling with a shortage so severe it threatens the city’s ability to host major events, and could ultimately cost the provincial economy billions.
Vancouver has incredibly high occupancy rates
Currently, hotels operate at 80% occupancy year-round, jumping to 95% during peak seasons – well above rates in comparable cities. For reference, the occupancy rate for San Francisco is 62.8% and for Seattle it’s 70.3%. The shortage forces average downtown rates to $422 per night in peak summer months, nearly double the Canadian average.
The crisis has been brewing for decades. Between 2002 and 2022, Vancouver actually lost hotel rooms due to closures and conversions. Only 12 new hotels opened in 20 years. The pandemic worsened the situation when 550 rooms were converted to supportive housing.
Metropolitan Hotel Vancouver
“Vancouver has the same number of hotel rooms as in 2002”
“Vancouver has the same number of hotel rooms as we did in 2002,” says Royce Chwin, CEO of Destination Vancouver. “Hotel development needs to be seen as a city-building tool. There is an opening to take swift action, otherwise capital will move wherever conditions are more favourable.”
The shortage carries steep economic consequences. Without action, the region risks losing $30.6bn in economic output, $16.6bn in GDP, 168,000 jobs and $7.5bn in tax revenue across all government levels by 2050.
Market conditions now favour hotel development. Declining demand for office and residential projects creates opportunities. The new Moxy and Element hotel on Seymour Street will feature 390 rooms when it opens in 2028, marking a significant step forward. Twenty-two projects representing 4,200 rooms sit in the development pipeline, though many face financing challenges.
Vancouver’s Hotel Development Task Force identified five hotel types the city needs most: large luxury hotels with event spaces, mid-market brands near transit, extended-stay properties for business travellers, budget options for young visitors, and boutique urban resorts.
Hotel Vancouver lobby
New policies launched to boost development
In April 2025, Vancouver City Council approved new policies to accelerate hotel development. Changes include allowing additional density in downtown areas, relaxing restrictions on mixed hotel-residential projects, and encouraging office-to-hotel conversions.
The measures target Vancouver’s Central Business District, which houses 43% of existing hotel rooms. The policy changes offer a three-year window with reduced site requirements to incentivise development on mid-sized lots.
Despite the pipeline and policy changes, immediate relief remains unlikely. No new hotels will open before 2026. Demand is expected to exceed supply during summer 2026, with year-round shortages predicted across Metro Vancouver by 2040.
The race is on to build the infrastructure Vancouver needs to remain competitive as a global destination. With construction finally beginning on major projects and supportive policies in place, the city hopes to transform its hotel landscape before the shortage leads to major losses.
