Harbour Towers Hotel & Suites in James Bay has applied for rezoning.

Harbour Towers Hotel & Suites in James Bay has applied for rezoning.

More hotel rooms disappearing in Victoria

The city’s tourism officials aren’t concerned, noting there is still plenty of capacity.

If Harbour Towers Hotel & Suites gets the go ahead to convert nearly 200 rooms into residential properties, Victoria will have lost around 1,000 hotel rooms during the last four years.

But the city’s tourism officials aren’t concerned, noting there is still plenty of capacity (approximately 5,700 rooms) and the average daily rate remains competitive when compared to other major destinations in Canada and around the globe.

“The reality is that accommodation in Victoria has been deeply discounted and under valued for several years,” said Tourism Victoria’s president and CEO Paul Nursey, noting the city is reaching a point of equilibrium and supply will be tight during the summer months if the demand keeps up.

“Greater Victoria, British Columbia and Canada are seeing tremendous demand for tourism. This is expected to be sustained for several years.”

According to Nursey, it’s natural for older hotels to convert to other uses since it takes a lot of money to maintain a certain level of amenities. Victoria used to have low and unhealthy rates that have since recovered. The average daily rate now sits at around $138.92.

The Harbour Towers hotel, said Nursey, provides accommodation that caters specifically to sport tourism groups, touring groups, student groups and families travelling on a budget, which is important to the mix of available hotel rooms the city offers.

Calls to Harbour Towers (located in James Bay) on their future plans were not returned, but nothing is anticipated to happen before the summer since the matter is still in the rezoning process.

Randy Holt, a commercial real estate agent, has been keeping an eye on the city’s hotel industry, noting the Queen Victoria, Travellers Inn and Dominion Hotel have been in various stages of conversion into residential housing since 2012.

Holt agrees it’s still a healthy functioning market, with occupancy shooting up more than 70 per cent. The business case for a new supply has also improved significantly, along with the ability for hoteliers to reinvest in their properties. Conversions have also helped relieve some of the pressures on the need for more affordable housing in a city struggling to keep up with demand.

“These conversions have typically happened with facilities that for one reason or another were in need of renewal. There was a crying need for more affordable housing and it made lots of sense, rather than convert these older facilities and do a huge investment upgrade,” said Holt, noting several players have looked at the hotel market, but he expects it will remain tight for the next couple of years.

“Certainly I anticipate that new supply will come because conditions warrant it.”

In the meantime, Nursey would like to see policies in place that will encourage the development of more hotels in Victoria’s downtown core — when the economic conditions warrant.

He’d also like to see provincial and municipal governments regulate and tax short-term vacation rentals, which he said would help level the playing field and make building hotels more attractive to developers considering investing in Victoria.