Digital hotels could ease Vancouver’s hotel space shortage

Tech-based hotel chain eliminates concierge as guests order basic services via apps

Vancouver needs new forms of hotels to house visitors after more than a decade of declines in the number of traditional hotel rooms in the city, according to industry insiders.

Emerging accommodation business innovations include digital hotels that forgo concierge desks and require guests to book room cleanings through an app, hotels that have a floor or two in multiple mixed-use buildings and pod hotels that are aimed at budget travellers.

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Residents around the region are helping to house visitors by getting city licences to offer rooms for rent on short-term-rental platforms such as Airbnb and VRBO, but that additional accommodation is not enough to meet growing demand for hotel rooms in the city, according to Tourism Vancouver.

The city’s tourism marketer notes that Vancouver had a record 10.6 million overnight visits in 2018 — a fifth consecutive record year for those visits.

City of Vancouver statistics from December show that it has issued 3,161 short-term-rental licences. Tourism Vancouver CEO Ty Speer told Business in Vancouver that those hosts have helped lighten the burden of accommodating visitors but novel solutions are needed to counter the trend of fewer hotel rooms.

He even floated the idea that an entrepreneur could try to navigate city bureaucracy and political pushback by trying to open a barge hotel or some other floating hotel that would not require the purchase of city land.

City of Vancouver statistics show that the city in mid-2018 had 13,925 hotel rooms, or 1,105 fewer units than it did a decade ago. Those lost rooms include the 626 suites in the former Empire Landmark and Coast Plaza Stanley Park hotels, which both closed in recent years.

Speer added that hotel rooms have also been on the decline across Metro Vancouver.

Part of the frustration for aspiring hotel owners is city bureaucracy.

Regal Century Management Inc. general manager Eric Cheung told BIV that his company looked into buying a hotel to redevelop and expand, but various city processes required to do that would have meant years of spinning through red tape.

Sonder’s Vancouver general manager, Emma Cahalane, counted a mere 26 buildings citywide that had what she called “outright” zoning that would allow them to be converted to hotels relatively easily. They have owners that can convert their buildings through a change-of-use process without having to get a development permit and a rezoning or development permit board approval.

Her hotel chain has operations in 18 cities in North America and Europe and has partnered with Vancouver developer Coromandel Properties to lease five floors of the historic Arts and Crafts Building at 576 Seymour St. after renovations that she expects will be completed by next spring.

That 36-unit hotel will be based on the upper four floors of the six-storey building. Sonder’s regional head office and a lounge will be on the second floor.

Unlike traditional hotel chains, Sonder has no concierge, and it offers guests services, such as changed sheets, fresh towels and other amenities, through smartphone apps. Its centralized and stripped-down services provide efficiencies, said Cahalane.

The company is already seeking other sites in Vancouver to lease and has a business model that enables it to potentially lease as little as a single floor in a mixed-use building — something that it has done in cities such as Minneapolis.

While the concept of a hotel squeezed into a few floors of a mixed-use building in Vancouver is not new — L’Hermitage has operated for many years on the fifth, sixth and seventh floors of a building at the corner of Richards and Robson streets — a fully digital hotel has never operated in the city.

Sonder’s plan is to get the same licence as a traditional hotel and pay market rent in buildings that could include purpose-built rental housing. It may operate in city neighbourhoods where there is little traditional accommodation. That part of Sonder excites city councillors Pete Fry and Sarah Kirby-Yung.

Fry said that instead of the city having to give developers substantial tax incentives to make building rental housing viable, Sonder could provide an alternative because Sonder could agree to lease a floor or two of the building and commit to pay market rents for a decade, providing security to the developer.

Sonder-style digital hotels that take a floor or two in neighbourhoods across the city could also be an economic driver, said Kirby-Yung.

Statistics Canada data shows that tourists spend more than double what an average Vancouver resident spends per day, and that spending could help restaurants and stores. 

gkorstrom@biv.com

@GlenKorstrom

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