Occupancy drops as Vancouver surpasses Canada in hotel room rates

Hotel occupancy in Vancouver fell in June, but prices continued to rise, making the metropolitan area the most expensive region in Canada to book a hotel room for the second month in a row.

Visitors to Metro Vancouver paid an average of $336.53 for a hotel room night in June, up more than 5.5 percent from the $318.92 paid in June, according to new data from CoStar, a global provider of real estate data, analytics and news.

This is the third-highest average nightly hotel room rate the region has ever seen and is just $0.25 shy of tying with September’s rate of $336.78, which was the second-highest average hotel room rate the region has ever seen. The highest average nightly hotel room rate ever in Metro Vancouver was last July, when it was $347.15 – a record high for any Canadian metropolis in any month.

High prices for hotel rooms can deter potential visitors.

Just like last year, Montreal was the second most expensive Canadian city to book a hotel room in June, beating out Toronto, which was in third place in both months.

Visitors to Montreal paid an average of $304.14 per hotel room night in June, up less than half a percent from the $302.71 they paid for room nights in June 2023. Those who chose to stay in Hogtown in June paid $286.44 per room night, down less than 0.7 percent from the $288.44 per hotel room night they paid in the same month a year ago.

The city with the biggest increase in hotel room rates in June was Edmonton, possibly due to dynamic pricing and interest in the National Hockey League’s Edmonton Oilers, who played four home games in two playoff series during the month. The Oilers then lost Game 7 of the Stanley Cup Finals to the Florida Panthers in a showdown in the Sunshine State.

Visitors to Edmonton still got a relative bargain, however, with room rates for the month averaging $150.68, which was the lowest of any major Canadian metropolitan area. However, it was 10.2 per cent more than the average price of $136.76 that Edmonton visitors paid for hotel room nights in June 2023.

When segmenting and comparing downtowns, Vancouver was the most expensive hotel in Canada for a night in a Toronto hotel room in June: $407.46 compared to $388.29. For Vancouver, that was a 4.7 percent increase compared to June 2023, while prices for hotel rooms in downtown Toronto were down 0.6 percent from $390.82 in June.

In good news for Vancouver’s tourism industry, there were more hotel rooms available in June than in June 2023. That was also true for the first half of 2024 compared to the same months in 2023, Laura Baxter, national director of hospitality analytics at CoStar, told BIV.

“In the first six months of this year, we saw a 1.5 per cent increase in supply in the Metro Vancouver market and a 1.4 per cent decrease in demand (in terms of total nights purchased). Overall, that equated to a decline in occupancy of just under three per cent,” she said.

However, in June, hotel room occupancy in Metro Vancouver fell much more sharply, dropping 5.4 percentage points to 83.6 percent, compared to 89 percent in June 2023.

The subregion within Metro Vancouver that took the biggest hit to regional hotel occupancy was an area that CoStar calls Vancouver Airport. That region, around Vancouver International Airport, includes the Fairmont Vancouver Airport hotel and many other hotels in Richmond.

The 388-room Radisson Blu Vancouver Airport hotel is among those hotels, and closed for renovations in June 2023. The Radisson Blu reopened in July of last year and is still open, meaning the subregion has significantly more hotel rooms this year than it did last year. Workers from Unite Here Local 40 also struck outside the Radisson Blu, likely deterring some potential guests from booking rooms at the large facility. As such, the Vancouver Airport hotel region saw a 12.4 percent drop in occupancy in June, compared to June 2023, according to CoStar.

Hotel occupancy in the Fraser Valley followed a similar trend to that in Vancouver Airport’s hotel submarket, declining 12.4 percentage points year-over-year in June. The 68-room Holiday Inn Express & Suites Chilliwack East opened this year, while it was not open last year, Baxter said.

Baxter said one of the reasons visitors booked fewer hotel nights in Metro Vancouver in June than in June 2023 is due to the fact that the massive demand for travel has subsided following the pandemic.

“That is slowly but surely starting to take shape now,” she said of the phenomenon some call “revenge trips.”

“I think it’s the other way around now,” Baxter said. “So many people have spent so much money on travel over the last few years that I think people, as they tighten their belts, are going to have to reprioritize and spend less on travel.”

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