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Hotel renos surge amid boom in tourism; more hotels mulled

July 4 cannot come quickly enough for Reid James. The general manager of the Hotel Grand Pacific has the day circled on his calendar as that’s when he gets 116 of his hotel’s 304 rooms back in service after a massive renovation.
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Construction workers peel away some of the wrap from the Hotel Grand Pacific as the major renovation in Victoria's Inner Harbour project nears completion.

July 4 cannot come quickly enough for Reid James.

The general manager of the Hotel Grand Pacific has the day circled on his calendar as that’s when he gets 116 of his hotel’s 304 rooms back in service after a massive renovation.

“Timing is everything,” James said, noting that while the tourism industry has boomed, the hotel has been without as many as 200 rooms at a time since last fall when it started the external renovation on its eastern tower. “For sure, we could have sold those extra rooms that were out of order in the east tower many times over.”

The exterior work, which started in September, included work on the walls, windows and patio doors on the tower that was built in 1989. James would not put a dollar figure on it. That work is to be completed by June 24.

At the same time, there has been a $5-million interior renovation with a complete upgrade of the rooms in the tower. Right now they are doing all of the bedrooms, and expect to do the bathrooms in the fall.

The interior upgrade of the other 188 rooms in the hotel is scheduled for the winter of 2017.

Getting those rooms back July 4 should make a big difference both for the Hotel Grand Pacific and the city, which has been dealing with a room shortage this year.

The city was without as many as 500 rooms this year, according to hospitality industry consultant Frank Bourree. The shortages stem from the Fairmont Empress undergoing a $30-million renovation that took 245 rooms out of service last fall until this month, the Queen Victoria being converted to rental apartments and the loss over the last several years of smaller hotels on the Gorge and just outside the downtown core.

The result was a jump in average hotel occupancy levels to 80.3 per cent in April, and 67.18 per cent through the first four months of the year, while revenue per available room jumped to $84.95, an increase of $15.95 from last year.

“I think with construction at the Fairmont and ourselves there has been some displacement, which I think our competition has been enjoying,” said James, with a laugh. “Our timing was not ideal.”

James said they will make up for it as they will have virtually a new hotel as of next month and they are looking at strong reservation numbers between July and October.

What has become clear, with another strong start to the tourism season, is the city could use new hotels.

Bourree, who has been doing hotel feasibility studies for 25 years, said the time is right.

“We are experiencing a real capacity issue and in July and August it will get quite severe,” he said.

And while the city has seen a “dry spell” of hotel construction in the last 15 years, that could change.

“In the last month, we have been approached by four qualified developers who want to build limited-service hotels,” he said.

Limited service would include places such as Holiday Inn Express hotels that might not offer conference facilities or full-service food and beverage.

“There’s a real market for that here,” Bourree said. “Generally, the rule of thumb in a community is when you start exceeding 70 per cent annual occupancy, that is the tipping point for new hotel development, and last year was the first year we did that.”

Bourree would not say who the developers are, but said all four have acquired land. There is one in Duncan, two in the West Shore and one downtown.

He said there is no real market for another luxury hotel. “That’s a whole other level of investment and risk,” he said, noting it also means waiting 20-plus years to get your investment back.

aduffy@timescolonist.com