Two new downtown hotels are planned for Nanaimo, where the tourism industry is charting rising numbers.
Millions in construction spending, new jobs and hotels to help boost Vancouver Island Conference Centre business spell good news to the city’s core, where Nanaimo has been trying to foster more vitality for years.
The first hotel to open will have a business advantage, said industry watchers.
A proposed six-storey, 90-unit hotel near the waterfront at 15 Front St. might have the edge.
Construction could start in April, with an early summer opening in 2018 if city approvals come through, said architect Thomas Moore of Victoria-based Moore Wilson Architects Inc.
The other potential hotel could be at 100 Gordon St., a city-owned lot designated for that use. Two previous development plans collapsed at the property, most recently in summer 2015.
Nanaimo is seeking expressions of interest for a buyer to develop the 0.4-acre site.
City hall wants to see a hotel on that property to help drive business at the nearby Vancouver Island Conference Centre, but is open to other uses.
Moore said a company consisting of a group of shareholders from China, who operate hotels overseas, is behind the Front Street plan. The entire project, including land costs, construction, furniture and fixtures would come in at about $12 million to $15 million, he said.
Construction would result in about 27,000 person-days of work. Once finished, up to 70 full-time jobs will be created for the hotel’s operation, Moore said.
The owners will likely run the still-to-be-named hotel themselves, Moore said.
Moore, who has done extensive work with new hotels, said the hotel business “is the best it has been in years.”
This project will be a “solid, three-star” hotel, he said.
“Typical startup to get a hotel property established is probably five years. In this market, it may be a little bit less because I think it is good timing to start a hotel. But it’s still very difficult to find the financing and to be able to build a hotel,” he said.
“We think getting it done and being the first out of the gate here would probably help with the success of the project.”
An application for a development permit and a tax exemption have been submitted to the city.
Amenities include a courtyard, rooftop patio and about 2,000 square feet of commercial space on the ground floor. “That could be a restaurant maybe operated by the hotel, or not. We are not certain right now.”
Frank Bourree, a hospitality industry consultant and principal of Chemistry Consulting in Victoria, produces monthly reports on the Victoria and Nanaimo tourism sector. Nanaimo’s November data showed a 65 per cent hotel occupancy level, the highest for the month in more than 20 years. That’s up from November 2015, when the average was 59 per cent. The average room rate climbed to $120 from $111 year-over-year.
July was another stellar month in Nanaimo with an average occupancy rate of 85.8 per cent, again the highest in two decades.
For the first 11 months of 2016, the average occupancy rate at Nanaimo hotels was 71 per cent, compared with 63 per cent over the same period in 2015, he said.
Those numbers are significant to investors.
Past financial metrics haven’t been there to spark development in another hotel. “That starts to tip when the occupancy rate starts around 70 per cent,” Bourree said.
Driving factors include increases in domestic and overseas visitors and the favourable exchange rate for U.S. visitors.
A good hotel with harbour views could command rates of $225 to $250 per night and more than $300 in the high season, Bourree said.
There’s room in the market for a higher-end hotel such as the Front Street project, Bourree said. “Nanaimo is experiencing some of the resurgence in the industry the rest of the province is seeing,” he said. “It is also kind of a gateway to Vancouver Island from the Lower Mainland.”
