Downtown Nanaimo to get 172-room Marriott hotel

The Utah-based developer of a hotel on Gordon Street in downtown Nanaimo hopes to begin construction before the end of the year.

Once PEG Development receives approval for its building permit, it will start the expected 20-month building process on the nine-storey Courtyard by Marriott hotel, Ali Monsen said.

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The City of Nanaimo expects to issue the building permit by the end of October.

PEG submitted a revised building permit this month, increasing the number of hotel rooms to 172 from 155.

The higher number is consistent with the previously approved development permit.

The first building permit was issued in April.

Originally, the developer had planned a six-storey, 112-unit hotel.

A hotel at 100 Gordon St. has been a dream for more than 15 years in Nanaimo, where it was once planned to help boost business at the Vancouver Island Conference Centre, which opened in 2008. The goal had been to see the hotel open on the adjacent property at the same time.

But deals fell apart until Nanaimo and PEG finally reached an agreement.

In 2015, Nanaimo council rejected a developer’s plea for a time extension to build a 21-storey, 240-unit hotel on the site for $50 million.

Nanaimo then put out a request for proposals for the city-owned property and, in June 2017, PEG was chosen .

“After assessing our design, PEG saw an opportunity to increase building efficiency by stretching the structure by a few feet in each corridor, as well as reconfiguring some room layouts,” Monsen said.

That meant the number of rooms could be increased.

“We reassessed the market and determined that the additional rooms would be a valuable addition. It was clear there is ample demand to justify the cost of building additional rooms.”

This hotel is seen as critical in the revitalization of downtown Nanaimo as the city strives to increase the population and vitality of the core area by attracting more business. Hundreds of condominium residences are being built.

“I think it will be tremendous for the conference centre and for Nanaimo as well,” Chemistry Consulting Tourism consultant Frank Bourree said.

A new hotel will help offset the loss of 100 rooms at the Howard Johnson Harbourside Hotel when it closes at the end of October.

Occupancy rates have been “very strong” in Nanaimo in the past two years and hotel rooms of this calibre are needed, Bourree said.

“I think the conditions are right now for an increase in supply, for sure,” he said. “Marriott is a very good brand. It will really attract a lot of attention mid-Island.”

The Vancouver Island Conference Centre has been underperforming, he said. Adding more rooms in a hotel under the Marriott brand “will really make a difference,” Bourree said.

Nanaimo Mayor Bill McKay expressed pleasure that PEG is building additional hotel rooms, saying the commitment shows that Nanaimo is becoming a popular place to invest. It will allow the conference centre to stage larger events.

This summer, Nanaimo hotels were unable to accommodate all 1,300 delegates for a conference, McKay said, and some were forced to book rooms in other communities, such as Parksville and Duncan, and then travel to Nanaimo for the event.

The new hotel’s total value has been estimated at $34 million. The value of the construction work in the building permit will be $22 million, city figures indicate.

Under the purchase agreement for the land, Nanaimo has the option to buy back the property if PEG has not spent $1 million on physical improvements to the site by December 2019.

cjwilson@timescolonist.com

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