Province may have to look beyond hotels and motels for new housing

The province is on the hunt for a capital region hotel to buy or lease to provide supportive homes for homeless campers by the end of March, but there’s little actively being marketed right now.

That’s not to say owners won’t sell as vacancies rise and revenue drops amid the pandemic.

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But Ross Marshall, senior vice-president of the Investment Properties Group at CBRE Ltd in Victoria, suggests the province might want to expand its options by taking unused office space and converting it to permanent housing.

The long-term view, shared by the hotel industry, is that Victoria hotels will weather the storm, he said.

“I don’t think it is a market that has been identified as one where brands and/or hotel operators are looking to make Victoria the first place where they consider the disposition of their real estate,” Marshall said.

“It’s a strong market and will continue to be. This COVID thing is a blip. We are all hopeful that it will go away sooner rather than later.”

Convinced the industry will bounce back, some hotels are using the slow period to carry out renovations.

On Friday, the 64-room Magnolia Hotel and Spa on Courtney Street announced it will upgrade some of its bathrooms by March.

“Although the past year has been more challenging than any of us could imagine, we are committed to forging forward positively,” said Bill Lewis, the hotel’s general manager.

Victoria’s landmark Fairmont Empress Hotel is also anticipating a market rebound.

It’s closed until early April while major mechanical improvements are completed.

Marshall said properties open to changing hands are more likely to be family operations needing improvements, rather than the larger brands or chains.

Apartment buildings in the region are typically full or close to full and so would not be suitable for the province’s needs, he said.

An alternative could be well-located office buildings with vacancies that could be repurposed for long-term housing, Marshall said.

“I think they should consider options above and beyond the hotel industry.”

Housing Minister and Attorney General David Eby said this week the province is looking to move people from outdoors to indoors as soon as possible.

The Burnside-Gorge area, where several social housing facilities are based, is not being considered for new housing, Eby said.

Frank Bourree, a business consultant specializing in tourism, noted that in the past 10 to 12 years, about 20 hotels in the area have shifted to social housing or condominiums.

“The number of hotel rooms in this community has shrunk dramatically.”

That could be a problem when the tourism sector recovers, said Bourree, noting many Airbnbs have shut down as well, further cutting into room inventory.

Any hotel purchased by the province would likely be a budget property due for a reno, he said.

Bourree noted that many of the region’s hotels are in highly populated, desirable areas, so the addition of a supportive housing project could result in conflicts with neighbours.

Michael Miller, executive vice-president at Colliers International’s Victoria office, said the province’s ability to purchase the 75-room Paul’s Motor Inn on Douglas Street and the Comfort Inn and Suites on Blanshard Street last year indicates hotel occupancy is “going to be down for the foreseeable future.”

Owners may not really want to sell, but might see this as a good time to do so, he said.

“[Owners] may just see an opportunity to take advantage of somebody who is a very motivated purchaser to maximize their sale price.”

Colliers in Victoria does not have any local hotels or motels listed.

— With a file from Katie DeRosa

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