The new eight-storey hotel with 167 rooms arrives amid increasing demand from leisure and business travellers.
Officials broke ground Wednesday on the first new hotel building in nearly two decades in Victoria.
The 167 rooms in the eight-storey Hyatt-branded hotel, expected to open in 2028 at Broad and Johnson streets, comes amid increasing demand from leisure travellers and conference delegates.
“A new hotel is very much needed,” said Paul Nursey, chief executive of Destination Greater Victoria, which markets tourism and conferences in the region.
He said visitor numbers are up just over 4% this year, and the number of major business conferences has increased, to about 30 a year. Both the tourism and conference sectors have continued to climb at a steady rate since the pandemic, even as the number of hotels has dwindled in the area.
Nursey said the new hotel will help the tourism industry remain competitive when bidding to bring large events to the region.
The new hotel by Chard Developments and Knightstone Hotel Group will cover major portions of Broad and Johnson streets downtown on the historic Duck’s Building property, preserving the 1890s-era building’s facade and back wall.
It will feature 5,000 square feet on the ground floor for a cafe and restaurant with a combined 215 seats, and 2,000 square feet of meeting space.
Jeff Bray, chief executive of the Downtown Victoria Business Association, said there is a need for new hotel rooms and called the new build an important economic driver for downtown. He said it will bring “new life” to downtown and Broad Street in particular.
“It’s a new business on the street that will have daytime activity, evening activity with a restaurant and will add a new vibrancy overall,” said Bray. “Imagine this street after 5 p.m. when this is open. That’s what really excites me. Lights on, people coming and going, food and beverages. We need that here.”
The last major hotel built in Victoria was the Parkside Hotel on Humboldt Street, which opened in 2009. Since then, the region has lost a significant number of hotel rooms after several properties were purchased by the province and converted to supportive-housing units during the pandemic.
Nursey said adding to the tourism-accommodation crunch are restrictions on short-term rentals. The City of Victoria only allows short-term rentals for up to two bedrooms in a principal residence, or the entire principal residence when the owner is away. The city previously made exceptions for some non-principal-residence short-term rentals, but that ended when new provincial rules restricting short-term rentals came into effect last year.
According to Chemistry Consulting, which tracks hotel occupancy in the region, there were 3,937 hotel and motel rooms in the capital region as of the end of May. Average occupancy for the first five months of the year was at 73%, a 5% increase over the same period a year ago.
A new 130-room hotel is also expected to open at Victoria International Airport this year.
Nursey said increasing visitor numbers have caught the attention of developers — he’s aware of 11 hotel development proposals being considered in the capital region.
Last week, Roundhouse developer Ken Mariash said one of the towers in the Vic West development will likely be a hotel.
The hotel-development pipeline is “quite robust right now,” Nursey said. “On the investment side, no one knew how quickly we were going to rebound from COVID. It was kind of a black swan event, and we’ve come back stronger than anyone imagined.”
Destination Greater Victoria has a 10-year plan calling for 2,000 new hotel rooms in the next 10 years.
Those projects will need to be staggered so as not to flood the market, said Nursey. “If we get one hotel a year for the next few years, that’s a good, healthy pace of development for our market.”
Nursey said having one major conference every week, and filling the hotels during the summer and holiday periods, creates a “business foundation” for developers and hoteliers.
“If hotel owners and operators know the next few years are going to be solid, it de-risks hotel development.”
He added that developers are looking “a bit more seriously” at the hotel sector as the condo market softens.
The hotel is expected to generate an annual economic impact of $14.9 million, attracting about 94,000 visitors a year.
The developers say guest spending is projected to contribute an extra $6.6 million annually.
Average daily spending for a conference delegate is estimated to be $400 a day, while a leisure traveller’s is $185.
About 60% of visitors to the area so far this year are Canadian, while 20 to 25% are from the U.S. and the rest come from 11 countries, from Europe to Asia and South America, Nursey said.
The hotel’s construction is expected to generate 462 full-time jobs, with an additional 196 direct and indirect jobs created after completion.
Victoria Mayor Marianne Alto said the new hotel marks a significant milestone for downtown Victoria, revitalizing a historic building and strengthening the city’s position as a “premier destination.”
“It’s a huge addition to the visitor economy,” said Alto. “But they’re not just building a hotel. They’re building something that very much reflects the history of the area.”
Alto said she expects more hotel development, noting the visitor industry is “booming.”
She said having Hyatt Hotels as a partner “speaks volumes to their confidence in the hotel and visitor sector, but also in the city.”
Council allowed the developers two additional storeys in April.
Chard Developments CEO Byron Chard noted it’s the company’s 14th building project in downtown Victoria over the past two decades. He said the plans for the hotel started with rough drawings on the back of an envelope prior to COVID, with Scott Richer of Hyatt Hotels.
The 131-year-old buildings previously on the site were at one point owned by the late Michael Williams, the businessman behind Swans Brew Pub and a protector of Victoria’s Old Town.
Williams, who died in 2000, bequeathed the buildings and others downtown to the University of Victoria. The university’s property company still owns the land and collects leasing fees, which support UVic’s academic mission.
