In the midst of what is shaping up to be a record-breaking tourism year, Destination Greater Victoria has a plan to address one of the industry’s shortcomings — a shortage of hotel rooms in the region.
The group is aiming to establish a hotel development task force that will work with the region’s municipalities to speed up the hotel development process, said Paul Nursey, chief executive of the destination marketing organization.
“We’re kicking that off to see how we can make approvals and other things more efficient, because hotels are a bit of a riskier asset class for developers,” Nursey said.
“With the condo market not performing right now, we’re seeing very high interest in hotel development, and we need to make sure that our municipalities are able to process these applications efficiently, because it’s not very often that we have this degree of interest in hotel development.”
Destination Greater Victoria has a goal of 2,000 new hotel rooms in the next 10 years.
The proposed task force, which will mirror the work of task forces in Vancouver and Alberta, would offer both industry expertise and best practices to economic development officers and city planning departments.
Nursey said he has fielded a lot of calls from developers interested in establishing new hotels in the region, and it’s important to strike while interest remains high.
More hotel rooms are needed in the region, he said, noting June hotel occupancy was nearly 92%, a 7.4% increase over the same time last year.
During the first half of 2025, downtown hotels saw occupancy hit 74%, said Bill Lewis, general manager of the Magnolia Hotel and president of the Victoria Hotel Association. “That’s a solid, really strong number for the city.”
That pressure has bumped up room rates, with the cost of a hotel room up about 4% from last year, Lewis said.
While the region boasts about 4,500 hotel rooms, it has lost more than 1,200 over the last 10 years, as older hotels were redeveloped or bought by the province to be used for supportive-housing units during the pandemic.
Adding to the room 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.
As for hotel development, there are several in the works, according to Nursey.
A 130-room hotel is expected to open at Victoria International Airport this year, while the first new hotel in the city of Victoria in nearly two decades broke ground recently on Broad Street.
The 167-unit Hyatt is expected to open in 2028.
A block away at the corner of Government Street and Pandora Avenue, there are plans for a 198-unit hotel to be flagged as a Hampton by Hilton. That project met resistance at city council, though, due to height restrictions in the Old Town neighbourhood.
Roundhouse developer Ken Mariash has also floated the idea of a hotel being part of his Vic West development when it breaks ground.
Despite the lodging shortage and ongoing tensions between Canada and the U.S., tourism has been strong this year in the region, even before another marquee event and tourist draw — Symphony Splash — hits the stage this weekend.
Underpinning that success have been 31 city-wide conferences this year, which takes pressure off the leisure business, Nursey said. “The conference business is the foundation of everything — it de-risks the whole year.”
According to Nursey and Lewis, all of Victoria’s visitor markets are performing well, with an expected increase in Canadian travellers, a slight increase in U.S. visitors and good numbers from Europe.
Reid James, general manager of the Hotel Grand Pacific, said he expects to see a 5% increase in occupancy this year compared with 2024.
He said Canadian business is “significantly up,” while American business is marginally down from last year.
“We have more bus tours than we did last year, which are mostly Canadian and some American,” he said, adding booking is “very strong” through the end of October, with a good mix of conference, bus tour, and leisure business in September and October.
For the two companies that ferry passengers between Victoria and Washington state, however, things aren’t quite as rosy, as some Canadians continue to boycott U.S. travel amid tensions between the two countries.
Mark Collins, chief executive at Clipper Navigation, said while things have not improved much for the passenger ferry that runs between Victoria and Seattle, “at least they have not significantly worsened.”
Collins said traffic is stable at about 20% below last year’s levels. “Every time there might be an improvement in the international relationship, something gets said somewhere that turns off Canadians or Americans. None of our marketing efforts appear able to overcome these macro issues on either side of the border.”
Collins said his team has decided to focus on 2026, as nothing seems to be able to change the narrative this year. “We are preparing ourselves for three to four weak years, taking the long view that relations with the U.S. may hopefully improve by 2028 or 2029,” he said.
Black Ball Ferry president Ryan Burles said ridership on the Coho between Victoria and Port Angeles has also taken a hit this year due to the trade war with the U.S.
He said the car ferry’s ridership overall is down about 20%, with the biggest hit coming from a substantial drop in southbound traffic — Canadians are not travelling south in numbers, while American ridership is down just 5%.
Burles said the drop comes as no surprise. “We understand people’s sentiments, so we understand we’ll have a soft year and realize that we don’t anticipate that there’ll be much of a change for the rest of the year.”
Burles is on board with the region pushing hotel development, noting it needs everything from budget-friendly two- and three-star properties to high-end hotels.
He said without that spectrum, and with short-term rentals heavily restricted, there’s no way for families to find value in a trip to Victoria.
>>> To comment on this article, write a letter to the editor: [email protected]
