Resilience in the Face of Challenge: How BC Hotels Are Adapting to Rising Costs, Labour Shortages, and Shifting Travel Trends
As Canada’s hotel industry gears up for a bustling summer season, operators are navigating a vastly different landscape marked by unprecedented operating costs, a tightening labour market, and evolving guest demands. In a recent conversation between Foodbuy and Paul Hawes, President & CEO British Columbia Hotel Association (BCHA), key insights emerged that highlight both the challenges and the resilient spirit driving the sector forward.
A Surge in Operating Costs
Coming off BCHA’s successful Summit, one of the most pressing issues facing hotels today is the dramatic increase in operational expenses. According to Hawes, the cost to operate a room at a downtown luxury property has ballooned to a staggering $200–$250 per night. This spike is driven by a convergence of rising insurance premiums, increased energy prices, and broader inflationary pressures affecting food and beverage, transportation, and cleaning services.
“The price to operate isn’t just up slightly—it’s up exponentially,” Hawes noted. “This makes it harder to keep hotel stays affordable while still maintaining the level of service guests expect.”
The Labour Crunch Deepens
Labour shortages continue to strain hotel operations across Canada, particularly in British Columbia. Hawes underscored the critical role immigration and short-term, seasonal workers play in the sector, with some properties relying on newcomers to fill over 30% of their frontline positions, including housekeeping and foodservice.
The root of the issue lies in a combination of post-pandemic workforce shifts and tightening immigration policies. “While we’ve seen some workers return to the industry after trying other sectors, the shortage persists,” Hawes said. “The reduced issuance of visas and the complexities of immigration are creating bottlenecks—especially in a market like BC, which depends heavily on international labour.”
Immigration Policies Under Scrutiny
Hawes also discussed the broader implications of federal imm
igration decisions on the hotel sector. A recent move by the Liberal government, influenced by Conservative pressures, to block travel from Mexico has had far-reaching consequences. Within six months of the policy change, traffic from Mexico to Canada has dropped significantly. Destination Canada has reported that traffic from Mexico is down by 41% in February compared to the same time last year. This has cut off a crucial pipeline of both travelers and temporary workers.
“These policies have unintended ripple effects,” Hawes explained. “When we block one of our main sources of hospitality labour, we’re essentially tying one hand behind our back in terms of service capacity.”
To combat this, Hawes and the BCHA are working hand and hand with the Hotel Association of Canada on immigration advocacy efforts at both the provincial and national levels, pushing for more flexible visa programs and streamlined immigration pathways for hospitality workers to gain permanent residency.
Regulation and Real Estate: Airbnb’s Impact in Vancouver
In BC, efforts to regulate short-term rental platforms like Airbnb are beginning to show early results. New policies are aimed at returning units to the long-term rental pool and tempering inflated property prices.
“It’s too early to call it a trend, but we are seeing early signs of downward pressure on both rents and sales prices,” said Hawes. While the full impact remains to be seen, the industry is hopeful these changes will support a more stable housing and labour environment.
A Shift in Traveler Demographics
While the challenges are real, they’re being met with adaptive strategies and an evolving market mix. One positive trend is the resurgence of domestic travel. With more Canadians choosing to explore their own backyard, hotels are experiencing a shift from corporate and group business to more transient and leisure bookings.
“This change in segmentation isn’t necessarily a negative,” Hawes noted. “It just means we need to adapt our offerings and marketing strategies to meet the needs of leisure travelers who are now driving demand.”
A Wave of Development—and Municipal Support
Despite economic headwinds, the appetite for new hotel developments in Vancouver remains strong. Several major projects are underway, including a 15-storey building by Le Germain, three new hotels by Pinnacle, and a full dismantle and rebuild of the iconic Listel Hotel.
Crucially, local government is playing a supportive role. Hawes praised the Vancouver City Council and Mayor’s office for making legislative changes aimed at reducing red tape and accelerating development approvals.
“It’s refreshing to see a city not just open to hotel development, but actively encouraging it,” he said. “The message to developers is clear: now is the time to invest.”
A Promising Summer Ahead
Looking ahead to the summer season, there’s a strong sense of cautious optimism. Hotels across the country are seeing healthy booking levels and strong last-minute pickups, further evidence of the sector’s ability to bounce back.
“Hospitality has weathered crises before—9/11, SARS, the pandemic,” Hawes reflected. “What makes this industry remarkable is its resilience. We adapt, we pivot, and we always find a way to serve our guests.”
Tools for Success: Launching the Hospitality Playbook
To help operators stay competitive and positive amid ongoing challenges, the BCHA announced the launch of a new Hospitality Playbook. Designed as a practical resource for hotels. The playbook includes frontline training tools, best practices for food buyers, and tactics to improve service delivery in a high-cost, low-labour environment.
“Our goal is to equip hotels with what they need to thrive, not just survive,” Hawes concluded. “By sharing knowledge and building strong teams, we can meet the moment—whatever it brings.”
Article as published in Foodbuy’s Hotel Guide.