The developers behind a proposed downtown Nanaimo hotel are hoping to get shovels in the ground before year’s end.
Utah-based PEG Development has plans to build a $23-million 172-room, nine-storey Courtyard by Marriott hotel at 100 Gordon St. across from the Vancouver Island Conference Centre downtown.
Despite councillors approving a 10-year municipal tax exemption for the project and receiving building permits from the city in February, PEG Development has yet to begin construction.
In an e-mail to the News Bulletin, Mckay Quinn, development manager for the project, said the company wants to begin construction on the downtown hotel later this year.
“We hope to break ground at some point in November,” he said, later adding that construction could take anywhere from 12 to 20 months.
The delays, according to Quinn, have been due to rising construction costs, and he said PEG has had to make calculated decisions in order to preserve the “quality” of the hotel project.
“As we have worked through a steady value engineering process over the past several months, we have been careful and deliberate with our actions,” Quinn said. “We are unwilling to sacrifice the quality of the project, which means we’ve had to negotiate and sometimes find creative solutions for the challenge of rising construction costs.”
PEG Development purchased the Gordon Street property from the city in December 2017 for $750,000. As part of the deal, the city has the right to re-purchase the property for $750,000 if PEG doesn’t start construction within two years.
Dale Lindsay, the city’s general manager of community development, said that clause in the agreement still stands. He said PEG hasn’t communicated often with the city about the reasons for the delay but that developments can be complicated in nature and can take more time than expected.
“There are a lot of things that can happen during a development that can cause delays,” he said.
Lindsay said the city remains optimistic that PEG Development will come through and build a hotel on the site.
However, delays are all too familiar for many in Nanaimo.
For years, the City of Nanaimo has envisioned a hotel on the vacant Gordon Street property in an effort to attract more business to the Vancouver Island Conference Centre. But plans to develop a hotel on the property by Triarc International, Millennium/Suro and SSS Manhao International Tourism Group have all failed.
In 2013, SSS Manhao had planned to build a $50-million 21-storey hotel – complete with commercial retail spaces and a connection to the conference centre – on the property but cancelled the project in 2015. SSS Manhao, an affiliate of Chinese-based Suzhou Youth Travel Services, had said the hotel would bring roughly 70,000 Chinese tourists to Nanaimo annually.
Coun. Ian Thorpe, who was on council in 2015, said SSS Manhao’s decision to cancel the project was understandable but that he had hoped to see it come to fruition. He also said councillors, despite the recent delays, are still very optimistic that PEG Development will build a hotel on the Gordon Street site.
“PEG has a good reputation and they have other projects in the province,” he said. “From every indication that we have gotten, based on what staff have told us, PEG is serious about the project.”
Kim Smythe, the Greater Nanaimo Chamber of Commerce’s chief executive officer, said after seeing SSS Manhao back out, he’s hoping PEG’s delays are the “final chapter” in the quest for a conference centre hotel in the city.
“I’m confident that this company, with the skin they have in the game, will proceed with this project,” he said. “I think they will proceed with it within the timeline that the city has established.”
Anthony Everett, chief executive officer with Tourism Vancouver Island, said there is no question that Nanaimo needs a conference centre hotel because without one, VICC will have a harder time attracting larger events.
“I think it is a great facility but it is hard to go after conferences,” he said. “You have to have a hotel to go with the conference centre.”
“Nanaimo needs more hotels, the hoteliers will tell you that,” he said. “In order to service a wonderful facility like the Vancouver Island Conference Centre, we need more inventory. A hotel here is what is needed and probably more than one is needed in order to grow that business.”
A conference hotel would not only increase the number of rooms in the city, but would also attract more business and tourism to the region, according to Everett.
“Business travel usually leads to lots of leisure travellers coming and return visitation,” he said. “It goes hand in hand with a hotel being built. There is just no way around that. We think, particularly regionally, a conference centre hotel could also be a benefit for Parksville, Qualicum Beach and into Ladysmith.”
Everett, who moved to Nanaimo from Prince George more than a year ago, said he knows about the history of failed hotel developments for the Gordon Street property. He said while some people might feel like the conference centre hotel saga is unique to Nanaimo, it isn’t.
“I moved from Prince George and the same thing happened there,” he said. “Eventually they got one. Somebody took that leap and Prince George has got a number of new hotels now because they started to attract business. It just took 20 years. Sometimes it just takes time.”
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