Is this town big enough for two new hotels?

When Vancouver’s iconic mid-20th century Red Lion Hotel Vancouver at the Quay closes next weekend, Vancouver will have the fewest downtown rooms available since the 226-room Hilton Vancouver Washington opened 10 years ago.

On Nov. 1, downtown will be left with 485 hotel rooms, according to tourism officials who are working to relocate the conferences that were booked out through 2020 at the Quay. The room shortage isn’t expected to last for long, though. Not one but two hotels are planned for the stretch of waterfront west of the Interstate 5 Bridge.

This raises the question: Can this city — Vancouver, not B.C.; Washington, not D.C. — draw enough tourists to fill the 140 to 170 hotel rooms these projects would add beyond mere replacement of the Quay’s 160 rooms?

Probably, experts say.

“Is someone going to fly from Munich? Probably not,” said Portland-based urban planning consultant Michele Reeves, who often advises Vancouver’s downtown redevelopment efforts.

Regional travelers, however, might stop in Vancouver as part of a loop through the Columbia River Gorge, the coast and Oregon wine country, she said.

“We have a lot of people who don’t want to go to Portland, but want that urban feeling,” Reeves said.

She could see new Vancouver waterfront hotels serving business travelers and tourists alike, given that other hotel options, the Hilton aside, are “fairly dated.”

Although Vancouver has seen a hotel-building boom this year, most of the rooms are being added in East Vancouver, around Columbia Tech Center and 192nd Avenue.

The new eastside hotels were the first hotels constructed in Vancouver since the 2008 recession, which hit the hospitality industry hard. The industry has since rebounded. In September, the most recent figures available for Clark County, occupancy reached 75.7 percent and the average room rate was $106.55, up from 73.2 percent and $94.88 for that month in 2014, according to Smith Travel Research and Visit Vancouver USA.

Two hotels?

The land on which the Quay sits, known as Terminal 1, is owned by the Port of Vancouver.

Not just a conference center for out-of-towners, the Quay has been a sentimental favorite among locals for weddings, romantic dinners, Fourth of July fireworks viewing parties and Mother’s Day brunches.

Nostalgia aside, the nautical-themed Quay’s sails have frayed over time. The restaurant was built in 1960 and the hotel was added in 1962. The prospect of demolition to make way for a new Interstate 5 Bridge deterred renovations, and the community anticipated the Quay’s demise even as plans for the new bridge foundered.

City roadwork supporting redevelopment of an adjacent waterfront site by Tualatin, Ore.-based Gramor Development cost the Quay its biggest banquet hall, the Centennial Center, and part of its parking lot.

The Red Lion’s lease expires Dec. 31, but the Spokane-based hotelier decided to close the Quay complex Oct. 31.

The port still is firming up plans for Terminal 1, but anticipates an upscale hotel of 100 to 130 rooms directly overlooking the river, with little or no meeting space or dining.

The port will issue a request for proposals, which the Red Lion plans to answer.

“We want to have the Red Lion brand at that location,” said Pam Scott, spokeswoman for the Red Lion Hotel Corp.

Gramor Development plans a 200-room hotel as part of its redevelopment of the former Boise Cascade paper mill site, just west of the port’s land. The project would also include restaurants, retail and housing. Gramor has sealed a deal for the hotel project, but has yet to announce details.

Gramor and the Port of Vancouver have been adversaries over the port’s effort to build an oil terminal on the Columbia River, and have not coordinated their hotel development plans.

Several experts say there’s demand enough for both projects.

Leland Consulting of Portland, which prepared an analysis for the port, found that the “hotel market is generally strong and undersupplied.” Leland concluded Vancouver’s waterfront could support “one or more additional hotels.”

Creating synergy

Hotels compete, but at the same time, clusters of them can create synergy.

The Hilton was able to host large conventions, in part thanks to the Quay, which accommodated overflow, as with the annual Kumoricon gathering of anime-enthusiasts, which grew to 7,000 participants.

After five years of convening in Vancouver, Kumoricon will move to the Oregon Convention Center in Portland next year out of need for more space.

Say’s Law — an economic principle that supply can induce demand — comes into play in the hotel industry, according to a report by PKF Hospitality Research, a key source of industry information.

“In certain circumstances where unique supply growth may induce demand within a market, improving market performance because of supply growth rather than in spite of it,” states the report, “If You Build It, Will They Come?,” which uses Nashville, Tenn., as a case study.

“Since the new demand has entered the Nashville market, average daily room rates have risen by double digits and the market occupancy level has gone up. This result is consistent with experiences observed in other markets that have expanded their meetings and lodging potential,” according to the report.

But Nashville is a bigger city than Portland, let alone Vancouver. The study looked at the addition of 1,500 new rooms, not the 170 anticipated in downtown Vancouver.

Visit Vancouver USA, which markets tourism here, thinks the potential additional rooms would be put to good use.

“We’re looking forward to the possibility of new waterfront hotels being built in the coming years and believe filling them will not be an issue as they will just add to the growing portfolio of unique hotel options Vancouver has to offer,” said Carrie Schave, the nonprofit group’s communications manager.

She said the additional rooms would offer overflow capacity for the Hilton, where Mike McLeod recently took the helm as general manager.

McLeod has roots in Vancouver, and his new job brought him back here after about eight years away. Downtown is perking up, he said, and that’s what attracts visitors.

“It’s neat to see all the changes,” McLeod said. “I notice a different restaurant or bar every time I go through downtown.”

McLeod is confident there’s room in downtown for a hotel to replace the Quay.

Two new hotels? He’s not sure.