The Explorer Hotel in Yellowknife is one of the city’s largest accommodation providers. A proposal known as “Explorer 2.0” would add 150 rooms to help address growing demand from tourists, government travellers and resource-sector workers.City of Yellowknife/Supplied
In Yellowknife, NWT, where tourists increasingly flock for ice-fishing and a front-row seat to the northern lights, locals say hotel rooms can be hard to come by. Yet despite years of strong occupancy rates and rising room prices, steep development costs have limited new hotel development.
Against that backdrop is an ambitious hotel proposal, known as “Explorer 2.0.” It’s set to neighbour the existing Explorer Hotel – a fixture of the city for more than 50 years – and add 150 rooms atop a massive rock escarpment, with its southerly side overlooking Frame Lake. The owner of the site, Nunastar Properties Inc., has requested that the lot be divided into a subdivision to make way for Explorer 2.0.
The proposal comes as Yellowknife’s hotel occupancy rate hit 77 per cent in 2025, while average room rates climbed to $208, according to consulting firm HVS. Those figures are up from 2019, which posted an occupancy rate of 68 per cent and average room rates of $169.
Demand really ramped up after COVID-19 travel restrictions were lifted, says Carrie Russell, senior managing partner at HVS.
“The numbers recovered in 2022, continued to grow in 2023, 2024 and even 2025, and we’re seeing the first quarter of 2026 exceeding expectations,” says Ms. Russell.
The recovery mirrors broader trends across Canada’s hotel sector, but Yellowknife has outperformed the national market on occupancy, with its average rate sitting 11 percentage points above the Canadian average.
A market under pressure
In 2004, Nunastar acquired the already-operating Explorer Hotel and has since expanded its offerings. In addition to increasing the number of rooms from 127 to 259, the company unveiled a larger conference centre at the hotel in 2019.
At eight storeys, the Explorer is the largest hotel in Yellowknife and one of about a dozen such properties in the city, according to Northstar Travel Group.
“Most times of the year, it’s very hard to find a hotel room to book,” says Nathan Round, realtor and co-owner of Coldwell Banker Northern Bestsellers Yellowknife, a brokerage specializing in both residential and commercial real estate.
Mr. Round says the city’s hotel sector is “overrun,” particularly during peak tourism windows: ice-fishing season and when the auroras are most visible.
That’s left demand to spill over into short-term rentals. Figures provided by Airbnb show that guest searches for listings in Yellowknife grew 85 per cent between 2023 and 2025.
Mr. Round says availability has become so constrained that some visitors are bypassing the hotel market altogether.
“We’re starting to see community governments from the Northwest Territories looking to purchase or lease real estate in Yellowknife as opposed to relying on hotel rooms when they send delegations to the capital,” he adds.
Yellowknife Mayor Ben Hendriksen says the sector is also grappling with growing demand tied to resource-sector activity and the city’s role as a health care hub for neighbouring and nearby northern communities.
“As part of our community planning process right now, we are putting in an area of town where worker accommodation would be possible,” says Mr. Hendriksen.
Yellowknife’s landscape presents unique development challenges. Limited available land, Canadian Shield bedrock and the high cost of extending infrastructure have slowed the construction of new hotels despite strong market conditions.City of Yellowknife/Supplied
The cost of building in the North
Ms. Russell points out that Yellowknife’s hotel market is “well-diversified” from a demand perspective, with business travellers and government employees accounting for roughly 60 per cent of stays and group bookings and leisure travellers making up the remainder.
Still, hotel developers habitually shy away from investing in the North.
Generally speaking, hotel projects are more difficult to finance than other types of commercial real estate, says Ms. Russell. But there’s more to it than that. The city is hemmed in by Great Slave Lake, former mine sites, environmentally sensitive lands and an airport that has become increasingly important to Canada’s efforts to expand its military and logistical presence.
That leaves just two areas that can be developed: the southwest and the central north of the city, says Mr. Hendriksen.
“A lot of people think the North [has] land everywhere. It’s actually very much not that reality,” he adds.
Building new infrastructure adds another layer of cost and complexity. A giant swath of the North is characterized by the Canadian Shield, which is difficult to build on and expensive to blast through to create level ground. Water and sewer pipes also have to be dug beneath frost lines, which adds further challenges.
A territorial push for (more) tourism
Despite the barriers confronting hotel development, the Northwest Territories is banking on the future of tourism in the city.
Earlier this year, the government released its latest tourism strategy, which touches on the expansion of local services such as hotels.
It comes as major mine closures threaten the health of local economies, with the province’s Diavik Diamond Mine shuttering after more than 20 years in operation.
“We can’t depend on any one industry to be the saving grace, and that’s what we have traditionally done,” says Mr. Hendriksen. “Northerners are working towards more varied economies, and there is a lot of potential with tourism.”
Last year, a 4-per-cent tourism accommodation tax was implemented in Yellowknife to help the city reinvest in hospitality.
To address the land issue, Mr. Hendriksen says Yellowknife is also in the process of applying to take municipal control of Crown land from the territorial government that can be opened up for development.
A bet on the North’s next phase
Among Yellowknifers, there is a sense of optimism around what the next decade will look like.
In March, the federal government announced a $40-billion plan aimed at strengthening northern defence and infrastructure. It includes investments in operational hubs, transportation corridors and other strategic projects, including several expected to improve connectivity and economic activity across the North.
The investments are expected to bring new workers, contractors and visitors, adding to strains already being felt in Yellowknife’s housing and accommodation markets. The challenge now is finding ways to expand capacity before demand outpaces supply even further.
“I would say that the last 10 years aren’t necessarily representative of what the next 10 years are going to be. I think with the military and Department of National Defence plans for the North, things are going to get a whole lot busier coming up,” says Mr. Round.