Toronto, ON – November 7, 2025 – Canadian hotels are on pace to exceed expectations thanks in large part to Canadians choosing to travel domestically, helping offset the drop off in U.S. tourists. While patriotism remains strong, economic weakness could soften the outlook for Canadian hotels. But soccer could save the day.
“Month-over-month and year-to-date data through July shows the pace is stronger than we had anticipated. Predominantly on Average Daily Rate (ADR) growth; less so on occupancy, which has been relatively flat,” says CBRE Hotels Senior Vice President Nicole Nguyen. “Still, the year would have shaped up very differently if Canadians hadn’t shown their national pride with domestic travel the way they have so far.”
Looking ahead the question is whether Canadians will continue to let patriotism shape their travel decisions, especially if the economy slows and disposable incomes suffer. CBRE Hotels Canada Industry 2026 Outlook notes that numerous economic challenges loom which could impact business and leisure travel demand.
“Canadians want to continue supporting the domestic industry and most are less enthusiastic about going to the U.S.,” says Nguyen. “But at some point, if the economic tap turns off, then that patriotic travel will decline as well because all travel, domestic and international, will become a luxury.”
Key Indicators to Remain Steady
CBRE is forecasting the key hotel market indicators – Revenue Per Available Room (RevPAR), Average Daily Rate and Occupancy – to remain steady over the next three years.
RevPAR will stay positive in most Canadian markets in 2026; between 2% to 4% over 2025 RevPAR for most markets, returning to pre-pandemic levels. National occupancy is forecast to go no higher than 66% for 2025, 2026 and 2027, while ADR is projected to rise to $216 in 2026 and $221 in 2027.
But there are already signs that Canadians are changing spending and travel habits to save money. Canadian domestic air passenger data is flat year over year while drive travel is up. “It means people are trying to pare back
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travel budgets,” Nguyen says. “They’ll drive somewhere four hours away versus flying. People might be making decisions with austerity in mind.”
She points to a recent Conference Board of Canada survey of travel intentions which showed a growing percentage of respondents citing financial reasons as the primary reason for not taking or being unsure about taking an overnight vacation trip. “They’re concerned they can’t afford to travel.”
Limited New Supply
Canadian hotel supply growth has been running below the long run average since 2019, with new supply increasing the available room nights increasing at less than 1.0% per year between 2020 and 2024. But supply is forecast to grow by 1.5% in 2026 and by 2.1% in 2027, according to CBRE’s forecast.
“The hotel pipeline is ramping up, albeit slower than expected,” says Nguyen. “Projects are taking longer to come to market. We are consistently seeing project delays throughout the development horizon for a multitude of reasons.”
FIFA World Cup a Bright Spot
Next summer’s FIFA World Cup, with seven matches slated to be played in Vancouver and six in Toronto, will be a bright spot for Canadian tourism
Much like Taylor Swift’s Eras Tour or the Toronto International Film Festival, the FIFA World Cup should help with hotel rate compression, or what happens when high demand for rooms, driven by big events, pushes a hotel toward full occupancy, leading to stronger than normal jumps in room rates across the board.
There could also be knock-on effects for those cities and Canada more broadly. “People will be reintroduced to the idea of Canada as a destination, so from a long-term legacy growth perspective it’s positive,” Nguyen says. “They might not spend the travel dollars in 2026, but maybe they come in 2027 or 2028.”
Download the full CBRE Hotels Canada Industry 2026 Outlook here.