Local travel has helped to offset a slowdown in US tourism, putting Canadian hotels on track to surpass expectations according to the CBRE Hotels Canada Industry 2026 Outlook report.
According to CBRE Hotels senior vice president Nicole Nguyen, month-over-month and year-to-date data through July revealed a stronger than anticipated pace of average daily rate growth, although occupancy was relatively flat. In the next three years, key hotel market indicators revenue per available room (RevPAR), average daily rate, and occupancy are expected to be stable.
In most Canadian markets, RevPAR is set to remain positive in the next year, with the rate expected to be 2-4 percent higher than the RevPAR for most markets in 2025 and reverting to pre-pandemic levels. National occupancy is predicted to tick up by no more than 66 percent from 2025 to 2027; ADR is forecast to increase to $216 and $221 in 2026 and 2027, respectively.
However, coming economic concerns could stifle the demand for business and leisure travel. Domestic air passenger data has been flat year over year while drive travel increased; this reflected a cutdown in travel budgets, Nguyen said.
A Conference Board of Canada survey recently revealed that many respondents listed financial concerns as the main reason they did not or were reluctant to go on overnight vacations.
“Canadians want to continue supporting the domestic industry and most are less enthusiastic about going to the US. 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,” she said in a statement.
Nonetheless, the upcoming FIFA World Cup is set to ramp up local tourism as the tournament will see four matches take place in Vancouver, while six are played in Toronto. The event is expected to help with hotel rate compression, causing room rates to increase more than usual.
“People will be reintroduced to the idea of Canada as a destination, so from a long-term legacy growth perspective it’s positive. They might not spend the travel dollars in 2026, but maybe they come in 2027 or 2028,” Nguyen said.
She added that hotel supply is predicted to increased by 1.5 and 2.1 percent in 2026 and 2027, respectively.