Article
Canadian Patriotism Drove Domestic Hotel Traffic in 2025. Will It Persist?
October 20, 2025 4 Minute Read
Canadian hotels are on pace to perform better than was expected earlier this year.
That strong performance is thanks in large part to Canadians choosing to travel domestically, helping offset the drop off in U.S. tourists coming north and softness on the international traveler side.
“We thought we would have to downgrade our forecast because of all the economic volatility,” says CBRE Hotels Senior Vice President Nicole Nguyen.
“But 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.
“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.”
Can It Continue?
The question is whether Canadians will continue to let patriotism shape their travel decisions, especially if the economy slows and disposable incomes suffer. Nguyen notes that numerous economic challenges loom which could impact business and leisure travel demand.
Non-essential travel is usually the first expense companies cut, and belt-tightening in turn causes employees to worry about job security and whether they’ll be able to keep paying their mortgages. “Things like travel are quickly deprioritized thrown by the wayside,” Nguyen says.
“I think Canadians want to continue supporting the domestic industry and most are less enthusiastic about going to the U.S. 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.”
Car Travel Is Up
CBRE is forecasting the key hotel market indicators – Revenue Per Available Room (RevPAR), Average Daily Rate (ADR) and Occupancy – to remain steady over the next three years. But Nguyen acknowledges “there are a few things giving us pause.”
For one, domestic air passenger data is flat year over year while drive travel is up, which Nguyen notes is “not a great indicator. It means people are trying to pare back travel budgets. They’ll drive somewhere four hours away versus flying. It raises concerns people are making decisions with austerity in mind.”
She points to a twice-yearly Conference Board of Canada survey of travel intentions, which looks at the primary reason for travelers not taking or being unsure about taking an overnight vacation trip. The most recent survey shows a growing percentage of respondents citing financial reasons as the primary reason.
“People are concerned they can’t afford to travel,” Nguyen says.
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, Nguyen says. “Though we’re not convinced it will create a ton more occupancy because June and July are already incredibly busy in those cities.”
But much like Taylor Swift’s Eras Tour or the Toronto International Film Festival, the World Cup should help with hotel rate compression, says Nguyen, referring to how high demand for rooms, driven by 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 from a reputation point of view. “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.”
No New Rooms at the Inn
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.”
By the Numbers
CBRE is forecasting RevPAR to remain positive in most Canadian markets next year.
“It’s moderate growth, between 2% to 4% over 2025 RevPAR for most markets,” says Nguyen, “but all told it’s expected to be positive overall for hotel owners. It’s getting back to how things were pre-pandemic.”
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.
“You can’t get past 66% occupancy on an annual basis because it is hard to convince people that they should travel to Canada in January, February and parts of March,” Nguyen says. “Even though winter is a spectacular time to be in many Canadian locations, it’s a hard sell for people who prefer temperate or warm climates.”
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