New Hotel Supply to Provide Relief Across Canada in 2025

Canadian hotel construction activity is set to reach its highest level since 2019, according to CBRE’s Canadian Hotel Industry Outlook. This year will see 6,500 new rooms come online across Canada, representing 1.4% growth in the national hotel supply. This comes after five years of stunted hotel construction, during which roughly two years’ worth of supply was delivered. Last year fewer than 3,000 new rooms were added to the national hotel inventory, or 0.6% growth.

“All new supply is welcome since there hasn’t been much inventory growth lately,” says CBRE Hotels Senior Vice President Nicole Nguyen. “Most of the upcoming construction will be in smaller cities and tertiary markets, but a few noteworthy projects will open in larger markets. This will help satisfy the strong appetite for new hotel supply and increase occupancy.”

Hotel construction activity is forecast to further accelerate in 2026 and 2027.

The Taylor Swift Effect

She came, we saw, RevPAR jumped!

As of July 2024, monthly national Revenue Per Available Room (RevPAR) – a key indicator of hotel performance and profitability – was well on its way to surpassing its 2023 performance, with 3.3% growth year over year.  “We’re still waiting to get the final figures, but it looks like 2024 may have finished stronger than expected,” says Nguyen. “This means the 2025 forecast could have a higher starting point than anticipated.”

Taylor Swift’s Eras Tour boosted Toronto’s hospitality sector in November , but perhaps not as much as anticipated. While the concerts bumped Toronto’s ADR by more than 25%, occupancy was only slightly ahead of the year prior.

“In Toronto, hotels closest to the Rogers Centre saw the highest ADRs, but the further out you went, the less you saw super high rates,” says Nguyen. “It is likely a confluence of factors – a high proportion of local attendees, a ceiling on what people were reasonably willing to pay and perhaps even Toronto traffic led to people choosing to stay as close to the venue as possible or use transit and stay farther out. The hype surrounding the concerts likely also resulted in displacement as travelers who would have otherwise come in November stayed away.”

It was a different story in Vancouver, which hosted the last three stops on the Era’s Tour. The city saw RevPAR growth of 71% with ADR up almost 54%. The shows generated incredible demand, with occupancy up seven points compared to the year prior. These final shows generated significant celebrity presence and greater inbound travel.

2025 Onward

Nationally, RevPAR is forecast to increase by 2.7% year-over-year in 2025, reaching a new high of $137, supported by growth in all major Canadian markets. The national occupancy rate is projected to hold at 66% over the next several years as the new supply will be quickly absorbed.

Markets across the country should continue to see growth in domestic business visits and overseas visits, which are currently below 2019 levels.

Niagara Falls will see the greatest year-over-year RevPAR growth (6.1%), benefitting from a strong U.S. dollar, followed by Saskatoon (3.5%) and Edmonton (3.2%). “American travellers in Canada see their dollar go far, so operators price accordingly,” says Nguyen.

Vancouver is expected to record the highest RevPAR in the country at $230, followed by Toronto at $175 and Montreal at $166. Vancouver will also boast the highest occupancy rate in the country at 79%, nearly recovering to its 2019 peak, while its ADR reaches $293.

“Like most of the cities along the West Coast, Vancouver has nicer weather for longer,” says Nguyen. “That elongates the period in which people want to visit, which benefits the hospitality industry and boosts the occupancy rates.”

Major Markets & New Hotels Ready to Impress

Alberta’s economic growth will continue to benefit its hospitality sector. Calgary could see RevPAR reach $122, while Edmonton’s could hit $92. Downtown Calgary will also welcome the Element Hotel by Westin in a formerly vacant office building, with the opening date scheduled to coincide with the 2025 Calgary Stampede.

Saskatchewan’s RevPAR will increase by 2.5%, driven by activity in Saskatoon and Regina. Winnipeg will see a small RevPAR increase despite a slight drop in hotel occupancy due to declining demand from government-sponsored programs. Toronto will also witness a slight dip in occupancy as new supply is absorbed into the market. This includes the long-awaited Nobu Hotel, slated to open in the spring.

Ottawa is expected to achieve a RevPAR of $142. The market inventory will grow as the new Alt Hotel opens at the Ottawa airport and a Moxy hotel opens downtown. Montreal’s RevPAR will reach $165, followed by Quebec City at $162. Early this year, Montreal will also welcome the opening of the new Moxy Montreal Downtown hotel.

Atlantic Canada will see muted growth as new supply is absorbed into the Halifax market and St. John’s occupancy is expected to dip slightly as demand related to refugee hosting programs declines.

“Overall, we’re looking at stable growth for 2025 and new hotels to entice travellers,” says Nguyen. “Stability means owners can plan more confidently and reinvest in even more exciting new projects. After all the ups and downs the hotel industry has seen over the last few years, this positive trajectory is welcome.”