Canada Hotels Posts Record RevPAR in 2025

Why It Matters

The record RevPAR underscores the resilience of Canada’s hotel sector despite trade headwinds, signaling continued pricing power and attractive investment opportunities.

Key Takeaways

• RevPAR reached $142.89, up 4.1% YoY.
• Ontario and Quebec underperformed national average.
• Domestic leisure travel offset U.S. demand decline.
• 2026 RevPAR growth forecast 1.9% Canada, 0.6% US.
• Inflation, labor, energy, taxes pressure operating margins.

Pulse Analysis

The Canadian hospitality market capped 2025 with an unprecedented RevPAR of $142.89, reflecting a 4.1% increase over the prior year. While the headline figure signals robust pricing power, the underlying dynamics were uneven. Ontario and Quebec lagged behind the national benchmark, largely due to lingering trade frictions that dampened cross‑border travel. Conversely, a pronounced shift toward domestic leisure trips helped buoy tourism‑centric markets, offsetting the U.S. demand shortfall. New hotel openings in several submarkets introduced supply pressure, moderating the pace of revenue growth.

Forecasts for 2026 suggest a more tempered expansion, with CoStar projecting a 1.9% RevPAR rise for Canada versus 0.6% in the United States. The incremental gain is expected to stem from average daily rate (ADR) improvements rather than occupancy gains, as overall demand remains subdued. Event‑driven demand, notably the FIFA World Cup matches slated for Toronto and Vancouver, should inject temporary pricing compression and lift in gateway cities. At the same time, operators confront persistent cost headwinds—rising energy costs, property taxes, insurance, and a tightening labour market aggravated by reduced foreign‑worker permits.

Despite operational challenges, the sector’s investment fundamentals stay attractive. Lower interest rates and abundant capital have spurred a surge in hotel transactions, with 2025 ranking among the strongest years for full‑service and luxury asset deals in the past two decades. Investors view hotels as a resilient asset class, benefitting from pricing power and event‑related demand spikes. For owners and developers, balancing revenue growth against escalating expenses will be critical, while strategic positioning in high‑traffic markets could capture the upside from upcoming international events and sustained domestic tourism.