Canada Hotels & Chains Report 2026 April 2026
The Canada Hotels & Chains Report 2026 provides a comprehensive overview of the Canadian hospitality sector, analyzing both independent and branded hotel performance as of 2025.
Drawing on industry data from CoStar and Horwath HTL’s proprietary research, the report evaluates market recovery, operational performance, supply distribution, and investment trends across the country.
Synopsis
The Canadian hotel industry achieved a record year in 2025, marked by strong financial performance and continued momentum in recovery. National occupancy stabilized at 66%, while ADR rose to $216 and RevPAR reached a historic high of $143.
Growth was primarily driven by strong pricing strategies and resilient travel demand, although regional disparities persisted. Western Canadian markets outperformed, while some major eastern cities experienced slight declines in occupancy.
The market structure remains highly fragmented, with independent hotels accounting for the majority of properties (72%), yet branded hotels dominating total room supply (55%). Smaller properties—particularly those under 50 rooms—represent a significant portion of the inventory, shaping franchising and development opportunities.
Investment activity rebounded in 2025, especially in urban full-service assets, supported by stable cash flows and limited supply growth. However, profitability pressures remain due to rising operating costs and continued economic uncertainty.
Looking ahead, the sector is transitioning from recovery to stabilization, with moderate growth expected. Success will depend on cost management, strategic pricing, and differentiation, while risks include slower demand growth, high interest rates, and increased consumer price sensitivity.
Key Highlights
- Record Performance in 2025
- Occupancy: 66% (fully recovered to pre-pandemic levels)
- ADR: $216 (+31% vs. 2019)
- RevPAR: $143 (highest on record)
- Industry Structure
- ~7,560 hotels and ~466,850 rooms nationwide
- 72% of hotels are independent, but branded hotels account for 55% of rooms
- Average size: 121 rooms (chain hotels) vs. 38 rooms (independent)
- Supply & Distribution
- ~84% of hotel rooms concentrated in Ontario, British Columbia, Alberta, and Québec
- Majority of hotels (61%) have fewer than 50 rooms, limiting branding opportunities
- Market Segmentation
- Upper midscale segment dominates branded supply (largest share of hotels and rooms)
- Luxury and resort segments performed strongly in 2025
- City-Level Trends
- Western cities (e.g., Victoria, Calgary, Edmonton) saw notable occupancy gains
- Some major cities (e.g., Montréal, Niagara Falls) experienced declines vs. 2019
- ADR increased significantly across all major markets (average +34%)
- Investment & Development
- 375 pipeline projects representing ~50,000 new rooms
- Strong investor interest in full-service urban hotels
- Limited new supply due to high construction and financing costs
- Competitive Landscape
- Leading chains by size include Marriott International, Wyndham Hotels & Resorts, and Hilton Worldwide
- Top brands include Holiday Inn Express, Best Western Plus, and Comfort Inn
- Outlook
Looking ahead to 2026 and 2027, the Canadian hotel industry is expected to move from recovery into a more stable phase of moderate growth. Economic forecasts point to modest GDP expansion of 1.2% to 1.6%, with inflation largely under control, creating a relatively steady—though not high-growth—operating environment. Demand is expected to normalize after the post-pandemic surge, with domestic travel remaining the primary driver, supported by a gradual return of international visitors and continued recovery in corporate and group segments.
Despite this stability, several challenges are likely to shape performance. Rising operating costs, particularly labor, utilities, and insurance, will continue to pressure profitability, even as room rates remain elevated. At the same time, increasing price sensitivity among travelers may limit the industry’s ability to offset these costs through further rate growth. High interest rates and constrained access to financing are also expected to restrict new development, helping to contain supply but slowing overall expansion.
Investment activity should remain focused on well-performing urban and resort markets, where strong fundamentals and pricing power support stable returns. Select-service and limited-service hotels are also expected to attract interest due to their more efficient cost structures. Overall, while the outlook remains cautiously positive, success will depend on disciplined cost management, strategic pricing, and the ability to adapt to evolving consumer expectations in a more competitive and economically constrained environment.
Source: View the original article at Horwath HTL.
