Canadian Hotels Experience Record-High Room Rates in October

• October 2024 sees record-high average daily rate (ADR) exceeding CAD200 for Canada’s hotels, according to CoStar data.
• Amidst an overall increase in occupancy, new inventory growth is expected to cause a slight decline in occupancy in 2025.

Canada’s hotels witnessed a significant landmark in October 2024, as the average daily rate (ADR) surpassed CAD200 for the first time ever, according to data from CoStar, a prominent online real estate marketplace and analytics provider.

October’s occupancy rate was 68.5%, marking a 0.8% increase from 2023. The ADR rose by 2.4% to CAD200.59, while the Revenue per Available Room (RevPAR) increased by 3.2% to CAD137.32. The rise in occupancy was mainly driven by transient and weekday occupancy, indicating an influx of individual business travelers.

Among the provinces and territories, Nova Scotia reported the highest occupancy level at 74.7%, albeit 0.3% lower than 2023. Toronto topped the major markets with an occupancy rate of 79.6%, marking a 3.5% increase from the previous year. Meanwhile, the lowest occupancy rate was recorded in Prince Edward Island at 58.2% and Edmonton at the market level with 58.4%.

However, looking ahead to 2025, STR and Tourism Economics have downgraded the RevPAR growth forecast to 1.5%. ADR is expected to align with inflation, while a slight decline in occupancy is anticipated due to the growth of new inventory surpassing improvements in demand. Hotel development activity is rising, with almost 6,000 rooms expected to open in 2025.

On the demand side, the impact of higher interest rates continues to be a challenge for consumers and businesses. However, spending is expected to gradually increase throughout 2025, particularly in the latter half of the year, driven by group and international travel.