HVS Releases 2025 Canadian Hotel Valuation Index Across 19 Major Markets

The 2025 Canadian Hotel Valuation Index from HVS analyzes hotel values across 19 major markets using an income capitalization methodology based on market and operating data.

The Hotel Valuation Index (HVI) tracks hotel values across 19 major Canadian markets and Canada as a whole. Derived from an income capitalization approach, the HVI uses market-area data from STR, combined with historical operational information from HVS’s extensive global experience in hotel feasibility studies and valuations. The data are then aggregated to produce a pro forma performance for a typical hotel in each Canadian market. Based on our experience with real-life hotel financing structures, gained from valuing hundreds of hotels each year, we apply appropriate valuation parameters for each market, including loan-to-value ratios, real interest rates, and equity return expectations. These market-specific valuation parameters are applied to the net operating income of a typical full-service hotel in each city.

It should be noted that the pandemic-induced uncertainty in the hotel industry led HVS Canada to pause HVI projections from 2020 through 2023.

The HVI is an index that uses the 2005 value of a typical Canadian hotel (2005 = 1.0000) as the base. Each market area is then indexed off this base, with a number indicating its value relative to the base. For example, the index for the Toronto Downtown market in 2005 was 1.41, indicating that the value of a hotel in Downtown Toronto was approximately 40% higher than that of a similar hotel in Canada.

The HVI allows one not only to compare hotel values in local markets against the national market, but also to assess value differences between hotels in two Canadian cities. For example, say that a hotel in Ottawa, Ontario, sold in 2025 for $100,000 per room. If a similar hotel were situated in Calgary, Alberta, it would have sold for $78,820 per room in 2025. This figure is calculated by dividing the 2025 HVI for Calgary by the 2024 HVI for Ottawa to determine the value adjustment.

The Canadian Hotel Market

As 2025 closes in, the CANADIAN LODGING MARKET has shown tremendous resilience. Canada’s “elbows up” nationalism has enabled the hotel market to thrive despite the global geopolitical disruption. As the year-to-date data through October shows, the market has exceeded 2024 levels in RevPAR. Canada continues to set new peaks in market demand and is matching the record-breaking occupancy levels of 2018.

Hotel market occupancy is significantly affected by new supply. Historically, Canada has had an annual average increase in net inventory of about 1.0%. Through 2029, net new supply is projected to grow at nearly 3.0% annually, as many projects put on hold during the pandemic have resumed. 

Average daily rate (ADR) has risen sharply in recent years, as hoteliers have faced significant cost increases and have had to offset these pressures with higher room rates. Inflation has enabled hoteliers to increase their room rates, but it has also increased their labour and operating costs, creating pressure to improve operational efficiency. At the same time, strong demand growth and growing occupancy have resulted in compression in many markets, allowing hoteliers to push room rates.

Consequently, RevPAR growth in 2025 is projected at 4.4%. From 2026 through 2028, ADR is expected to increase at a rate greater than inflation, at 3.5% annually; however, an uptick in supply is likely to result in modest occupancy declines, moderating RevPAR growth in the near term.

This year has been marked by the trade tariffs that the US has imposed on Canada. In 2024, $3.6 billion in trade was exchanged daily between the two countries. Moreover, Canada and the United States are each other’s closest international partners—76% of Canadian domestic exports went to the US. However, the tariff tensions between the US and Canada are creating uncertainty for the future of this trade relationship. As a result, Canada is looking to expand its breadth of international trading partners to make its economy less dependent on trade with the United States.

Overall, the trade conflict with the United States does not appear to be adversely affecting the Canadian lodging market. Projections for 2025 show the national value per room increasing to $195,214, a 4.0% increase from 2024. The growth of RevPAR in the top urban markets, including Vancouver Downtown, Toronto Downtown, and Montreal Downtown, is contributing to an average increase of almost 5.0% in per-room value in these major markets over 2024.

What does 2026 hold?

The Conference Board of Canada projects that national GDP will grow by 0.9% in 2025. In 2026, as measures to mitigate tariffs and diversify trading partners take hold and the Bank of Canada’s interest-rate reductions have a stimulating impact, the national GDP is projected to increase by 1.9%.

In 2026, the national per-room value is expected to increase by $13,000, or 6.5%, to $207,900. This significant growth reflects several emerging trends. After a slowdown in development in response to the pandemic, more high-quality inventory is entering the market. A notable amount of hotel inventory is also being renovated, and hotels are increasingly recognized as compelling real estate investments. This in turn has resulted in more liquidity in the market and a competitive lending environment that is ready to support new hotel development and investment.

In our 2026 projections, the top markets for new hotel supply are Toronto Downtown with 669 rooms, Ottawa–Gatineau with 582 rooms, and Niagara Falls with 453 rooms. This is expected to result in an average national occupancy rate of 66%, on par with 2025 despite a 2.5% increase in supply (more than 7,000 rooms), reflecting pent-up demand in the market.

Download the HVS 2025 Canadian Hotel Valuation Index.