Explore the key dynamics of the hospitality sector as ADR growth, major event demand, expanding hotel supply, and strong investor interest position Canada's hotel market to outperform expectations in 2026.
The Canadian hospitality sector continued to record strong revenue growth through the first half of 2026, headlined by FIFA World Cup matches recently held in Vancouver and Toronto. The World Cup’s impact on the topline performance of the host cities is highlighted in this Outlook.
Across the broader national market, room demand growth remained relatively modest at 0.9% in H1 2026. As seen in recent quarters, revenue growth was driven primarily by ADR, which increased by 6.2%, resulting in RevPAR growth of 6.5%.
ADR growth was particularly strong in the luxury segment, where rates increased by 9.0% year-over-year, followed by the upper-upscale segment at 6.2%. Urban hotels recorded ADR growth of 7.9%, followed by resorts at 6.6%. Notably, after lagging in the post-COVID recovery, larger hotels with more than 500 rooms (typically urban hotels with significant meeting and event space), delivered the strongest performance across all property sizes, with ADR growth of 9.9%.
Strong, consistent results have supported an increase in proposed hotel supply across the country, with anticipated income levels generally supporting development costs. According to CoStar, the supply pipeline across all stages of development has increased by approximately 10% since mid-2025, to ±48,000 rooms.
The investment market remains strong as hotels continue to provide investors with growth not seen in most other asset classes. While availability is constrained, we expect the overall trade volume to increase in 2026.
