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CBRE forecasts record RevPAR in 2025
Canada’s hotel industry is expected to achieve significant growth in 2025, driven by sustained travel demand, major international events, and robust economic conditions, according to the latest CBRE report, U.S. Hotels State of the Union February 2025 Edition.
CBRE forecasts a 2.7 per cent year-over-year increase in revenue per available room (RevPAR) for Canadian hotels in 2025, reaching an unprecedented high of $137. This growth is set to occur across all major Canadian markets, buoyed by a resurgence in urban hotel occupancy and rising demand for luxury accommodations.
The optimistic outlook for Canada is underpinned by a broader regional trend, which sees hospitality sectors in the U.S. and Mexico also thriving. The report attributes this regional upswing to recovering international tourism and steady increases in group and business travel, contributing to a forecasted overall RevPAR increase of 2.0 per cent for the broader North American hospitality market.
"Canada’s hotel sector is particularly well-positioned for growth, benefiting from major international events such as the 2026 FIFA World Cup, which will be jointly hosted by Canada, the U.S., and Mexico," states the CBRE report. These global events are expected to significantly boost international visitation, driving occupancy rates higher, especially in key urban markets like Toronto, Vancouver, and Montreal.
Moreover, despite anticipated demand growth, the supply of new hotel rooms in Canada is projected to remain constrained. Factors such as high financing and construction costs, coupled with labour shortages and lingering impacts from past economic uncertainty, mean new hotel openings are expected to grow at less than one per cent annually over the next three years. CBRE notes this constrained supply could enhance pricing power and increase asset values for existing hotel properties.
Economic conditions in Canada are also favourable, with forecasted GDP growth of approximately 2.4 per cent and inflation around 2.5 per cent, which are expected to positively correlate with hotel performance metrics.
The report emphasizes that hotel owners and operators in Canada can expect improved profitability and sustained demand, provided economic conditions remain stable and international travel continues its recovery trajectory.
Canadian hospitality stakeholders should prepare strategically to capitalize on these positive market dynamics, focusing on maximizing revenue potential from upcoming events and addressing ongoing challenges in hotel construction and staffing.
