Amid escalating political tensions between Canada and the United States, a significant shift in travel patterns has emerged, with Canadians increasingly opting for domestic destinations over U.S. travel.
What does this trend mean for Canada's hotel industry?
According to a recent survey by Abacus Data, 71 per cent of Canadians intending to travel in 2025 plan domestic trips, with 44 per cent aiming to explore regions outside their province. This inclination towards local exploration is further supported by data from Statistics Canada, which reported that in December 2024, Canadian residents returned from 4.5 million trips abroad, marking a 1.3 per cent increase from the previous month.
The hotel sector has capitalized on this domestic travel boom. According to the National Tourism Indicators, tourism spending in Canada by Canadians increased by 0.5 per cent in the third quarter of 2024, after a 0.2 per cent increase in the second quarter. This uptick underscores the growing demand for local accommodations and services.
However, external factors have influenced travel behaviours. Political tensions between Canada and the United States, marked by increased tariffs and political rhetoric, have led many Canadians to reconsider U.S. travel plans. Reuters highlighted a 20 per cent decline in new bookings to the U.S. from Canada since February 1, 2025, with U.S. airlines like United reducing capacity from Canada. This sentiment is echoed by Abacus Data, which found that 71 per cent of Canadians plan to avoid U.S. travel for at least the next six months, reflecting the growing impact of political tensions on travel decisions.
In response, Canadians are seeking alternative destinations. Travel consultant McKenzie McMillan observed a decline in U.S. travel inquiries, with clients opting for destinations like Mexico, Europe, Iceland, and Asia. This shift further fuels domestic tourism, benefiting local economies and the hospitality sector.
The Canadian hotel industry's resilience amid these shifting travel patterns underscores its adaptability and the enduring appeal of domestic destinations. As geopolitical and economic factors continue to evolve, the sector remains poised to leverage Canadians' growing inclination to explore their own country.
According to the Globe and Mail, the "Buy Canadian" movement has starts to take a sizable bite out of U.S. business. U.S. tour operators are reporting booking declines of as much as 85 per cent, while American distilleries are losing major deals. Meanwhile, Canadian grocers are posting a bump in domestic product sales of up to 10 per cent. One National Tour Association member operator reported just two bookings for U.S. tours in the past two weeks compared to 39 bookings during the same period in 2024, she said. Another Canadian operator, with 85 per cent of their business focused on tours to the U.S., had to scrap every U.S. departure for March, April and May due to client cancellations.
Statistics Canada data also show that Canadian automobile trips to the U.S. are plummeting. About 1.2 million return trips were made into Canada by Canadians in February – a 23-per-cent drop from that period a year ago.
The U.S. Travel Association warned in February that even a 10 per cent drop in Canadian visitors would lead to more than $2.1-billion in spending losses and a threat to 14,000 jobs.
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