Canada’s hotel investment market saw significant growth in 2024, with total transaction volume reaching $2.0 billion, a 16 per cent year-over-year increase, according to Colliers’ INNvestment Canada Hotel Report Q4 2024. Strong operating performance and investor confidence contributed to the sector’s continued momentum, particularly in major metropolitan markets.
Investment activity driven by major markets and secondary opportunities
The fourth quarter of 2024 accounted for 24 transactions totaling approximately $354 million, representing 18 per cent of the year’s total. Ontario led the country in hotel investment, making up 47 per cent of all transactions, followed by Alberta (19 per cent) and British Columbia (14 per cent).
Significant sales included the Radisson Toronto Airport West, which sold for $28.9 million, and the Best Western Plus Ottawa Kanata, which traded for $10.5 million. The Radisson Hotel & Suites Niagara Falls is set for a major renovation and will be relaunched under IHG’s voco brand.
While major urban centres remained the focal point, investment in secondary and tertiary markets was also strong, with smaller transactions dominating the landscape. Sixty percent of all 2024 hotel trades were valued under $10 million, and 43 per cent closed for less than $5 million, reflecting investor interest in smaller markets with attractive yields.
Record hotel performance despite moderating growth
Revenue per available room (RevPAR) reached a record high in 2024, though growth slowed to 4 per cent year-over-year, following increases of 18 per cent in 2023 and 91 per cent in 2022. The strongest performance came in the fourth quarter, boosted by demand surges during Taylor Swift’s concerts in Toronto and Vancouver.
Overall occupancy levels remained flat, increasing by just 0.1 per cent year-over-year. Growth was largely driven by higher average daily rates (ADR), which outpaced inflation. Demand from transient travellers and weekday business travel remained stable, helping to offset weaker group and weekend demand.
Despite topline revenue growth, profitability was slightly impacted by rising operational costs. Gross operating profit as a percentage of revenue fell 10 basis points to 34.2 per cent over the first eleven months of 2024, primarily due to labour costs increasing to 37.7 per cent of revenue.
Outlook for 2025 includes new supply and shifting demand trends
The Canadian hotel sector is expected to experience moderate expansion in 2025, though occupancy rates may decline slightly due to an increase in new hotel inventory. Currently, 10,000 rooms are under construction across the country, with 60 per cent of those expected to open within the year, adding approximately 1.3 per cent to total supply.
ADR growth is forecasted at 1.7 per cent, raising concerns about whether it will keep pace with projected 2.4 per cent inflation. Additionally, GDP growth is expected to be 1.4 per cent, with economic uncertainty remaining a key risk factor for the sector.
Opportunities in group and international travel
One of the biggest opportunities for 2025 is expected to be in group and international travel. Group demand contracted by 3.3 per cent in 2024 and remains 18 per cent below pre-pandemic levels, largely due to China’s continued exclusion of Canada from its list of approved group travel destinations. However, as business travel normalizes and the number of conferences and conventions increases, year-over-year growth in this segment is expected to return.
International travel, particularly from the United States, is also expected to boost demand. Historical trends show that American travel to Canada increases when the U.S. dollar strengthens against the Canadian dollar, and with further depreciation of the Canadian dollar expected in 2025, a rise in inbound U.S. travel is anticipated.
While challenges such as rising operational costs, economic uncertainty, and new supply additions remain, stable valuations and growth in key market segments indicate that Canada’s hotel sector is positioned for continued resilience in the year ahead.
Easton's Group of Hotels and The Gupta Group, in partnership with The Remington Group, the Rudolph Bratty family, and Marriott Hotels, have announced the official opening of the Kingston Marriott on December 18, 2024.…
Marriott International has appointed Bertil Fabre as area general manager.
Over the holiday season, InnVest Hotels presented a $75,000 cheque to Food Banks Canada-Banques alimentaires Canada. The funds were raised during InnVest’s Giving Tuesday initiative, and came from a portion of hotel…
Union Hotel, developed by the Silver Hotel Group, is set to open its doors in January 2025. Located at 60 York Street, the hotel is a bold reimagining of the former Strathcona Hotel, which operated from 1933 until 2023.
