Canada’s tourism industry is on track for measured growth in 2025, with potential tailwinds from a weakened Canadian dollar and evolving domestic spending patterns. According to a recent report from the Business Development Bank of Canada (BDC), economic conditions and traveller behaviour are expected to play key roles in shaping the sector’s performance over the coming year.
Tourism’s contribution to GDP and jobs
In the first three quarters of 2024, Canada’s tourism industry contributed 1.55 per cent to the national GDP. Within the sector, accommodation accounted for the largest share at 27 per cent, followed by transportation (21 per cent), food and beverage services (16 per cent), and other tourism-related goods and services (36 per cent).
Approximately 690,000 Canadians were employed in tourism-related jobs during that period, representing 3.3 per cent of total employment.
Demand driven primarily by domestic travel
Domestic travellers continue to be the backbone of Canada’s tourism market, representing about 76 per cent of total demand. International visitors — particularly from the United States — also make up a significant share of activity. In 2023, U.S. residents represented 77.9 per cent of all foreign visitors to Canada, although they accounted for just over half of the total international tourism spending. This is attributed to the shorter duration of many U.S. visits.
Ontario remained the top destination for foreign travellers in 2024, attracting nearly 47 per cent of all international visits between January and November. British Columbia and Quebec followed as the next most popular provinces for foreign tourists.
Currency shifts may support international and domestic travel
The depreciation of the Canadian dollar relative to the U.S. dollar is expected to boost Canada’s appeal to American visitors in 2025, while also encouraging Canadians to opt for domestic travel over international options. Historical patterns show that a weaker Canadian dollar typically results in increased foreign tourism spending.
However, domestic tourism is more strongly influenced by the broader economic climate than by exchange rates alone. While a weaker dollar may discourage outbound travel, sustained domestic spending will depend largely on consumer confidence and income levels.
Balancing optimism with economic uncertainty
BDC expresses cautious optimism for the year ahead. While currency conditions could support both inbound and domestic travel, overall performance will depend on the resilience of the Canadian economy and the stability of key tourism markets.
The sector is positioned for potential growth in 2025, but operators are advised to remain alert to shifting economic conditions and consumer trends that may impact travel decisions.
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