Toronto Goes Hand in Hand With Vancouver and More as Canada Tourism Eyes 6% Spending Surge Despite Hotel Investment Crunch in 2026

Toronto goes hand in hand with Vancouver and more as Canada tourism eyes a 6% spending surge despite hotel investment crunch in 2026, driven by rising domestic travel, international arrivals, major events and growing visitor demand while accommodation development struggles to keep pace with tourism growth.

Canada is heading towards one of its strongest tourism years in recent history, but a growing accommodation problem threatens to complicate the boom.

Destination Canada expects tourism spending to reach C$140.9 billion in 2026, an increase of 6% from 2025. The forecast is stronger than its previous 5.4% growth projection and comes after a record summer in 2025.

Toronto, Vancouver, Montreal, Calgary and other destinations are positioned to benefit from stronger domestic holidays, international arrivals, business events and the global exposure generated by the FIFA World Cup 2026.

But there is a problem.

Canada needs more tourism infrastructure, particularly hotels. Hotels Canada says investment capital is available, yet high construction costs, taxes, development charges and lengthy approval processes are making some Canadian hotel projects less attractive. The industry says some investors are instead considering opportunities south of the border.

That creates an unusual tourism story. Demand is rising. Visitor spending is climbing. International interest is strengthening. Yet the places where those visitors sleep may not be expanding quickly enough.

Canada Tourism Spending Could Reach C$140.9 Billion in 2026

Destination Canada’s outlook points to a powerful year for the visitor economy.

Tourism spending is projected to increase 6% in 2026 to C$140.9 billion. By 2035, revenue could reach C$216.3 billion, representing growth of 67% from 2024 levels.

The sector already supports about one in every 10 Canadian jobs and hundreds of thousands of businesses across approximately 5,000 communities.

The first quarter of 2026 provided further evidence of momentum. Tourism revenue increased 5.6%, while spending by international visitors climbed 7.6%.

Domestic tourism is another major force. More Canadians are choosing holidays at home, with reshored travel spending projected to contribute C$4.4 billion between 2025 and 2027.

Toronto: Canada’s Biggest City Sits at the Centre of the Global Tourism Push

Toronto has become one of the clearest symbols of Canada’s tourism opportunity in 2026.

The city hosted Rendez-vous Canada from 26 to 29 May, bringing together more than 500 international travel buyers from 24 markets with Canadian tourism businesses. The event was projected to generate more than C$100 million in tourism sales.

Toronto’s importance extends beyond leisure tourism. It is a major business-events destination, international aviation gateway and cultural centre. Its hotel sector benefits from corporate demand, conventions, entertainment, sport and long-haul visitors.

Toronto is also one of the cities benefiting heavily from international visitor spending. Along with Vancouver and Montreal, it accounts for a substantial share of spending by overseas travellers.

Its challenge is therefore not attracting attention. It is ensuring accommodation and infrastructure continue expanding fast enough to handle future demand.

Vancouver: Canada’s Strongest Hotel Market Is Running Into a Supply Problem

Vancouver demonstrates the hotel challenge more clearly than almost anywhere else.

Downtown Vancouver recorded hotel occupancy of 80.5% in 2025. Its average daily room rate reached approximately C$342, while revenue per available room stood at about C$275.

Those figures place Vancouver among Canada’s strongest hotel markets.

But demand is beginning to exceed available supply.

Destination Canada investment material estimates Vancouver could require approximately 20,000 additional hotel rooms by 2050. Demand could begin outpacing existing room supply as early as 2026.

Vancouver welcomed approximately 11.2 million visitors in 2024, exceeding pre-pandemic levels. International demand from Asia-Pacific, Europe and the US West Coast adds further pressure.

The city therefore illustrates Canada’s wider dilemma perfectly: tourism demand is strong enough to support investment, yet barriers to building new accommodation remain substantial.

Montreal: International Spending Keeps Canada’s Cultural Gateway Important

Montreal remains another major beneficiary of Canada’s international visitor economy.

Together, Vancouver, Toronto and Montreal account for a large concentration of international tourism spending in Canada.

The city’s strength comes from its ability to combine culture, gastronomy, festivals, business events and international aviation.

Montreal also benefits from a different tourism identity from Toronto and Vancouver. Its French-speaking character gives international visitors a distinctive urban experience without leaving North America.

This diversity is valuable as Canada tries to grow overseas markets more quickly.

Destination Canada expects overseas tourism markets to expand at an average annual rate of 9.8% through 2035, almost twice the expected pace of growth from the US market.

That makes internationally recognised cities such as Montreal increasingly important to Canada’s long-term tourism strategy.

Calgary: Tourism Growth Moves Beyond Canada’s Three Largest Gateways

Calgary is also becoming more important in Canada’s international tourism strategy.

The city will host Rendez-vous Canada in 2027, giving Alberta an opportunity to present itself directly to international travel buyers.

Calgary’s tourism proposition extends well beyond the city itself. It acts as a gateway to Banff, Lake Louise and the Canadian Rockies, making it particularly valuable for long-haul travellers seeking nature and outdoor experiences.

That fits closely with Canada’s global tourism reputation.

Safety, open spaces, wilderness and stability are among the characteristics helping Canada maintain strong international appeal.

Calgary can therefore capture urban tourism, business travel and major events while feeding visitors into some of Canada’s best-known natural attractions.

The strategy also supports Destination Canada’s wider goal of distributing international visitors across more communities rather than concentrating them exclusively in Toronto, Vancouver and Montreal.

Canadian Travellers Are Spending More but Staying Closer to Home

Canada’s tourism growth is not being driven only by international visitors.

Canadians themselves are planning to spend significantly more on travel.

A 2026 Ipsos survey for Allianz Global Assistance Canada estimated total Canadian vacation spending could reach a record C$47.6 billion, up 22% from the previous year.

The average household vacation budget has climbed to C$4,169.

Travellers heading overseas expect to spend considerably more, averaging around C$6,354 per trip.

Yet confidence is not universal.

Higher living costs, economic uncertainty and a weaker Canadian dollar are encouraging some households to reconsider expensive international trips.

That creates an advantage for Canadian destinations. Travellers who might previously have spent their vacation budgets overseas can instead choose regional road trips, cottage stays, camping and shorter domestic holidays.

Shorter Road Trips Could Spread Tourism Spending Across Canada

The domestic travel pattern is also changing.

Rather than relying exclusively on traditional one- or two-week holidays, some Canadians are taking shorter regional trips.

Drive-to destinations have an advantage because travellers can reduce airfare costs and maintain greater control over their budgets.

That can spread tourism spending beyond Canada’s largest cities.

Ontario residents can explore smaller communities outside Toronto. British Columbians can travel beyond Vancouver. Albertans can combine Calgary with the Rockies. Quebec travellers can build shorter regional itineraries around Montreal and rural destinations.

Camping, cottage rentals, outdoor recreation and nature-based tourism can benefit from this shift.

For Canada’s tourism economy, domestic travel provides an important stabiliser. Even when international conditions weaken, Canadians choosing to spend more of their holiday budgets at home can support hotels, restaurants, attractions and tourism businesses.

The Hotel Investment Crunch Threatens to Become Canada’s Tourism Bottleneck

Strong tourism demand creates a simple requirement: visitors need places to stay.

That is where the industry’s concerns become serious.

Hotels Canada says 97% of Canadian hotels are Canadian-owned, including many properties operating under major international brands.

Yet hotel investors face increasing development costs.

Construction and renovation expenses have risen. Development charges can be substantial. Approval processes can be lengthy. Taxes can reduce project returns.

The industry argues that these factors can make Canadian hotel development less attractive than competing opportunities in the United States.

According to Hotels Canada, 46% of Canadian hotel investors have either already invested in US opportunities or considered doing so.

That creates a potential contradiction.

Canada wants tourism revenue to reach C$216.3 billion by 2035, but insufficient accommodation investment could make it harder for destinations to absorb the visitors needed to achieve that target.

Canada Tries to Make Investment More Competitive

The investment environment may now be changing.

The federal government announced a Productivity Mega Deduction in September, designed to make new capital investment more attractive.

The measure allows businesses to immediately write off much of their new capital investment and reduces Canada’s marginal effective tax rate on new investment from approximately 13% to 6.4%.

Hotels Canada has said the measure should help improve Canada’s competitiveness with the United States.

But the hotel industry is asking for more.

It wants reforms that encourage existing capital to be reinvested into new hotel projects and major renovations.

The argument is straightforward: strong tourism demand alone does not build hotels.

Developers need projects to produce competitive returns after construction costs, financing, taxation and regulation are considered.

Without that, Canada’s visitor economy could continue growing faster than its accommodation infrastructure.

FIFA World Cup Adds Another Layer of Tourism Demand

The FIFA World Cup 2026 has added another powerful source of international visibility.

Canada hosted matches in Toronto and Vancouver, while Destination Canada used the tournament to promote communities across the country.

The tournament was expected to attract more than one million visitors and contribute approximately C$2 billion to Canada’s economy.

Its value extends beyond match tickets and hotel stays.

Global broadcasting, international creators and destination campaigns exposed Canadian landscapes and tourism experiences to audiences in Germany, France, the UK, Australia, China and other major markets.

That exposure is important because Canada’s overseas visitor markets are forecast to grow 9.8% annually through 2035.

The World Cup therefore functions not only as a 2026 visitor event but also as an international marketing platform for future tourism growth.

Overseas Markets Could Become Canada’s Biggest Long-Term Growth Engine

Canada’s international tourism strategy is increasingly focused on diversification.

The United States remains the country’s largest international visitor market, and US visitor spending is forecast to grow around 5.3% annually.

Overseas markets, however, are expected to grow much faster.

Destination Canada projects average annual growth of 9.8% from overseas markets through 2035.

China could become important again as outbound travel recovers. Europe remains central. India represents another high-growth long-haul opportunity. Japan, Australia and other Asia-Pacific markets can support Vancouver and western Canada.

This matters because overseas travellers can help Canada reduce its dependence on the US market.

They can also strengthen tourism outside the traditional summer peak because long-haul travel patterns are often less tied to Canadian holiday calendars.

Tourism Growth Is Becoming an Investment Race

Canada’s 2026 tourism outlook is therefore exceptionally strong, but it comes with an important warning.

Visitor spending is projected to reach C$140.9 billion this year. Domestic vacation budgets are increasing. International visitor spending is growing. Overseas markets could expand rapidly over the next decade. Toronto and Vancouver have gained global exposure through the World Cup, while destinations across the country are benefiting from Canadians choosing to travel at home.

Yet tourism growth requires physical capacity.

Vancouver already demonstrates what happens when strong demand meets constrained hotel supply. Toronto needs enough accommodation to support major events, international visitors and business travel. Calgary, Montreal and emerging destinations need investment if they are to capture a larger share of future growth.

Canada has the visitors.

It has the international reputation.

It has domestic demand.

And according to the hotel industry, it also has investors willing to deploy capital.

The critical question for the next decade is whether the country can build quickly enough.

If hotel investment keeps pace with visitor demand, Canada’s projected 6% spending surge in 2026 could become the beginning of a much longer tourism expansion towards C$216.3 billion by 2035.

If accommodation development falls behind, however, Canada’s biggest tour

Toronto goes hand in hand with Vancouver and more as Canada tourism eyes 6% spending surge despite hotel investment crunch in 2026 as growing visitor demand, international arrivals, domestic travel and major events boost tourism spending while limited hotel supply creates new challenges.

In conclusion, Toronto goes hand in hand with Vancouver and more as Canada tourism eyes 6% spending surge despite hotel investment crunch in 2026, with rising international arrivals, stronger domestic travel, major events and growing visitor spending supporting tourism expansion. However, limited hotel development, higher construction costs and investment barriers remain key challenges that Canada must address to ensure accommodation capacity keeps pace with future tourism growth.