The Canadian hotel industry is entering a new phase. After several years of post-pandemic recovery, the market is now seeing steady, moderate growth. Strong leisure travel, major events, and higher room rates are pushing revenue to record levels. However, rising operating costs are putting pressure on profits.

To stay competitive, operators are turning to smarter hotel procurement strategies, including support from a Group Purchasing Organization (GPO).

Strong Performance Driven by Higher Rates

One of the biggest trends in the Canadian hotel sector is rate-driven growth.

Room demand has mostly stabilized across the country. However, hotels are still increasing prices. This has led to higher:

• Average Daily Rate (ADR)
• Revenue Per Available Room (RevPAR)

For example, a recent May report showed ADR reaching CAD 233.40, a 9.5% increase year-over-year. This growth is ahead of inflation and shows that guests are still willing to pay premium prices.

As a result, many hotels are generating strong top-line revenue even without major increases in occupancy.

Rising Expenses Are Cutting Into Profit

While revenue is growing, costs are rising just as fast or faster.

Hotel operators across Canada are seeing increased expenses in key areas such as:

• Labour and staffing
• Utilities and energy
• Insurance
• Food and beverage supplies
• Maintenance and operational goods

These cost pressures are reducing profit margins, even as ADR and RevPAR hit record highs.

This creates a gap between revenue growth and actual profitability. As a result, controlling costs has become a top priority.

Regional Differences Across Canada

Not all markets are performing the same way.

Slower Growth in Ontario and Border Markets

Some regions, especially Ontario and border locations, have seen slower growth. Changes in travel patterns and cross-border traffic have affected demand in these areas.

Hotels in these regions are still performing well but are not seeing the same rapid gains as other parts of Canada.

Strong Growth in Quebec and Montreal

In contrast, Quebec and Montreal are experiencing strong rate growth.

These markets are benefiting from:

• Increased tourism
• Strong cultural and event-driven demand
• Limited supply in key areas

This has led to noticeable spikes in ADR and overall revenue performance.

Increased Hotel Development Activity

After several years of slow growth, hotel development is picking up again.

For nearly six years, Canada saw less than 1% growth in new hotel supply. Now, in 2026, that trend is changing.

New projects include:

• Ascend Collection properties in Quebec
• Le Méridien Pinnacle in Toronto

This increase in development shows renewed confidence in the Canadian hotel market.

Strong Investment Activity

Investor confidence is also rising.

Major Canadian markets have recorded over $1.3 billion in hotel transactions. This includes interest from both domestic and institutional investors.

These investments signal long-term belief in:

• Market stability
• Revenue potential
• Continued travel demand

Major Events Driving Demand

Large-scale events are playing a key role in hotel performance.

Events such as FIFA World Cup matches in Vancouver and Toronto are creating strong demand. These events drive:

• Higher occupancy rates
• Increased ADR
• Growth in corporate and group bookings

This leads to what is known as compression pricing, where limited availability allows hotels to raise rates significantly.

Why Hotel Procurement Matters More Than Ever

With rising costs and tighter margins, operators need to improve how they manage spending.

Traditional purchasing methods can lead to:

• Higher costs
• Too many vendors
• Limited pricing visibility

This is why more hotels are focusing on hotel procurement strategies that improve efficiency and reduce costs.

How a Group Purchasing Organization (GPO) Supports Hotels

A Group Purchasing Organization (GPO) helps hotels control costs by combining their buying power with other businesses.

Instead of negotiating alone, hotels gain access to:

• Pre-negotiated contracts
• Preferred supplier pricing
• Streamlined purchasing processes

1. Lower Costs Across Key Spending Categories

A hotel purchasing program supported by a GPO delivers savings in areas such as:

• Food and beverage procurement
• Operating supplies (OS&E)
• Maintenance products
• Utilities and services

These savings help offset rising expenses and protect margins.

2. Simplified Supplier Management

Managing multiple vendors can be complex and time-consuming.

A GPO simplifies this by:

• Reducing the number of suppliers
• Offering standardized pricing
• Improving product availability

This allows hotel teams to focus on operations and guest experience rather than procurement tasks.

3. Data-Driven Decisions

Modern hotel procurement solutions provide access to valuable data.

Hotels can track:

• Spending patterns
• Category performance
• Cost-saving opportunities

This visibility helps operators make smarter financial decisions and improve long-term performance.

The Future of the Canadian Hotel Industry

The outlook for the Canadian hotel market remains positive.

Key trends include:

• Continued rate growth
• Strong event-driven demand
• Increased investment and development

However, rising costs will remain a major challenge.

Hotels that adopt smarter hotel purchasing strategies including working with a Group Purchasing Organization will be better positioned to succeed.

Final Thoughts

The Canadian hotel industry is moving into a stable growth phase. Revenue is strong, but profitability remains under pressure due to rising expenses.

To stay competitive, hotels must focus on both revenue and cost control.

By improving hotel procurement and leveraging the power of a GPO, operators can reduce costs, streamline purchasing, and protect their margins in an evolving market.

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