We explore Canada’s hotel industry hitting its highest occupancy since 2019, driven by major events and strong luxury performance. Meanwhile, rising customer acquisition costs challenge travel brands, highlighting the need for AI, personalization, and retention-focused strategies to drive loyalty and reduce spend.
We dive into the latest developments in Canada’s hospitality sector and the growing challenge of customer acquisition costs facing travel brands.
Canada’s Hotel Market Hits Record Occupancy
Canada’s hotel industry is seeing remarkable growth, achieving its highest occupancy levels since August 2019. In July 2025, occupancy reached 77.6%, with the average daily rate (ADR) increasing by 5.3% and revenue per available room (RevPAR) climbing 8.5%. Manitoba led the gains, demonstrating strong regional performance, while Quebec experienced a slight decline in occupancy.
Major events in Toronto, including the Oasis concerts and the Toronto International Film Festival, are driving strong bookings, highlighting how cultural and entertainment events continue to be key revenue drivers for the hospitality sector. Globally, hotel fundamentals remain solid, supported by limited supply, strong demand in luxury segments, and investors focusing on medium-sized, high-quality acquisitions.
The market is also seeing significant developments in new openings, renovations, and transactions, signaling continued confidence and growth in Canada’s hospitality landscape. For hotel operators, this is a reminder of the importance of staying agile and aligning property offerings with evolving traveler preferences, especially as demand continues to rise in key urban and event-driven markets.
The Rising Challenge of Customer Acquisition Costs
While the hospitality industry shows strong performance, travel brands are facing a growing challenge: rising customer acquisition costs (CAC). Between 2022 and 2025, CAC increased by approximately 35%, while customer lifetime value grew only 4.5%. This widening gap highlights the inefficiency of traditional marketing strategies and the financial pressure on brands trying to attract new customers.
Several factors are driving this trend:
Poor personalization: Generic promotions fail to engage travelers effectively.
Fragmented data: Incomplete or siloed data prevents brands from understanding their customers holistically.
Outdated targeting strategies: Many brands continue to spend on customers who are already loyal, wasting valuable marketing dollars.
Experts recommend a shift in strategy to address these challenges:
Focus on retention: Prioritize loyalty programs, repeat bookings, and personalized communications to increase lifetime value.
Unify customer data: Integrate first-party data across platforms to gain a complete view of traveler preferences and behaviors.
Leverage AI and personalization: Use AI-driven tools to create tailored experiences, optimize marketing spend, and deliver offers that resonate with each guest.
Implement service recovery initiatives: Quickly address negative experiences to retain customer trust and satisfaction.
By focusing on these strategies, travel brands can reduce CAC, improve ROI on marketing spend, and build long-term relationships with guests. The future of hospitality marketing lies in a customer-centric approach where technology, personalization, and experience take center stage.
Final Thoughts
Canada’s hospitality sector demonstrates that strong fundamentals and strategic investments continue to drive growth. However, brands must navigate rising costs and evolving customer expectations with innovative marketing, personalized experiences, and intelligent use of AI. For hoteliers, property managers, and travel businesses, the key to long-term success is balancing revenue growth with customer satisfaction—ensuring that every guest interaction fosters loyalty, repeat bookings, and sustainable profitability.
