Toronto Hospitality Investment Forecast

Supply dynamics test demand. Toronto’s hotel sector was resilient through 2025, as demand increased and key fundamentals held firm. That said, performance began to moderate amid lingering economic risks. Meanwhile, the city’s under-construction inventory sits at 3.6 per cent of existing supply, nearly double the national level of 2.0 per cent, reflecting developers’ confidence in long-term fundamentals. Despite elevated construction activity, demand growth has largely kept pace, though occupancy is projected to ease slightly in 2026 due to these supply-side pressures. Even so, downtown Toronto is poised to outperform, buoyed by corporate and group travel tied to major employers, convention facilities and a strengthening return-to-office trend supporting midweek stays. At the same time, Toronto’s global reputation and early momentum tied to the 2026 FIFA World Cup will further underpin leisure demand. Modest rate gains should help offset small occupancy declines, keeping overall revenues on a positive trajectory. Toronto’s hotel market enters 2026 from a position of strength, transitioning from a post-pandemic recovery phase into a more mature, supply-driven cycle.