A Sector Anchoring the Canadian Economy

Canadians entered 2025 with a heightened sense of caution - and as 2026 begins, that mindset largely remains. Yet despite prolonged affordability pressures, elevated operating costs, and broader economic uncertainty, Canada’s hospitality industry continues to demonstrate its resilience. The past year reinforced that hospitality remains a core pillar of the Canadian economy and a priority for consumers.

Throughout 2025, restaurants, hotels, and tourism operators benefited from a continued shift toward domestic travel. A pullback from U.S. leisure trips redirected discretionary spending toward domestic travel, staycations, local dining, and entertainment closer to home. Canadians kept showing up - but with greater intention. Value, transparency, and quality increasingly shaped purchasing decisions, influencing how hospitality businesses attract, retain, and serve their guests.

Looking ahead to 2026, momentum remains, though growth is expected to be more measured. Consumer sentiment data referenced by the Bank of Canada indicates that economic uncertainty, housing affordability, labour-market concerns, and persistently high prices for everyday goods continue to weigh on spending decisions.

For hospitality leaders, the path forward is clear: success will hinge less on volume expansion and more on operational discipline, thoughtful talent strategies, and the ability to consistently deliver meaningful value in an uncertain environment.

Accommodation: A Record Year, Followed by Stabilization

Canada’s hotel sector delivered its strongest top-line performance on record in 2025, supported by the strength of domestic tourism, major events, and sustained pricing power. National occupancy reached 66.1%, ADR rose to CAD $216.10, and RevPAR increased to CAD $142.89, according to CoStar.

While revenues climbed, profitability remained under pressure. Rising labour, utilities, insurance, and technology costs limited margin expansion and exposed operational strain. Strong performance did not eliminate the need for sharper execution - it amplified it.

Looking ahead to 2026, momentum continues but with moderation. Improving international inbound travel is expected to add further lift following a strong domestic tourism year in 2025. Colliers forecasts inbound travel growth of 5.5% in 2026 and 6.8% in 2027, with volumes surpassing pre-pandemic levels by 2027. Carrie Russell, Senior Managing Partner at HVS Canada, characterizes the outlook as “positive but measured.” Occupancy is expected to hold near current levels as new supply enters the market, while room rates should continue to outpace inflation, albeit at a slower pace, supporting steady, less dramatic RevPAR gains.

World Cup host cities are poised for stand-out gains that highlight the sector’s upside potential. Global events such as the FIFA World Cup 2026 will drive short-term performance spikes, while longer-term success will hinge on discipline, leadership depth, and operational precision.

As our team worked on hundreds of searches and spoke to thousands of candidates in 2025, they saw a recurring theme - this environment is reshaping leadership demand. We are seeing strong need for commercially focused roles, particularly Directors of Sales & Marketing, revenue management leaders, and hotel and resort operators who can sharpen operations, protect margins, and lead from the front.

Foodservice: From Recovery to Reinvention

Canada’s foodservice industry entered 2025 under pressure and exited the year with proof of resilience. Despite persistent inflation, elevated labour costs, and a more cautious consumer, the sector outperformed expectations and reaffirmed its role as a foundational pillar of the Canadian economy.

According to Restaurants Canada, foodservice sales are projected to grow by approximately 5.4% in 2025, reaching close to $100 billion. Domestic tourism and temporary tax relief provided a lift, while consumer demand for shared dining and social experiences remained intact. The industry also added approximately 23,600 jobs, pointing to a measure of labour-market stabilization after several volatile years.

Beneath the headline growth, however, profitability remained under strain. Rising food costs, wage pressures, and higher borrowing expenses continued to compress margins, even as revenues increased. Consumers are still dining out but with sharper value expectations. Spend per visit is down, promotions matter more, and traffic is increasingly shifting toward quick-service and fast-casual formats.

Looking ahead to 2026, the outlook becomes more measured and structural. Forecasts point to flat to low single-digit sales growth, with real (inflation-adjusted) gains expected to remain modest. Industry sentiment is divided, reflecting heightened uncertainty. A new report by Dalhousie University’s Agri-Food Analytics Lab suggests Canada could lose approximately 4,000 restaurants on a net basis in 2026 - an adjustment driven not by sudden collapse, but by prolonged cost pressure, balance-sheet fatigue, and shifting consumer behaviour.

For industry leaders, the message is clear: the food service sector has moved beyond recovery. 2026 will reward operators who are disciplined, differentiated, and deeply attuned to value. Talent strategy, cost control, and operational clarity will matter more than expansion for expansion’s sake. At JRoss, we see an industry actively recalibrating - leaner, more intentional, and increasingly focused on long-term sustainability. The next phase of success won’t be driven by volume alone, but by leadership.

Hospitality Employment: A Softer Market, the Same Hard Problems

Hospitality hiring pressures appeared to ease in 2025. Wage growth slowed, candidate availability improved, and job vacancy rates retreated from pandemic-era highs. Beneath those headlines, however, the industry’s core labour challenges remain firmly in place. They have not disappeared - they have evolved.

Across Canada, the greatest strain continues to sit where it matters most: experienced leadership and skilled back-of-house talent. While more resumes are circulating, alignment between available candidates and the capabilities required to run efficient, data-informed operations remains uneven. Employers are seeing higher application volume, but the quality and role-readiness of candidates has not kept pace. Internal TA teams and operators are increasingly overwhelmed by volume, reinforcing the gap between perceived talent availability and actual fit.

This misalignment is being compounded by structural pressures on the talent pipeline. Reduced immigration levels, increasing difficulty renewing work permits, and longer processing timelines are limiting access to experienced international workers who have historically played a critical role in hospitality operations. The impact is particularly acute in tertiary markets and tourism-driven destinations. At the same time, declining international student enrollment and the closure or downsizing of hospitality and culinary programs across the country are constricting the future leadership pipeline.
 

If these challenges seem familiar, you can reach out any time to see how we can help – we’d be happy to chat. Contact Ian Milford at 604.260.6202 x1, or via email –

 

JRoss Observations : Lower Mobility, Higher Friction

In 2025 our team collectively connected with thousands of hospitality leaders as clients and candidates during hundred of searches across the country. What we are seeing on the ground is a market defined less by availability and more by hesitation. Candidate mobility has slowed meaningfully, particularly among experienced operators who perceive greater stability and internal opportunity within their current organizations. In an environment with economic uncertainty and where labour shortages persist, many candidates believe staying put offers a stronger path to progression than making an external move.

As a result, lateral moves have become far less attractive. Even well-aligned roles now require clearer upside, stronger narratives around stability, and defined progression within a near-term horizon to motivate change. In several cases, successful placements are occurring not because of heightened competition, but because fewer candidates are willing to move at all.

From a client perspective, we are also seeing a growing perception gap. Many employers believe the market is flush with talent due to increased resume volume from job postings. In reality, the majority of applicants are misaligned or unqualified, placing additional strain on internal teams and slowing decision-making. This disconnect is contributing to longer hiring timelines, re-evaluation of previously agreed salary ranges, and increased hesitancy at offer stage.

Candidate experience has also deteriorated in the open market. Ghosting, both from employers and recruiters is being reported more frequently, driven by overwhelmed TA and hiring teams and high application volumes. This erosion of communication is damaging employer brand perception and reinforcing the value of relationship-led, high-touch recruitment approaches.

Finally, while AI and automation are increasingly embedded in hiring processes, they are amplifying noise rather than solving alignment challenges. Automated screening and communication may increase efficiency, but they are not replacing judgment, context, or trust - particularly at the leadership level where decision making, cultural fit and credibility remain critical.

What the Data Shows

Statistics Canada data reinforces this tension. Hourly wage growth for permanent employees is at its slowest pace in more than three years, easing inflationary pressure but doing little to resolve persistent skills gaps. Vacancy rates in foodservice and accommodation have declined, yet remain among the highest of any sector and well above pre-2020 norms. In practice, compensation pressure has shifted rather than disappeared: while base wage escalation has moderated, cost-of-living realities continue to weigh heavily on candidate decision-making, particularly for senior and operational leaders.

Tourism employment softened modestly at the end of 2025, with seasonal pullbacks concentrated in food and beverage services and recreation. Accommodation and transportation roles posted gains, and overall employment levels remained near or above pre-pandemic benchmarks. Unemployment held steady at 4.9 percent, pointing to a temporary lull rather than a structural downturn. However, slower client decision-making, longer hiring timelines, and increased hesitancy at offer stage are contributing to greater execution risk across searches.

Labour pressures remain most visible in culinary hiring. By late 2025, foodservice vacancies approached 100,000 roles nationwide. A shrinking labour pool, rising living costs, and shifting worker expectations have reduced the number of experienced professional chefs willing or able to step into leadership roles, creating persistent gaps in kitchen management across the country.

Our experience in 2025 and now in the first month of 2026 is that hiring in 2026 is shifting away from pure headcount growth toward capability building. Employers are prioritizing leadership depth, cross-functional BOH and FOH skill sets, operational discipline, and talent comfortable working with technology, data, and automation. AI and automation are supporting scheduling, forecasting, and inventory management - not to replace people, but to raise expectations around digital fluency, adaptability, and decision-making.

The labour challenge facing hospitality is no longer cyclical. It is structural. Organizations that invest in recruitment strategy, leadership development, and transparent career pathways will be best positioned to compete for a smaller, more constrained pool of qualified talent.

Finding and attracting just the right candidates is just what we help with. We successfully connect leading hotel and restaurant organizations like yours with top talent. If you’d like to see how we can help, just let us know. 

Conclusion : A People-Driven Future

Canada’s hospitality industry enters 2026 with proven resilience and hard-earned discipline. Consumer demand remains intact, but more cautious. Growth opportunities still exist, but they are narrower, more competitive, and more execution dependent.

In this environment, people strategy becomes business strategy. Hospitality has always been human at its core, and the next chapter of the industry will be written by organizations that treat staffing not as a cost to be managed, but as a strategic asset - one that directly shapes service quality, brand loyalty, and long-term sustainability.

For hospitality leaders, 2026 will not be about doing more. It will be about doing better - with the right people in the right roles, leading with clarity, discipline, and purpose.