Montreal’s Hotel Paradox: Why More Rooms Don’t Guarantee More Revenue
Canada’s tourism sector saw record revenues this summer – a staggering $59 billion between May and August 2025, a 6% jump from the previous year. But while most major Canadian cities enjoyed a surge in hotel occupancy and revenue, Montreal bucked the trend. A new report from Cushman & Wakefield reveals a 5.8% drop in occupancy rates and a 3.9% decline in revenue per available room, raising questions about the city’s tourism strategy and future prospects.
The Supply & Demand Imbalance
The core of Montreal’s challenge isn’t a lack of demand, but an overabundance of supply. Since 2019, the city has seen an 11.5% increase in hotel rooms, largely driven by development near the Montreal-Trudeau airport to address a previous capacity shortfall. “Industry data shows that Montreal is going through a cycle where supply and demand evolve at different rates,” explains Dominique Villeneuve, president and CEO of the Greater Montreal Hotel Association. This rapid expansion, while intended to boost attractiveness, has mechanically diluted occupancy rates.
Yves Lalumière, president and CEO of Tourisme Montréal, emphasizes the proactive nature of this growth. “We didn’t have a hotel [near the airport]. Real estate developers have seized this opportunity.” While this foresight is commendable, the immediate impact is a more competitive landscape and downward pressure on pricing.
Beyond Room Count: A Broader Perspective
However, focusing solely on room numbers paints an incomplete picture. The loss of government contracts for airport-adjacent accommodations and a dip in American tourism also contributed to the negative results. Furthermore, external factors, like fluctuating exchange rates and geopolitical events, can significantly impact international travel patterns. The report also highlights the impact of events like wildfires in Western Canada, which boosted revenue in cities like Winnipeg (+24.7%) due to emergency accommodation needs.
The Halifax & Winnipeg Anomalies
The success stories of Halifax (+16.2%) and Winnipeg demonstrate the power of external factors and strategic positioning. Halifax benefited from increased direct flights and a shift in traveler preferences, while Winnipeg capitalized on an unforeseen crisis. These examples underscore the importance of adaptability and diversification in tourism strategies. Statistics Canada provides further data on Canadian tourism trends.
Montreal’s Competitive Position & Future Outlook
Despite the recent downturn, Tourisme Montréal remains optimistic. Montreal’s average hotel rate of $247 is still $20 higher than the national average for major cities, even with the increased inventory. Lalumière is quick to point out the futility of direct comparisons with cities like Toronto. “If you give me 80 Live Nation concerts…a baseball team…and three convention centers, we will not have the same results.” Toronto’s robust event calendar and infrastructure provide a significant competitive advantage.
Vancouver, facing a hotel room shortage, presents a different challenge. Lalumière argues that Vancouver’s limited capacity will inevitably drive up prices, making it less accessible to a wider range of travelers. Montreal’s proactive approach to expanding hotel capacity, while currently impacting occupancy rates, positions it for long-term growth and affordability.
The Evolving Canadian Tourism Landscape
The Canadian tourism industry is undergoing a significant transformation. The rise of domestic travel, fueled by a desire for closer-to-home experiences, is reshaping demand patterns. Cities that can adapt to these changing preferences and offer unique, compelling experiences will thrive. The key for Montreal lies in attracting a diverse range of visitors, leveraging its cultural attractions, and effectively marketing its value proposition.
Looking ahead, the ability to anticipate and respond to external shocks – from economic downturns to global health crises – will be crucial. Investing in sustainable tourism practices, diversifying revenue streams, and fostering strong partnerships between public and private sectors will be essential for ensuring the long-term resilience of Canada’s tourism industry. What strategies will Montreal employ to navigate these challenges and reclaim its position as a leading tourism destination? Share your thoughts in the comments below!
