Canada’s travel industry sees sharp declines in 2025, with fewer international visitors and lower spending. Discover the causes, impact, and road to recovery.
Foreign Visitor Numbers Drop Sharply
Canada’s tourism industry has hit a significant low in 2025, with international arrivals dropping 16.1% compared to the same period in 2024, according to Statistics Canada. The first half of the year saw a dramatic reduction in air and land entries, particularly from the United States—Canada’s largest tourism source. In May alone, arrivals fell from 7.1 million in 2024 to just 5.9 million.
U.S. Travel Dips Amid Tensions
The steepest decline comes from the U.S., where air travel to Canada by residents dropped by 24.2% and automobile returns fell 33.1% in June. Experts link the drop to strained diplomatic ties and trade-related uncertainty, discouraging American travelers from crossing the border.
Spending Declines Hit Tourism Revenue
International visitor spending also took a hit. In 1 of 2025, foreign tourist spending dipped 2.6%, reversing the 2.3% growth seen in the previous quarter. Key areas like accommodations, air travel, and food and beverage services saw the sharpest cuts. The economic pinch is being felt by businesses nationwide.
Shorter Stays and Shifting Preferences
Tourism patterns are changing, too. More travelers are skipping major cities like Toronto and Vancouver in favor of shorter, alternative trips—or bypassing Canada altogether. The rise in cost-conscious travel, inflation, and visa requirements are contributing to reduced overnight stays and shrinking visit durations.
Factors Fueling the Industry’s Decline
Several pressures are combining to drag tourism down. Economic uncertainty, inflation, and a stronger Canadian dollar have made Canada less affordable. Meanwhile, emerging global destinations—often cheaper and less restrictive—are attracting the attention of international tourists seeking value and adventure.
Hard-Hit Sectors: Hotels, Retail & Dining
The impact is evident across multiple sectors. Hotel occupancy rates are falling, especially in regions outside major urban centers. Restaurants and retailers, particularly those catering to foreign tourists, report fewer sales. High-end retailers are especially vulnerable as big-spending tourists stay away.
Government’s Domestic Push and Market Diversification
In response, Canada is turning inward and outward. Domestically, travel discounts and tourism campaigns are encouraging Canadians to explore local destinations. Internationally, marketing efforts are being redirected toward fast-growing markets like India, China, and Latin America to reduce reliance on traditional Western markets.
Digital Marketing Fuels Outreach
Technology is playing a key role in recovery. Tourism operators are using virtual tours, influencer partnerships, and social media to engage new audiences. These strategies aim to attract a younger, digital-savvy traveler base while showcasing Canada’s natural beauty and diverse experiences.
Signs of Hope in a Tough Year
Despite the downturn, recovery remains possible. With proactive marketing, diversification, and domestic engagement, Canada’s tourism sector is working to overcome its 2025 slump. Industry leaders remain cautiously optimistic that the second half of the year will bring stabilization, and that longer-term shifts will help the sector evolve into a more resilient, global player.
