Canada investment strategy outlook: Colliers

CANADA – Demand for quality assets in Canada remains deep, capital both from equity and debt is available, and investors are increasingly strategic in where—and how—they deploy it, according to a new report from Colliers Hotels.

In its 2026 Canadian Hotel Investment Report, Colliers said that while geopolitical uncertainty persists globally, Canada remains an attractive destination for foreign capital, and hotels continue to demonstrate their ability to outperform through revenue flexibility, inflation-hedging characteristics, and diversified demand drivers.

Colliers Hotels

Liquidity across hotel equity markets remains ample entering 2026, according to Colliers, though capital is increasingly patient and selective. It said investors are prioritizing assets with clear operating upside, durable cash flow, and realistic paths to value creation. Bid ask spreads are narrowing, but disciplined pricing remains a hallmark of the current cycle.

With limited new supply in many Canadian markets, investor focus continues to skew toward well-located, high-quality assets, particularly those benefiting from brand affiliation, recent capital investment, or repositioning opportunities. Secondary and tertiary markets with proven demand drivers are gaining further traction as core markets remain tightly held.

As cap rate compression moderates, Colliers said asset-level operating fundamentals are once again front and center. Revenue growth—particularly through rate optimization—alongside cost containment and margin management will be key differentiators in asset performance. Investors are underwriting operational efficiencies as much as location.

Liquidity continues to improve, with increased competition among lenders and greater creativity in deal structures, according to the report. While leverage remains prudent, flexible financing— including structured debt and seller financing—will play a growing role in facilitating transactions, particularly for repositioning and portfolio strategies.

Interprovincial capital is expected to remain active, with Alberta, Atlantic Canada, and select resort markets attracting incremental attention due to favorable entry points, diversified economic drivers, and strong leisure and transient demand. Major urban centers remain highly sought after, though opportunities are often limited by tightly held ownership.

Select trophy assets attracted foreign interest; however, transactions ultimately closed with Canadian buyers, reflecting the strength of the domestic market and foreign capital’s historic preference for large portfolio acquisitions.

Colliers Hotels

Domestic capital continues to anchor Canadian hotel investment activity, driving the large majority of transaction volume. Global capital remains highly selective, engaging primarily in large-scale portfolios, marquee single-asset transactions, or situations with strategic or platform-building rationale. While favorable currency dynamics and Canada’s relative stability remain supportive, international participation is targeted rather than widespread, Colliers stated.

Colliers said the next phase of the cycle will reward expertise, scale, and strategy. While historically considered high-risk given the operating nature of the business, the lodging sector is now increasingly being viewed as part of alternative real estate investments capable of generating durable, long-term returns.

2025 takeaways

National hotel investment activity built further momentum in 2025, extending a multi-year growth trend with transaction volume exceeding $2.3 billion.

Substantial transactions in Canada’s major markets (+1 million population) were a primary driver of overall activity, increasing 37% year-over-year to $1.4 billion (62% of dollar volume) and lifting price per room metrics to historic highs.
Strong operating cash flows and favorable sell-side conditions enticed owners to selectively bring assets to market, while portfolio offerings remained limited (6% of volume).
Nearly 80% of the year’s 132 deals took place in secondary, tertiary, and resort-oriented markets, reflecting investor confidence beyond gateway cities as capital increasingly traversed provincial boundaries in pursuit of yield and relative value.
Concentrated trading in city centers drove full-service transaction volume above $1.4 billion, the highest level in nearly a decade, alongside record price-per-key metrics.
Investment activity across other service segments was more balanced, with focused-service pricing averaging above $200,000 per key (up 4% year-over-year), and limited-service assets recording a notable 17% increase to $116,000 per key.
Quebec transaction volume rose 29% year-over-year, driven by multiple sales in Montreal’s downtown and airport submarkets. Ontario registered its highest average price per key on record, driven by elevated trading in Toronto and Ottawa. Notably, provincial volume surpassed $1 billion without any major portfolio transactions.
Alberta and British Columbia remain highly competitive when assets come to market, though Western Canada transaction volume declined 7% year-over-year as slower activity in Alberta was partially offset by an increase in British Columbia.
Atlantic Canada investment volume increased nearly 30% year-over-year, led largely by Ontario-based buyers across both portfolio and single-asset sales.

While several institutional-grade assets came to market, acquisition activity was dominated by private capital sources with limited participation from traditional institutional capital.

Hotel investment companies (HIC) remain the most active buyers, driven by continued portfolio expansion among Canada’s largest owners and smaller ownership groups scaling into the HIC category.
Real estate company capital primarily targeted major metro markets, positioning hotels as a diversification strategy within broader real estate portfolios.
Select trophy assets attracted foreign interest; however, transactions ultimately closed with Canadian buyers, reflecting the strength of the domestic market and foreign capital’s historic preference for large portfolio acquisitions.
Increased participation from a broad variety of institutions including Schedule I banks, cooperatives, and credit unions has resulted in increased liquidity to the lodging sector.

Cap rates

Lodging investors continue to benchmark value using a combination of going-in and stabilized yields, gross room revenue multipliers, and price-per-key metrics, calibrated to asset location and business composition between rooms and other departments.

Hotels continue to offer an attractive yield premium relative to other real estate asset classes, with competition for high-quality assets maintaining pressure on cap rate expectations.

Canada investment strategy outlook: Colliers

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