Canadian Occupational Projection System (COPS)

NAICS 7211; 7212; 7213

This industry comprises establishments primarily engaged in providing short-term lodging to travellers and vacationers in facilities such as hotels, resorts, motels, bed and breakfast homes, and cottages and cabins. These establishments may offer complementary services, such as food and beverages, recreational services, conference rooms and convention services, laundry and parking services. The industry also includes establishments operating recreational vehicle (RV) parks and campgrounds (including hunting and fishing camps); and establishments operating rooming and boarding houses, which may serve as a principal residence for the period of occupancy. Traveller accommodation is by far the largest of the three segments, accounting for 86% of employment in 2021, followed by RV parks and recreational camps (12%), and rooming and boarding houses (2%). The 4-digit NAICS breakdown for GDP is not available. Overall, the industry employed 130,500 workers in 2021 (down from 188,900 in 2019), mostly concentrated in Ontario (34%), British Columbia (23%), Quebec (17%), and Alberta (11%), with women accounting for the majority of the workforce (61%). The industry is also characterized by much lower wages than the overall economy average and a significant proportion of part-time workers (26%). Key occupations (4-digit NOC) include:

• Light duty cleaners (6731)
• Hotel front desk clerks (6525)
• Accommodation service managers (0632)
• Janitors, caretakers and building superintendents (6733)
• Accommodation, travel, tourism and related services supervisors (6313)
• Executive housekeepers (6312);
• Support occupations in accommodation, travel and facilities set-up services (6721)

* Also include many occupations related to the food services industry:

• Food and beverage servers (6513)
• Cooks (6322)
• Food counter attendants, kitchen helpers and related support occupations (6711)
• Chefs (6321)
• Bartenders (6512)
• Maîtres d’hôtel and hosts/hostesses (6511)

Accommodation services are heavily reliant on tourism activity and business travel, which in turn are driven by consumer spending and business activity both from the domestic and foreign sides (domestic tourism accounts for about 60% of total revenues). Consequently, the industry is particularly sensitive to fluctuations in domestic and foreign economic conditions, travelling costs, and the value of the Canadian dollar. After stalling during the global recession of 2008-2009, output increased at a subdued pace until 2015, reflecting the persistent weakness in discretionary spending on tourism activity and business travel and the slowdown of the Canadian economy following the oil price shock of 2014-2015. The pace of growth in output accelerated markedly from 2016 to 2019, as tourism activity benefited from multiple factors, including a notable increase in consumer spending attributable to robust labour markets in both Canada and the United States; major events such as the 150th anniversary of the Canadian Confederation and the 375th anniversary of Montreal; and the recognition of Canada as the best travel destination by Lonely Planet and the New York Times in 2017. Lower fuel costs and the sharp depreciation of the Canadian dollar in 2014-2015 have also contributed to improve tourism activity and increase domestic and foreign demand for accommodation services. Indeed, lower fuel costs have resulted in lower air and ground transportation fares, while a lower currency has attracted a large number of foreign tourists to Canada, particularly Americans, and encouraged more Canadians to choose vacation within the country.

However, the industry was devastated by the COVID-19 pandemic, with home confinement, physical distancing measures, travel restrictions and closed borders leading to a drastic fall of 40% in output in 2020 alone. Due to the continuation of public health restrictions in 2021, travel in Canada remained far below typical levels, but the industry was able to recuperate some of its losses, with output rebounding by 17%. As a result, real GDP contracted at an average rate of 1.3% annually over the entire period 2012-2021. Despite solid output growth prior to the pandemic (+2.8% per year), employment was on a downward trend, falling at an average pace of 1.1% annually from 2012 to 2019. This declining trend accelerated during the pandemic, as employment collapsed by 28% in 2020 and by an additional 4.8% in 2021, leading to an average decline of 4.6% per year over the past decade. Overall, productivity growth was positive, averaging 3.3% annually in the past ten years, essentially driven by the downsizing of the industry prior to the pandemic. Technological innovations, such as online hotel bookings and chatbots, have played an important role in reducing labour demand and increasing productivity by streamlining customer services and delivering smooth business-to-customer interactions. Growing competition from new business models like Airbnb and Vrbo has also amplified the need to contain operating costs in the industry. Many of the rentals found through those digital platforms are less expensive than hotels and often offer a more unique experience than traditional accommodations, thereby appealing to budget-conscious travellers. According to Statistic Canada, revenues from those types of private short-term accommodation services surged from $265 million in 2015 to $2,760 million in 2018, with Airbnb and other private short-term rentals accounting for 18% of the inventory for accommodations in Canada.

Over the projection period, output growth in accommodation services is expected to return to positive territory and to straighten markedly, as the industry continues to recover from the pandemic and keeps expanding. The lifting of public health restrictions; the return of conferences and business travel; the accumulation of a pent-up demand for tourism activity; and the recovery in arts, entertainment and recreation activities (such as concerts, major sport events, etc.) are all factors projected to lead to additional jumps in output in 2022 (+29%) and 2023 (+12%). However, once the output fully recovers, its pace of growth is expected to soften significantly, as strong inflation and higher interest rates will put pressures on household budgets and corporate profits, restraining growth in discretionary spending on leisure and business travel, which are often perceived as non-essential activities. When inflation returns to its target rate of 2%, interest rates should eventually start to decline and contribute to support disposable income and corporate profits, allowing individuals and businesses to increase discretionary spending and the industry to expand further. Tourism activity should continue to benefit from a favourable currency situation, labour markets close to full employment in Canada and the United States, and the fact that Canada will be co-hosting the 2026 FIFA World Cup (with the United States and Mexico). The industry will also benefit from massive retirements of baby-boomers from the labour force, as this large and relatively well-off demographic group will have more time to spend on tourism activities, including campgrounds and RV parks. Baby-boomers are expected to inherit a substantial amount of wealth and assets over the next ten years, providing another source of income to spend on travel and accommodation services (this will help to compensate for the slower pace of growth projected in disposable income and consumer spending resulting from the gradual slowdown anticipated in Canada’s employment growth). Tourism activity is expected to be increasingly reliant on overseas travellers, particularly from emerging economies where demand for travelling is rising in line with higher incomes. Compared with U.S. tourists, overseas travellers tend to stay longer in Canada and spend more. On the negative side, the growing number of firms and organizations using online platforms for meetings and conferences to save on business travel is expected to restrain demand for accommodation services, especially in downtown office-centric areas.

On average, the industry’s real GDP is projected to grow by a strong 5.4% annually over the period 2022-2031, driven by large increases in the first two years of the forecast. The notable rebound in output relative to the previous decade is also expected to lead to a strong pickup in employment, with job creation averaging 3.4% per year, recording most of the gains from 2022 to 2025. Thereafter, employment growth is expected to moderate in line with slower growth in output and additional gains in productivity. Overall, productivity growth is expected to average 2.0% annually throughout the next decade, with a large part of the growth occurring in 2022-2023 in response to post-pandemic adjustments and frictions in labour supply. Indeed, because the industry was severely impacted by public health restrictions and a high level of uncertainty during the pandemic, many previously employed individuals have found jobs in more secure industries, leading to cyclical frictions in labour supply. In the longer term, productivity growth is expected to soften as a significant part of the adjustments to technological innovations and new business models already took place prior to the pandemic. Nevertheless, there is still room for additional gains in productivity through technologies such as contact center automation platforms, which pair automation with artificial intelligence. By allowing companies to automate a large part of their customer service requests, such technologies leverage conversational AI and easy-to-navigate platforms, and often include built-in telephony, customer relationship management integrations and advanced analytics with regards to customer behaviour. Accommodation services are also characterized by a high degree of labour turnover due to the prevalence of part-time and seasonal work and much lower wages relative to other industries. Those factors, combined with demographic pressures on Canada’s labour force and a tight labour market, represent additional incentives for the industry to improve productivity as it may become increasingly challenging to compete with other industries to attract workers. As a result of additional gains in productivity and potential difficulties in retaining and attracting workers, employment in accommodation services is not expected to return to pre-pandemic levels over the projection period.

Real GDP and Employment Growth Rates in Accommodation Services

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.