Canada’s hospitality industry has returned to full strength in terms of demand and spending, but workforce stability continues to lag, according to a new industry report.
Spending in Canada’s hospitality sector reached $104 billion in 2025, with employment surpassing pre-pandemic 2019 levels, according to Beyond the Boom: Canada’s Hospitality Labor Market in 2025 and the Road to 2030, a new report from The Staffing Agency. Restaurants are busy again and travel has rebounded, but operators are still struggling to retain workers long term.
The report characterizes the situation as a “labor paradox.” While hotels and restaurants are actively hiring, many roles are filled by part-time workers, including students, newcomers and temporary employees. That approach keeps shifts covered but contributes to high turnover and inconsistent operations, the report finds.
Labor costs are also rising beyond hourly wages. Operators are facing higher wage floors, premiums in high-cost urban markets, benefits expenses and the ongoing cost of recruitment and training. As a result, margins are tightening even as consumer demand remains strong.
“In Canada, the wage increase isn’t a threshold; it’s the new baseline,” Steven Kamali, CEO of The Staffing Agency, said in a statement. “The question now isn’t if we can pay more, but if we can make the model work.”
Housing affordability has emerged as one of the most significant challenges to workforce stability, according to the report. In major markets such as Toronto, Vancouver and Montreal, many hospitality workers cannot afford to live near their workplaces. Longer commutes are making scheduling more difficult and contributing to unfilled shifts.
At the same time, union activity is increasing in several urban centers, influencing scheduling practices, pay structures and overall operations, the report notes.
Kamali said the pressures facing Canadian hospitality operators reflect broader trends across North America. “The pressure is not limited to Canada,” he said. “In the United States also, wage growth is outpacing productivity in many markets, while housing constraints continue to shape labor availability. Canada’s reliance on international talent adds another layer of sensitivity to policy changes.”
The report concludes that long-term growth will depend on building more reliable talent pipelines, addressing housing availability near job centers and developing region-specific workforce strategies. Without those changes, the industry’s recovery is likely to remain uneven, according to the findings.
The full report is available here.