Canada’s Hospitality Boom Is Back but the Labor Fix Is Still Missing

Canada’s hospitality industry is busy again, but its recovery is still not fully stable.

A new report from The Staffing Agency says the sector generated $104 billion in spending in 2025, while employment rose above pre-pandemic levels. However, many hotels and restaurants are still struggling to keep workers for the long term.

The industry has recovered faster than its workforce

The report describes this as a “labor paradox.” Businesses are hiring and shifts are being filled, but many jobs are covered by part-time, temporary, or short-term workers. That keeps operations running, but it also makes staffing less predictable.

Higher costs are making recovery harder

Labor has become one of the biggest cost pressures for hospitality operators. The report says businesses are paying not only higher wages, but also more for benefits, recruitment, training, and wage premiums in expensive cities.

Restaurants Canada reported a similar problem. In its 2026 outlook, 89 percent of restaurant operators named labor costs as a top concern, while 88 percent pointed to food costs.

Housing is now part of the staffing challenge

Housing affordability is also hurting workforce stability. In major cities such as Toronto, Vancouver, and Montreal, many hospitality workers cannot afford to live close to where they work. This creates longer commutes and makes shift coverage harder.

Hospitality depends on in-person service. Hotels need workers on-site for rooms, guest support, and food service. Restaurants need kitchen and front-of-house teams at exact times. When workers live far away, early shifts, late shifts, and last-minute schedule changes become more difficult.

Foodservice remains under the most pressure

The labor recovery is not equal across the sector. Tourism HR Canada said food and beverage services were still around 7 percent below 2019 employment levels in December 2025. Accommodation performed better, but restaurants remained more exposed to staffing gaps and turnover.

This helps explain why restaurants may feel more pressure than hotels. Foodservice relies heavily on part-time workers and flexible schedules.

A similar pattern is visible in the US hospitality market, where employment has improved, but workforce stability remains weak. The sector had more workers than before, but high turnover, low average working hours, and weak long-term retention continued to hurt operations.

Photo by Eugene Aikimov on Unsplash