Rising Cost of Living Crisis Threatens Canada Travel and Tourism Recovery as Majority Struggle to Afford Basic Necessities, New Update You Need To Know

Canada’s travel and tourism sector is entering a critical moment. Despite high hopes for a strong post-pandemic revival, new data reveals a harsh truth that could derail the industry’s momentum. A nationwide survey conducted in July 2025 has exposed that over 57% of Canadians can no longer afford basic living expenses on their current income—fueling concern that domestic travel demand may fall sharply just as the industry regains its footing. For a sector that relies heavily on Canadian travelers to sustain local tourism economies, this financial shock is more than troubling—it’s a direct threat.

Canadians Under Financial Pressure: Tourism Takes a Back Seat

The survey, conducted by Harris & Partners, reveals a country on edge. Over half of respondents report that their income no longer stretches far enough to cover essentials like rent, groceries, transportation, and utilities. This alarming figure points to a growing crisis that reaches far beyond household budgeting—it strikes at the heart of discretionary spending.

Travel, especially within Canada, often falls into that discretionary category.

When basic needs become difficult to meet, non-essential spending is the first to go. Weekends away, family vacations, hotel stays, and even local experiences like dining out or attending events take a backseat. That means fewer bookings, emptier hotels, lower tour participation, and reduced revenue across the travel and hospitality sector.

Inflation Isn’t Just an Economic Issue—It’s a Tourism Threat

The inflation wave that swept across Canada in recent years has made everyday life more expensive—from food and gas to rent and insurance. But while the travel sector had hoped that easing inflation in 2025 would translate into higher bookings, this survey shows that the damage may already be done.

Wages for many Canadians have not kept pace with the rising cost of living. People are now using credit to cover essentials, skipping bill payments, and cutting corners wherever possible. In this climate, even affordable travel packages or seasonal promotions feel out of reach for a growing share of the population.

The tourism industry depends on optimism. But when people feel financially exhausted and emotionally drained, travel becomes a luxury few can afford.

Domestic Travel Demand May Decline Despite Open Borders

Canada’s tourism rebound in 2024 was driven largely by domestic travel. Canadians eager to explore their own country filled hotels, campsites, and national parks. But this new financial reality threatens to halt that momentum.

With more Canadians reporting that they can’t afford even the basics, plans for travel—both short and long-distance—are likely to be postponed or cancelled. Summer trips to the Rockies, weekend getaways in Ontario, or culinary tours through Quebec may lose traction as household budgets shrink.

Tourism boards and travel operators that were counting on continued domestic growth may now need to rethink marketing strategies and pricing models to appeal to increasingly cost-conscious consumers.

Tourism and Mental Health: A Hidden but Growing Crisis

The survey also revealed something deeper and even more concerning: the emotional toll of financial instability. As Canadians struggle to stay afloat, many are experiencing high levels of anxiety, stress, and burnout. That emotional weight doesn’t just impact daily life—it also dampens the desire to explore, escape, or engage in experiences.

Even when affordable options exist, mental fatigue can hold people back from traveling. Planning a trip becomes overwhelming. The idea of spending money—even for rest—feels risky. The joy of travel is replaced by guilt, fear, or emotional paralysis.

This invisible barrier could suppress domestic travel in unexpected ways, even in regions that are fully open and welcoming visitors.

Travel Businesses Are Feeling the Impact Already

Across the country, tourism-dependent regions are starting to feel the strain.

Hotel occupancy rates in secondary markets have plateaued. Midweek bookings are down. Local tourism operators report fewer advance reservations and a growing number of cancellations. Restaurants and attractions in traditionally high-footfall areas are seeing shorter visits and lower spending per customer.

While international visitors help cushion the blow in some areas, the loss of domestic travelers—who typically make up over 80% of Canada’s total tourism volume—is creating significant financial strain for many small businesses.

And the worry is far from seasonal. If household financial conditions continue to deteriorate, the winter 2025–26 travel period could be severely undercut, leading to layoffs, closures, and a prolonged downturn across the sector.

Airlines and Rail Services May Also See Booking Volatility

The travel squeeze isn’t limited to tourism operators. Airlines, especially those relying on regional and budget-conscious travelers, could see a dip in domestic route demand. Carriers may need to reconsider frequency and pricing on short-haul routes between cities like Toronto, Ottawa, and Montreal.

Similarly, VIA Rail and regional bus companies, which serve commuters and leisure travelers alike, may face a drop in ticket sales as Canadians prioritize essential spending and cut back on travel for events, family visits, or local vacations.

These shifts, if prolonged, could push providers to scale back services—further shrinking access and opportunities for low-income travelers and creating a negative feedback loop across Canada’s domestic mobility infrastructure.

What Travel Companies and Tourism Boards Can Do Now

The crisis may be real, but so is the opportunity to act.

Tourism authorities, travel brands, and hospitality operators must urgently pivot to address affordability head-on. That means more than just offering discounts. It requires thoughtful, empathetic product design, including:

• Flexible booking policies to ease uncertainty
• Tiered pricing for experiences and accommodations
• Partnerships with financial institutions to offer zero-interest installment plans
• Community engagement campaigns to promote local travel within budget

Equally important is mental accessibility. Marketers need to recognize that emotional stress can be just as limiting as financial stress. Messaging that emphasizes rejuvenation, healing, and stress relief—without pressuring spending—can resonate deeply.

This is a time for the travel industry to become not just a source of joy, but a source of hope, wellness, and emotional reset.

Government Support Could Shift the Landscape

The survey also raises critical questions for policy makers.

If most Canadians can’t afford the basics, it’s not just a personal crisis—it’s an economic one. And because travel plays a central role in job creation, regional development, and national pride, its weakening poses wider risks to Canada’s recovery goals.

Targeted support measures—such as travel credits for low-income households, tourism grants for small operators, and public campaigns promoting affordable regional travel—could help stabilize the industry while supporting household well-being.

Canada’s long-term tourism vision must now include income adequacy and access equity as part of the equation.

Final Thoughts: The Travel Sector Must Walk With Its People

Canada’s travel industry has always celebrated connection—between landscapes and people, cities and stories, cultures and communities. But connection can’t exist when affordability is lost.

The new data from Harris & Partners is a clear warning sign. If more than half the population can’t meet their daily needs, the travel industry must stop and listen.

This isn’t just an economic trend. It’s a call to action.

If tourism wants to thrive, it must adapt to the lived reality of Canadians today. That means working with compassion, innovation, and bold strategy to rebuild travel as something everyone can access—not just the fortunate few.

Because in a country as vast and beautiful as Canada, the ability to explore should never be a luxury. It should be a right.