Canadian travelers continue to avoid the U.S., RBC notes

RBC economist Abbey Xu said Canadian travel demand is not weakening so much as shifting away from the United States and toward domestic and other international destinations, a trend she said is helping support tourism spending at home.

“Travel by Canadians is not weakening—but it is being redirected,” Xu said.

In her April 9 report, Xu said travel to the U.S. has fallen sharply, with 29.1 million Canadians returning from the U.S. in 2025, down 25.4% from 2024, while January 2026 data pointed to another year-over-year decline of about 23%. She said land crossings accounted for most of the pullback, suggesting shorter discretionary trips have been hit hardest.

At the same time, Canadians are redirecting more travel spending inside the country. Xu said returns from overseas destinations rose 9.2% in 2025, but the larger shift has been toward domestic tourism, where spending by Canadians increased 2.7% and helped lift total tourism spending by 1.7%, even as spending by international visitors in Canada fell 0.7%.

She said that rotation is helping support the services economy. Tourism GDP grew at an annualized 4.8% in the fourth quarter, compared with a 0.6% contraction for the broader economy, marking the third straight quarter in which tourism outpaced overall growth. Accommodation and dining spending rose 5.6% in 2025, while vehicle rental spending by Canadians increased 4.9%.

Xu said the shift also improved Canada’s travel-services balance, with softer Canadian spending abroad outweighing weaker spending by foreign visitors in Canada, making Canada a net exporter of travel services again in 2025.

She said domestic travel demand should remain supported by lower interest rates and a steadier labour market, though slower population growth, trade uncertainty and higher fuel costs could limit upside.

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