Accommodation and Food Services (NAICS 72): Ontario, 2024-2026
HIGHLIGHTS
- There were 426,700 people employed in the accommodation and food services industry in Ontario, comprising 5.4% of Ontario‘s workforce in 2023.
- Employment in the Ontario accommodation and food services industry increased by 7.0% in 2023.
- Employment is expected to see moderate growth over the 2024-2026 forecast period. The sector‘s recovery may be tempered by lower discretionary spending due to inflation and the industry‘s ongoing labour shortage.
ABOUT THE SECTOR
Composition and importance of the sector
Accommodation and food services is comprised of two key sub-industries: accommodation services, and food services and drinking places.
In Ontario, this sector employed 426,700 people in 2023. While this only made up 5.4% of the total workforce in Ontario, these workers accounted for more than one-third (37.8%) of employment in the accommodation and food services industry across the country.
The accommodation and food services industry in Ontario produced over $15 billion in gross domestic product in 2023, contributing 1.8% to the province‘s total GDP.
- Between 2022 and 2023, GDP in the industry increased by $935.5 million (6.4%).
- Between Q2 2023 and Q2 2024, GDP grew by 5.9%.
Graph 1. Employment Share by Subsector
Source: Statistics Canada, Labour Force Survey, Custom Table
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Geographical distribution of employment
Across the province in 2023, the economic region (ER) with the highest proportion of workers in the accommodation and food services sector was the Toronto ER, with 46.7% of employment.
Workers in the industry were over-represented in several ERs, including the Muskoka-Kawarthas ER, where 6.9% of total employment was in accommodation and food services, 6.2% for Hamilton-Niagara Peninsula ER and 6.1% for Windsor-Sarnia ER. In comparison, this sector made up 5.4% of overall employment in Ontario.
Table 1. Employment by Economic Region
Source: Statistics Canada, Labour Force Survey, Custom Table
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WORKFORCE
Workforce characteristics
- Women accounted for more than half (55.6%) of Ontario‘s accommodation and food services workforce in 2023, compared to 47.4% for all industries.
- Youth (aged 15 to 24) comprised 45.7% of workers in the industry, far greater than the 13.2% for the province‘s total workforce for all industries in 2023.
- Nearly half (46.6%) of accommodation and food services employees worked part-time in 2023, compared to 17.3% of the overall workforce in the province.
- The industry also had a greater share working in temporary roles (17.0%) compared to Ontario as a whole (9.7%).
- In 2023, the average hourly wage rate in Ontario‘s accommodation and food services was $18.31, far below the provincial average of $29.18.
Table 2. Top 5 Occupations
Source: Statistics Canada, Labour Force Survey, Custom Table
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RECENT HISTORY
Labour shortages have been an ongoing issue for the accommodation and food services sector in the province even prior to the pandemic, and continue to plague the industry. At the start of 2019, the sector had approximately 17,920 unfilled positions, representing a 3.6% job vacancy rate, compared to 3.0% for all industries in Ontario. Five years later, in 2024, the vacancy rate for the sector is at 3.8% (around 18,230 unfilled positions), compared to a 3.1% rate for all industries. These labour challenges were also reflected in the industry‘s employment data. Ontario‘s employment in this sector totalled 459,400 in July 2019, and dropped 3.6% to 442,700 by July 2024.
Accommodation services: Since the peak of pandemic-related disruptions in 2020, hotel occupancy rates in Ontario have significantly rebounded. In 2023, the occupancy rate climbed to 68.1%, a notable improvement from 34.8% in 2020, and nearly reaching the 2019 rate of 68.7%. That said, in recent years, occupancy rates have became less of a concern. Due to staffing shortages, establishments are more comfortable hosting fewer guests, preferring to offer fewer rooms at higher rates. The increased demand for leisure travel post-pandemic has also supported this trend.
In accordance with recorded labour shortages, employment in this subsector in Ontario fell 20.2% between July 2019 and July 2024. Comparatively, from a financial perspective, the subsector‘s operating profit margins improved significantly, reaching 19.5% in 2022 compared to 15.6% in 2019 and a notable increase from 5.2% in 2020.
Food services and drinking places: The provincial government enacted numerous public health measures to help restaurant establishments stem various waves of the pandemic in Ontario, and officially lifted all capacity limits for indoor settings in March 2022. Accordingly, sales at food services and drinking places in Ontario reached $32.2 billion in 2022 and $36.4 billion in 2023, representing increases of 5.4% and 18.9% respectively from pre-pandemic in 2019.
While sales have been strong, rising costs have remained a challenge for the industry and broader economy. In 2023, food prices in stores rose 7.8% on average, while restaurant prices increased by 6.5% on average in 2023. Along with increased labour expenditures and other operating costs, 43% of restaurants in Canada reported that 2022 was financially worse than 2021, and one-third of these establishments were operating at a loss in 2023. Additionally, the sector also saw the highest increase in insolvencies with 219 more filings (+43.8%) in 2023 than in 2022.
Graph 2. Sector Employment, Sector GDP and Operating Profit Margins for Accommodation Services (NAICS 721) and Food and Drinking Places (NAICS 722) in Ontario*
Source: Statistics Canada, Labour Force Survey, Custom Table
Statistics Canada, Gross Domestic Product by Industry - Provincial and Territorial (Annual)
Statistics Canada, Annual Survey of Service Industries: Accommodation Services
Statistics Canada, Annual Survey of Service Industries: Food Services and Drinking Places
*Data are expressed as index where year 2013 = 100%
** Data for 2022 were not yet available.
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EMPLOYMENT OUTLOOKS
The accommodation and food services sector in Ontario is expected to experience moderate employment growth, though overall industry growth may be limited by spending pressures on consumers and sustained labour shortages.
The economic outlook and global macroeconomic conditions are affecting Canadians‘ discretionary spending patterns. Recent data signaled a drop in discretionary spending, likely due to inflationary pressures weighing on households.Specifically, a May 2023 survey found that 7 in 10 Canadians were not dining out as much in order to save money. As well, consumers reported cost-reducing measures if they were to dine out, such as choosing cheaper main dishes on the menu (39%), looking for daily specials and deals (37%), and choosing less expensive restaurants to eat at (36%). This trend continues into 2024, with many Canadians dining out less frequently and opting for takeout at least once a week.
Other key drivers of growth in this sector are consumer demand for tourism and discretionary goods and services. Forecasts indicate that Ontario‘s tourism revenues are expected to grow from $86 billion to over $101 billion in 2027. While establishments in this sector cannot attribute all their revenues to tourism, overall, they should benefit from this increase.
Even though leisure travel may be reduced due to inflationary pressures, hotels have been experiencing demand via business travel and bookings for company-related events. However, the increase in business travel may not entirely offset the drop in leisure travellers. Accordingly, accommodation establishments have been raising rates to compensate. For 2024, the average cost of a hotel room in Toronto is expected to increase by 6.7%, compared to 7.8% nationally.
Another trend driving the employment outlook in this sector is changes in worker preferences and labour shortages. As in many other industries, the accommodation and food service sector continues to grapple with a lack of staff, demanding and physical in-person work, unstable hours and working conditions, and poor compensation. All of these factors have been pushing current and potential workers to other sectors, given that other jobs with similar entry-level requirements tend to offer steadier hours, more upwards mobility and less reliance on tips.Worker attraction and retention will continue to be a major challenge for this industry.
Table 3. Employment Change in Accommodation and Food Services: July 2019 vs. July 2024
Source: Statistics Canada, Labour Force Survey, Custom Table
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Key trends affecting the outlook of the accommodation and food services sector
- Inflationary pressures, both on establishments and consumers
- Increased business travel and hotel bookings for work-related events
- Labour shortages and workers leaving the industry for better working conditions elsewhere
FOR FURTHER INFORMATION
Note: In preparing this document, the authors have taken care to provide clients with labour market information that is timely and accurate at the time of publication. Since labour market conditions are dynamic, some of the information presented here may have changed since this document was published. Users are encouraged to also refer to other sources for additional information on the local economy and labour market. Information contained in this document does not necessarily reflect official policies of Employment and Social Development Canada.
Prepared by: Labour Market and Socio-economic Information Directorate, Service Canada, Ontario Region
For further information, please contact LMSID at: Contact: Labour Market Information - Canada.ca (services.gc.ca)
APPENDIX
Table A1. Geographical Distribution of the Sector
Source: Statistics Canada, Labour Force Survey, Custom Table
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Table A2. Characteristics of Employed Persons
Source: Statistics Canada, Labour Force Survey, Custom Table
*Average annual growth rate for last ten years available data
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| Accommodation and Food Services | All Sectors | |||||
|---|---|---|---|---|---|---|
| Employment, 2023 | Share of Total (%) | AAGR (%)* | Share of Total (%) | AAGR (%)* | ||
| Employment | 426,700 | 100.0% | 0.3% | 100.0% | 1.6% | |
| Male | 189,500 | 44.4% | 0.7% | 52.6% | 1.7% | |
| Female | 237,200 | 55.6% | 0.0% | 47.4% | 1.4% | |
| 15-24 years old | 195,100 | 45.7% | 1.5% | 13.2% | 1.3% | |
| 25-54 years old | 181,900 | 42.6% | -1.0% | 65.0% | 1.2% | |
| 55 years and older | 49,700 | 11.6% | 2.1% | 21.8% | 3.0% | |
| Worked full-time | 227,900 | 53.4% | -0.2% | 82.7% | 1.8% | |
| Worked part-time | 198,800 | 46.6% | 1.0% | 17.3% | 0.3% | |
| Self-employed | 28,000 | 6.6% | -1.3% | 13.6% | 0.4% | |
| Employees | 398,700 | 93.4% | 0.5% | 86.4% | 1.8% | |
| Permanent job | 326,200 | 76.4% | 0.2% | 76.6% | 1.9% | |
| Temporary job | 72,400 | 17.0% | 2.0% | 9.7% | 0.9% | |
| Less than high school | 88,200 | 20.7% | 0.1% | 6.1% | -2.1% | |
| High school graduate | 160,700 | 37.7% | -1.2% | 22.3% | -0.4% | |
| Postsecondary cert. or diploma | 100,900 | 23.6% | 1.4% | 32.3% | 1.3% | |
| University degree | 76,900 | 18.0% | 3.4% | 39.3% | 4.1% | |
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