A new study found that visitors pumped billions of dollars into Toronto's economy last year, but tourists have not yet returned to pre-pandemic levels amid signs of slow growth in the tourism sector.

Approximately 26.5 million visitors arrived in 2023 and spent $8.4 billion – the bulk of which went to hotels, restaurants, and transportation – according to a report by Tourism Economics.

However, tourist numbers dropped below the peak of 2019, when 28 million people descended on the city, according to Tourism Toronto, which was commissioned to conduct the study.

Last year, 88% of visitors were Canadian, while nearly 7% came from the United States and 4.5% from abroad. The percentages of the latter two were higher before the pandemic.

Tarik Khan, the report's author, said that while spending in 2023 slightly exceeded pre-pandemic levels, much of that was due to inflation.

Growth also seems to be stalling, as Andrew Weir, CEO of Destination Canada, stated that hotel bookings in May declined from the previous year, which is a sign of potential withdrawal from visitors this summer.

He added during an interview: "The recovery is still far from complete and uneven."

Weir remarked: "Revenge travel was great for a while," referring to the wave of tourism that followed two years of pent-up demand due to the COVID-19 pandemic, "It's not a straight line; growth is returning but it's slowing."

Weir stated: "Still, the industry hopes that at least one event this year will mark the beginning of a new era, which is 'Taylor Swift.'

The pop star is set to arrive in the city for six nights at Rogers Centre next November. He noted that hotel bookings for that month – usually a blank space for reservations – have risen by 300 percent by early June compared to last year. "Any guesses why?"

But even the Swiftie hordes may not be able to counteract the tourism slowdown caused by inflation and rising interest rates.

Weir said: "Family budgets are under pressure, and that translates into less discretionary spending that includes tourism."

The significant decline in the number of visitors from China – the number one tourism market for Toronto with over 300,000 arrivals in 2019 – has also cut numbers. This sharp drop stems from China's decision not to add Canada to its list of countries allowed for group tour travel, even as the United States, the UK, Australia, and others were included on the list last summer.

Weir explained: "It allows groups to hold meetings here and for businesses to travel here," referring to "diplomatic issues" that prevented Canada from becoming an approved destination.

He added: "These were high-yield travelers. If you're going to travel for 12 hours, you have to stay a long time and do a lot at the destination when you arrive."

However, leisure tourism has rebounded more than corporate tourism. The slow return of business meetings and broader business travel is responsible for much of the stagnation in tourism this year.

Destination Toronto facilitated hosting 71 conferences and major events last year, which is far fewer than gatherings that exceeded 100 events in 2018. Weir stated that events in 2023 attracted 290,000 business delegates – many of whom were visitors – who spent about $400 million, indicating the massive economic contribution of conferences. However, this figure pales in comparison to the $800 million spent six years ago.

He said: "Some major meetings are not fully back."

The gradual reduction of health and travel restrictions in Canada in the years following the pandemic emergence may have also cost it some major event bookings, as large conferences are booked up to seven years in advance.

Weir added: "Many of the meetings in 23, 24, 25, 26 were booked in 2021. In 2021, there was no American meeting planner choosing Canada. Our borders were closed."

Meanwhile, individual business travelers and small corporate groups are increasingly opting for video calls instead of costly and time-consuming field visits.

Weir said: "This kind of thing has changed forever."

The study found that tourism directly maintained nearly 47,300 jobs – and about 20,000 jobs indirectly – in Toronto last year, making it even more critical for operators to tap into new markets and expand the sector.

Weir said: "If we are only selling within the Toronto or Ontario economy, you are not growing; you are just moving money around within that economy."