Caisse de dépôt et placement du Québec is leading a new round of investment worth $160-million in Germain Hotels to speed up the Canadian lodging company’s expansion as the tourism industry stays hopeful in an economy fraught with uncertainty.

The Montreal-based pension-fund giant is quarterbacking a new injection of equity in Germain that also includes the Fonds de solidarité FTQ labour fund and Investissement Québec, the provincial government’s investment arm, the partners said in a joint news release Thursday. All three are existing investors in Germain, together with the company’s founding family.

“Now we have some fresh money,” Jean-Yves Germain, the company’s co-founder and co-president, said in an interview. “We hope with this funding we’ll be able to increase our presence in the Toronto market and in the B.C. market.”

Germain Hotels has 19 properties in Canada under three main banners (the higher-end Le Germain, as well as Alt, and Escad). The Quebec-based company plans to open an Alt location at the Ottawa airport later this year, followed by a Germain on the Casino de Montréal grounds. In March, it announced a partnership with Reliance Properties for a Germain hotel on West Hastings Street in Vancouver, set to open in 2029.

The family enterprise is expanding at a tricky time for Canada’s hospitality sector. Tourism spending in Canada held strong in 2024 after rebounding as the COVID-19 crisis receded, climbing 3.6 per cent after a 15.3-per-cent gain the year before, according to Statistics Canada figures.

Growth now appears to be levelling off, but the outlook for the industry is cautiously optimistic, Business Development Bank of Canada said in an analysis published in March. A devalued Canadian dollar could boost the sector by attracting more foreign visitors, but continuing economic uncertainty triggered in part by U.S. President Donald Trump’s tariff war could affect the spending of Canadians at home, the financial Crown corporation said.

Mr. Germain said his team has some worries about the fallout from decisions being made across the border. “If the economy is hurt in Canada for sure we will be hurt,” he said. Still, bookings for the summer are looking “very good,” he said.

Germain Hotels has three properties in the Toronto area but could afford to have between eight and 12 given the market’s size, Mr. Germain said. As for B.C., he said the company is scouting for other locations to add to the West Hastings site.

The new equity injection marks the fourth round of financing the Caisse has participated in with Germain Hotels, said Kim Thomassin, an executive vice-president at the pension fund who leads its Quebec investments. “It’s part of our ambition to bring great Quebec companies to the next level.”

In all, the Caisse has invested roughly $100-million in Germain.

Ivanhoé Cambridge, the Caisse’s real estate arm, once held a vast portfolio of hotels, including landmark properties like the Royal York in Toronto and the Chateau Laurier in Ottawa. But it sold most of them off over the past decade to focus on assets it believed had more stable returns, such as residential property and logistics centres.

“We feel that we’re not hotel experts and we want to leave that to those who are,” Sylvain Fortier, Ivanhoé’s then-investment chief, said in 2014.

Ms. Thomassin echoed that view and noted that the Caisse’s latest funding for Germain is being made by its private-equity unit under the Ambition ME program (which supports Quebec-based mid-market companies) and not by Ivanhoé Cambridge. “We see it as an investment, yes in the industry. But in the management and the key talent and the people and the business plan and the growth plan that we see,” she said.