In Winnipeg, Manitoba Victoria Day is mostly referred to as "May Long Weekend". It's the day when most Provincial Parks open for the summer camping season, so many take advantage of this first weekend out camping. However, May is unpredictable and it's a coin toss as to whether the weather will be nice, or cool and raining or even snowing.
Some cities, and I believe Victoria, BC is one, have a parade and fireworks. In Winnipeg we don't have a parade. However, I think we (Winnipeg) have a cannon salute at noon at our Legislative Building.
Victoria Day is actually a day to honour the Queen's Birthday (Queen Victoria and the current reigning Queen).
Other than finding out the stores are closed, I don't think you can really expect much. Canada Day (July 1st) is a much more celebrated holiday in Canada, but not nearly as celebrated at the USA's 4th of July which seems to have celebrations for days and weeks before and after.
So far as hotels go, it's always best to reserve as far in advance as you can. I can't see a hotel being booked up because of "Victoria Day" in particular, but some companies may schedule conventions etc on a long weekend which may cause problems. So you might want to make your reservation soon.