Summary1. Many far-ranging bird and mammal species aggregate in colonies to breed, and most individuals remain faithful to one colony. Here, we use modelling to explore the consequences of this site fidelity for the metapopulation dynamics of such species. 2. We develop a spatially explicit model of the annual transfer process between colonies. We apply it to different spatial arrangements of 20 identical colonies and thus demonstrate that connectivity alone can, in the short term, give rise to heterogeneity in colony size. 3. We place the annual transfer model within a state-structured population model and examine the consequences of local and global density dependence for long-term dynamics. For each scenario, we investigate the implications of the strength of site fidelity, the cost of migration and the population's intrinsic growth rate. 4. Our results suggest that, under local density dependence, site fidelity slows down the colonization process and can temporarily trap the entire population in a subset of the available potential colonies. When site fidelity is strong, the metapopulation follows a step-like trajectory. Population growth occurs only rarely because individuals must overcome their site-fidelity to found new colonies. Even though this effect is temporary, it renders the entire metapopulation vulnerable to rare catastrophic collapses. 5. Under global density dependence, site fidelity imposes competition between colonies for the limiting resource. Stochastic events lead to the dominance of certain colonies and the temporary extinction of others. If site fidelity is strong, it can permanently prevent the metapopulation from occupying all available potential colonies. 6. We conclude that, irrespective of the mechanism of population regulation, colonially breeding species that show strong site fidelity are likely to occupy only a portion of the breeding habitat available to them.