Spinnaker, you'll be fine and it's TOTALLY worth it. It's soooooo beautiful. The altitude might make you out of breath and you might have a headache, but nothing an over the counter painkiller and some water won't cure. It's not going to make you unable to ride.
For the hostels, when you leave Lake Louise (northbound) carry a package of spaghetti, a couple of packets of tuna and a couple of packets of powdered sauce mix (like pesto) - it's not gourmet, but it's food. THey have all the cooking utensils. The hostel at Lake Louise has a restaurant and there are other restaurants and a grocery right there. North of there, no real groceries, but if you carry some ride-food (pop tarts, granola bars, etc.) and the spaghetti, you'll be fine. There are a couple of lame rip-off tourist trap restaurants north of Lake Louise and the hostels.
Really it's totally worth it.