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Tourists take pictures of the 1000 Islands during a tour of the St. Lawrence river near Gananoque Ont., Aug. 6, 2015. (Lars Hagberg For The Globe and Mail)
Tourists take pictures of the 1000 Islands during a tour of the St. Lawrence river near Gananoque Ont., Aug. 6, 2015. (Lars Hagberg For The Globe and Mail)

Canada's travel industry cannot rely on weak loonie for growth: report Add to ...

Tourism to Canada rebounded in 2015, thanks to the low Canadian dollar, but the travel industry can’t count on a favourable exchange rate to prop it up indefinitely.

The sector has to make some significant changes if it is going to regain its spot among the top 10 destinations in the world, according to the latest annual report from the Travel Industry Association of Canada. That means boosting marketing efforts, trimming airport taxes and fees for incoming travellers and making sure there are enough employees to work in the sector.

The report notes that Canada was in eighth place among the world’s top destinations – measured by international visits – in 2000, but it has fallen well out of the top 10 since then. By 2014, Canada was in 17th place, behind countries such as Saudi Arabia, Greece, Thailand and Austria.

France, the United States and Spain occupy the top three spots, as they did back in 2000.

The main reason for this long-term drop in status is a significant decline in U.S. travellers coming to Canada, said Rob Taylor, TIAC’s vice-president of public affairs. That was caused by a confluence of events, including the 2002 SARS outbreak, a weak U.S. economy and tighter security rules. At the same time, “we haven’t built enough business from other markets to compensate … while other countries have,” he said.

Consequently, Canada has developed a strong travel-trade imbalance, because Canadians continue to boost their own spending outside the county; we are currently ranked seventh in total international travel spending. Our international deficit stood at more than $18-billion at the end of 2014, the TIAC report said. In Canada, the travel industry has what TIAC calls an “unhealthy dependence on domestic travel by Canadians.”

Even the low dollar, which helped boost incoming travel numbers by 7 per cent in the first eight months of 2015 and kept many Canadians at home, will not solve the problem, the TIAC report says. There is a “danger of relying on currency exchange as a growth strategy,” it warns.

Despite the low dollar, “Canada is an expensive place to travel to,” Mr. Taylor said, and part of the problem are high taxes and fees paid by travellers using the country’s airports.

One of the TIAC recommendations is that those levies be cut. It also says Ottawa should make it easier for foreign visitors to get visas, especially if they are coming from key growth markets.

The report also recommends the federal government boost the country’s international tourism marketing budget. While Destination Canada – the government Crown agency responsible for selling Canada as a travel choice – got a $30-million infusion of funds over three years from Ottawa to boost marketing in the United States, it needs more to be effective, the report said.

Indeed, while the low dollar has helped make travel here somewhat less expensive for people in the United States and Europe, it has made advertising and marketing outside the country more costly for Destination Canada, the provinces and the private sector.

Another key issue for the tourism sector is a labour shortage, especially in Western Canada. Loosening the Temporary Foreign Worker Program to allow a seasonal stream of employees would be one short-term fix, TIAC suggests.

The report points out the importance of emerging countries such as China, which is poised to take over from Britain as our second-largest source of tourists after the United States. Most Chinese travel is now to British Columbia and Ontario, partly because that’s where the flights go and that’s where family members reside. But there is enormous potential to expand Chinese tourism significantly.

Over all, the U.S. market is – and will remain – key to the Canadian tourism sector. The TIAC report says it is crucial to maintain the current volume of short cross-border trips by Americans, while taking “surgical approaches” to attract more long-term U.S. travellers, most of whom come from larger cities.

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