Canadians are flocking across the border in record numbers, a surge that is bound to heighten concerns among domestic retailers and airlines.
Overnight travel to the United States -- which includes travel by car or plane -- hit 1.95 million in September, the highest number since Statistics Canada began record-keeping in 1972.
It’s not a one-month blip, either. The second-highest number of visits on record was in June.
Several factors are luring people south. The strong Canadian dollar, at around parity, has made clothes, shoes and travel within the U.S. more affordable.
“A strong loonie, which averaged its best level in 14 months, no doubt tempted cross-borders shoppers,” noted Bank of Montreal economists.
Cheaper flights from U.S. destinations, such as Buffalo, to other cities in the U.S. and overseas is likely another draw. The Conference Board of Canada estimates that almost five million Canadians cross the border for cheaper flights each year, aiming to avoid Canadian taxes and fees.
Recent changes to duty-free rules are also playing a role. In June, the federal government eased restrictions on cross-border shopping. People on a trip of between two and seven days can now bring $800 worth of goods duty free, double the $400 limit before.
In all, overnight travel – measured as stays for at least one night – rose 2.6 per cent from a month earlier.
The wave of Canadians headed south spells lost opportunity for many retailers and airline companies in Canada – and it’s a trend not likely to diminish.
“With the holiday season upon us, the pull of the strong loonie and steep U.S. discounting may be too much to resist for Canadians,” BMO said in a note. “Expect cross-border shopping to remain a drag on retail spending.”