Lakeside Beach, PEI.John Sylvester
With the price of oil and the value of the Canadian dollar tumbling, businesses are facing challenges – but there's at least one bright spot in the economy: tourism.
Tourism industry experts say the sector stands to benefit from the lure of an attractive exchange rate for foreign travellers, particularly from the United States, along with a potential rise in domestic travellers – Canadians who choose to vacation within Canada, considering the more expensive price tag on certain international trips.
The numbers already indicate that it's setting up to be a better-than-usual summer for tourism.
In May, 2.3 million international travellers visited Canada, an increase of 6.5 per cent from the same period last year, and a 2.5-per-cent growth from April. Visitors from the United States represented the highest May figure in five years, while for overseas travellers it was the highest May total in 15 years.
"We are seeing growth numbers we haven't seen in a long time," said Rob Taylor, vice-president for public affairs at the Travel Industry Association of Canada. "This is attributable to a number of things, but Canada is a high-cost destination, so when prices come down because of currency effects, we will see a direct uptick. There's definitely a correlation between the exchange rate and inbound travel to Canada."
A stronger U.S. dollar could entice more Americans to visit Canada, more Europeans to choose Canada over a more expensive United States and more Canadians to stay home. While it remains to be seen whether the summer season really will yield a significant gain in travellers – May numbers were the most recent available – the tourism industry is hopeful.
"Some of our members are operators on the ground, and they've raised to our attention that early on in the season there was a lot of sales coming out of traditional European markets," Mr. Taylor said. "There's nothing to let us believe it will downturn in the months following."
The growth in tourism, particularly from mature markets such as Europe and the United States, strikes many in the industry as a long time coming.
According to a report by the Canadian Chamber of Commerce, Canada was one of the top countries for international travellers just a decade ago. Now, Canada is at risk of falling out of the top 20. Research conducted by Deloitte shows that Canada is one of very few tourism countries to have actually seen international arrivals fall in recent years – a decline of 15 per cent since 2000. U.S. travel to Canada has decreased over all, while international travel has remained flat, reaching a mere 0.3 per cent last year.
While factors such as 9/11, the financial crisis and dollar parity with the United States have all affected the competitiveness of Canadian tourism, industry insiders say there is an enormous need to better market Canada as a travel destination.
Canada's tourism marketing efforts are spearheaded by the Canadian Tourism Commission, which promotes Canada as a brand to 12 selected countries around the world. Although the United States is one of the 12, it's been neglected compared to emerging markets until recently, when in May the Harper government allotted a budget of $30-million over three years for a new "Connecting America" project.
"You can't turn your back on your biggest market," said Lyle Hall, managing director at HLT Advisory Inc., a tourism and hospitality consultancy. "The fact that you've got 300 million people on our border that have not shown an interest in international travel to Canada, it means we need to position ourselves to do better."
And there might be no better time. With the lower dollar and the additional budget, it's Canada's chance to re-engage its neighbours to the south. "Without question the lower dollar will breed increased demand, but then it's a matter of moving beyond the border communities, getting the spending to be where it needs to be, and realigning existing marketing," Mr. Hall said. That includes ensuring that Americans are aware of the current pricing advantage without marketing Canada as a low-cost destination.
And in the end, it's still a temporary advantage – what Mr. Taylor calls a "stroke of fortune" that happens to favour the tourism industry. "Tourism is strong because of a weaker dollar. That's not necessarily a good thing," he said. "If it's recessionary, then it's reflective of a weaker economy and spending will be gone. It might also cover up some long-term structural problems in the industry and take the pressure off the government to act."