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The Grand Canyon (Scott Keeler/St. Petersburg Times)
The Grand Canyon (Scott Keeler/St. Petersburg Times)

Barrie McKenna

U.S. tourism campaign puts Canada on back foot Add to ...

It’s the United States as you’ve never seen it before – quirky and diverse.

The new Discover America ad campaign features singer Rosanne Cash belting out a folk anthem, Land of Dreams, interspersed with smiling people of varied ethnic and religious backgrounds, and stunning city and country scenes.

The United States is putting out the multicultural welcome mat in its first national effort to sell itself to the world since the Reagan administration.

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And it’s scaring the daylights out of the tourism industry in Canada – a key target of the richly financed campaign by Brand USA, a new government-industry partnership.

“The giant has awoken,” said David Goldstein, president and chief executive officer of the Tourism Industry Association of Canada.

“They’re the best marketers on the planet, and they’re putting their shoulder into it. It’s frightening to our industry.”

Roughly $20-million (U.S.) of Brand USA’s $200-million annual budget is expected to be spent in Canada.

The new U.S. ads portray a country that looks remarkably like this one, at a time when Canada is spending significantly less promoting itself.

In March, Ottawa slashed the budget of the Canadian Tourism Commission (CTC), a federal Crown corporation, to $58.5-million (Canadian) for 2013, from $72-million in 2012, and more than $100-million a decade ago. Without a fresh infusion of funds, the agency will be forced to stop pushing Canada in several existing and emerging new markets.

“We have a diminished marketing budget at the same time the United States is coming up here and going after our market,” lamented Anthony Pollard, president of the Hotel Association of Canada. “It’s a problem, absolutely.”

The conundrum has forced the industry to consider an unpalatable option: a $15 fee on all inbound foreign air travellers to finance Canadian tourism promotion. The fee would harvest plenty of cash – roughly $126-million a year – but it would add to already steep and fee-laden Canadian airfares.

“Our cost structure is already high,” Mr. Goldstein acknowledged. “So there’s an ongoing debate about whether the [fee] model is appropriate here.”

Canada is in a lose-lose situation. The strong dollar and intense competition from countries willing to spend vastly greater sums on promotion is already hurting business. Canada has slipped to 15th spot in 2010 from 7th place in 2002 among the world’s top tourist destinations.

Canadian tourists now spend $16-billion a year more abroad than foreigners spend here – a huge drain on the Canadian economy.

A new tourism promotion fee would be piled on top of a host of existing taxes and levies imposed on Canada’s airlines and airports – all eventually passed on to travellers via inflated ticket prices. Canadian airfares are so out of whack with those in the United States that millions of travellers are now skipping Canadian airports altogether to save money, flying instead out of U.S. airports just across the border.

The fee proposal emerged after Ottawa recently invited various players in Canada’s tourism industry to provide options for financing the CTC over the long haul. The industry is exploring other alternatives, including restoring the CTC’s budget or reallocating some of the revenue from the roughly $460-million a year that foreigners pay in goods-and-services tax.

The fee may be the path of least resistance. And sources suggest it might already have the support of key cabinet ministers. The United States and many other countries already charge similar levies.

But piling more costs on an already uncompetitive industry is an odd way to narrow Canada’s widening tourism deficit.

The post-9/11 era hasn’t been much kinder to the United States, which has also been losing share of a growing global travel pie.

But it is already two years ahead of Canada in fixing its problem. Last year, it started imposing a $14 (U.S.) fee on travellers from most countries (though not Canadians). Several major tourist operators are contributing $1-million apiece to the Discover America campaign, including Walt Disney Co., Marriott and Best Western.

Years of neglect have left Canada with no easy way out. It almost certainly will have to put a lot more money on the table to promote tourism. And someone will have to pay for it – either Canadian taxpayers, foreign visitors, or the industry itself.

And the case for opening the Canadian airline industry to foreign ownership is suddenly a lot more compelling.

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