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The Globe and Mail

Loonie’s drop driving more American tourists to Canada

Banff, Alta. has seen an increase in U.S. visitors this year.

Chris Bolin/The Globe and Mail

The shrunken loonie is helping encourage Americans to holiday in Canada, where their dollars are going much further than when the currencies were at par.

Like Canadian exporters, who gain competitiveness when the dollar sinks, the travel industry is finding itself on the winning end of the exchange rate imbalance. The Canadian dollar, which was over 90 cents (U.S.) for all of last summer, fell below 85 cents in January, and has been under 80 cents since early July.

While the impact is hard to quantify, Canadian travel destinations say they are definitely seeing more U.S. business.

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At the Banff and Lake Louise information centres, from January to June there was a 21-per-cent year-over-year increase in U.S. visitors, said Leslie Bruce, president of Banff Lake Louise Tourism. And online travel agencies that work with the association have reported that U.S.-sourced bookings are up by one-third or more, she said. "There is a noticeable change," that is likely due to the low loonie, although it is impossible to say categorically it is because of the exchange rate, she adds.

In the city of Vancouver, the number of American visitors was up by about 8 per cent in the first five months of this year, said Ty Speer, president of Tourism Vancouver.

"That's a little bit more than us just having a really good year," he said. While it is a result of many factors, there is "a little bit of help from the currency."

The exchange rate bonus is far more likely to have an influence on Americans who drive across the border regularly and are aware of the currency fluctuations than on those who fly in from New York or elsewhere to go on a long-planned cruise, Mr Speer said. For both those groups, however, the weakened loonie means they may spend more once they are in Canada.

The effect is being felt in Central and Eastern Canada as well. "Our U.S. numbers are up. We are seeing more U.S. people here," said Ann Swerdfager, publicity director at Ontario's Stratford Festival. That's not all attributable to the exchange rate, she said – good reviews of this year's shows have also helped.

The low loonie is also increasing attendance from within Ontario, since it is more expensive for Canadians to travel to the U.S., she said.

"It takes longer for the Americans to realize that dollar is going to have an impact on their holiday plans in a positive way than it takes Canadians to realize it is going to have an impact in a negative way," Ms. Swerdfager said.

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Still, American visitors may stay longer or spend more – or make repeat plans for next year – when they realize what a deal they are getting.

Numbers compiled by Destination Canada, the government agency responsible for marketing Canadian travel, show that overnight trips to Canada from the United States rose by 6.5 per cent in the January-to-May period, compared with the same stretch a year earlier.

More than 3.3 million Americans came to Canada in the first five months of 2015, the highest level for that period in several years, but still short of the peak in 2002 when there were well over four million U.S. visitors. That year, the Canadian dollar hit rock bottom, below 62 cents (U.S.).

"Certainly our best years were when the dollar was extremely low," said Ms. Swardfager, noting that those were also the best years for other businesses in Stratford that serve the tourist trade.

While the low dollar will draw more Americans to Canada, the Canadian travel industry should not depend on it, said Rob Taylor, vice-president of the Tourism Industry Association of Canada, which lobbies for the industry.

"I don't want my industry to be contingent on a low dollar," especially after the tourism sector has put so much effort into attracting well-heeled travellers who tend to spend more. "We are not a cheap discount destination."

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Andrew Weir, executive vice-president of Tourism Toronto, said his city has shifted its marketing to more experienced fly-in travellers who are not coming just because it is cheap. The city does not want to focus on the exchange rate because it is a short-term approach, he said. It is better to say "Toronto is worth paying for [like] other elite destinations."

Still, the cheaper dollar helps, he acknowledged.

"There is no question that once people are interested in Toronto, they will do the math and discover it offers more value than maybe they first thought."

At the same time, "the currency has the potential to keep Canadians here."

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