By Christopher Jones
For Business Edge
These are not the best of times for Canada's tourism industry.
Surveying the economic landscape in early 2009, those in the business of tourism cannot help but be alarmed about the prospects for our sector in the short and medium term.
Plummeting consumer confidence, stock market turmoil, tightening credit, business failures and reduced headcounts all point to seriously weakened demand for business and leisure travel.
The telltale signs are everywhere. Hotel occupancy rates are down significantly; offsite meetings and retreats, especially in resorts, are being scaled back; advance bookings by U.K. residents for winter ski vacations here are down 30 percent; and lodges and outfitters in Northern Ontario are experiencing dramatic drops from the border state, blue-collar workers who are their traditional target market.
The deterioration is pervasive as businesses and governments seek to reduce travel expenditure, and individuals stay closer to home, leery of taking on additional debt and cocooning themselves with family.
Although the industry had warned of this "crisis" scenario in June with the release of the Report on Canada's Tourism Competitiveness, there is little consolation for those who saw it coming. Travel remains a discretionary activity that can be readily cut back in tough times such as these.
A crisis, however, can have transformative dimensions, some of which may prove to be benign, providing that key government and industry players respond appropriately and with a view to the longer-term prosperity of the sector.
It is critical that Canada's government does not ignore tourism interests as it contemplates stimulatory actions in the short term to kick-start demand in the economy.
Tourism, after all, employs 1.6 million Canadians directly and indirectly, and has a proven capacity to deliver job creation and earn foreign currency. Moreover, there are 180,000 tourism-related businesses in Canada, of which 79 percent are small and medium-sized.
These businesses, as the secretary general of the United Nations World Tourism Organization (UNWTO) has recently stated, are no less worthy of economic support than firms in traditional Canadian resource sectors.
Perhaps a more compelling reason to aid the sector at this time is the recognition that there are profound demographic and economic changes afoot that, post-crisis, will usher in a new global travel economy.
Canada needs to position itself now to capitalize on these game-changing trends and not be merely a spectator when the present financial crisis subsides and the economic pendulum inevitably swings back.
The most profound of these is the rise of nascent middle classes in emerging market economies such as Brazil, India, China and Russia. As citizens of these countries acquire more rights and increased disposable income, their curiosity and desire to explore the world will rise proportionately.
At present, Canada does not engage in tourism marketing and promotional activities in most of these countries, confining ourselves instead to a presence in the traditional, mature source markets of the United States, Japan, Germany and the U.K., to name a few.
The tourism sector urges Finance Minister Jim Flaherty to enable the Canadian tourism brand to be marketed to the citizens of emerging market economies by enhancing the resources available to the Canadian Tourism Commission. The recent success in marketing the welcoming, safe and high-quality Canadian destination brand in Mexico should be replicated in other large industrializing countries.
Secondly, if our simultaneous energy and environmental crises tell us nothing else, they inform us that we will need to do some things quite differently to assure ourselves an economic future in the medium term.
According to the UNWTO, spending by tourists abroad averages US$2.35 billion a day, making it the world's largest industry. Tourism is only two percent of GDP in Canada whereas it is six percent in France and 11 percent in Thailand.
Canada is ideally placed to market its intrinsic green assets of unspoiled, iconic parks and protected areas, natural beauty and abundant wildlife to the emerging, sustainably oriented and ethically minded international traveller. It is our ace-in-the-hole and we need to do more to market it strategically in the future.
Canada's tourism industry strongly urges Flaherty to develop a dedicated tourism infrastructure/ product fund to invest, on a matching basis with the provinces and the private sector, in the refurbishment of Canada's tourism assets and facilities.
Many of these sorts of authentic, sustainable destinations attract a large quotient of higher-yield guests willing to pay for quality cuisine, spas and other amenities. The return on investment from this kind of tourism activity should thus provide government with the rationale and confidence to proceed in this direction.
Canada needs to give the international traveller new and compelling reasons to come here for the first time or to rediscover our country.
In doing so, we would be building on our intrinsic advantages and contributing to a low-footprint economic activity that is likely to grow ever more important in global terms in the course of this century.
(Christopher Jones is vice-president of public affairs for the Tourism Industry Association of Canada)
