Canada's tourism promoters are facing a financial squeeze. Despite predictions of tourism growth this year, Canada is struggling to compete with other global marketing initiatives for traveller dollars.

While other countries increase their tourism marketing budgets, Canada is making do with less. Funding to the Canadian Tourism Commission (CTC) has dropped to $75 million from $85 million, says Randy Williams, president and CEO of the Tourism Industry Association of Canada (TIAC).

"When the rest of the world is increasing their tourism budget by 11 per cent, why are we cutting ours by 12 per cent?" asks Williams.

Industry officials say that a move by the federal government to cut visitor GST rebates will also hurt the sector, even though the ruling Conservatives are bringing back aspects of the GST visitors' rebate program (VRP) that they recently cancelled.

Photo courtesy of Tourism Saskatchewan/Douglas E. Walker
Kayakers take to the water in one of Prince Albert National Park's many rivers in Saskatchewan's north.

Ottawa's new program covers GST rebates on tour packages and for the convention sector, but individual tourists are no longer covered.

"Cutting the GST rebate program will reduce the competitiveness of the Canadian tourism product and potentially impact millions of foreign visitors a year," says Gary Wheeler, a spokesman for the Ontario Ministry of Tourism.

"Our international competitors - other countries - have a tax-rebate program because they realize its positive economic value."

Wheeler says the federal move to cut programs, particularly when the tourism industry is facing challenges, "is ill conceived and ill timed."

Ontario is doing what it can to keep its travel sector buoyant. The industry received a $22-million cash infusion last fall, which included money to market Ontario festivals and events along with convention development funding. In its provincial budget last month, $35 million was announced for a new conference and convention centre for Niagara Falls.

Canada is also trying to stem potential losses from new U.S. passport requirements. Ontario Premier Dalton McGuinty, along with the premiers of Manitoba and New Brunswick, met earlier this year with U.S. governors in Washington where they pressed for the use of a driver's licence with upgraded security features - and a citizenship designation - as a passport alternative.

The U.S. is Canada's No. 1 inbound market, with Americans representing four out of five inbound visitors.

Wheeler says the U.S. Department of Homeland Security has indicated that it will consider the use of such a driver's licence as border identification.

Meanwhile, the TIAC's Williams says the outlook for the upcoming year is for (tourism) growth of about three to four per cent for 2007 over 2006, which he notes trails the global pace of a four- to six-per-cent growth rate.

"We're losing share to other destinations and Canada is slipping," he says. "The good news is we're growing slowly, but the bad news is that we're not growing as fast as we should be."

Photo courtesy of Tourism Saskatchewan/Douglas E. Walker
The RCMP performs its sunset retreat ceremony at its Regina barracks.

The country's travel deficit is also a concern. The deficit - the amount of money spent by Canadians on travel outside Canada compared to what foreign tourists spend in this country - had dropped to $1.5 billion prior to 2006.

But in 2006 that number "ballooned" to $7.2 billion, says Williams. "We have to stop that bleeding of the Canadian currency in other markets and we need to get more visitors into Canada."

But not all the travel news is bad. Canada's tourism industry, valued at $66.9 billion, is on a bit of an upward swing.

According to Statistics Canada, the tourism gross domestic product (GDP) grew 1.9 per cent in the fourth quarter of 2006, nearly five times the 0.4-per-cent growth in economy-wide GDP.

Overall, tourism GDP grew 4.2 per cent in 2006, the third consecutive annual increase since 2003, when it declined 2.3 per cent. Statistics Canada also reports that 73 per cent of hotel operators expected almost the same or higher occupancy rates in the first quarter of 2007. Only 27 per cent expected them to fall.

The Vancouver-based CTC is not the only tourism promotion group facing cutbacks. Saskatchewan's tourism marketing budgets are also declining under the pressure of inflation, says Candace Phelps, vice-president and director of marketing for the Regina-based Tourism Saskatchewan.

"It's been more challenging to stay front of mind (as a destination) for our target markets," says Phelps, whose group is narrowing its marketing efforts to ensure that it gets enough bang for its bucks.

Alberta is Saskatchewan's No. 1 market, she adds. "We also focus on the U.S. angler and hunter - Saskatchewan is well known for its 100,000 lakes and our trophy-hunting experiences. And we do a bit of work in German-speaking Europe. There's always been an interest in our ranch and outdoor adventure product in those areas."

A tourism boost is also expected from the new RCMP Heritage Centre opening in Regina this spring, which will teach visitors about the RCMP's history and its role in policing. The Dakota Dunes Golf Course, just south of Saskatoon, is also becoming a tourist draw after being named Canada's best new course in 2005 by Golf Digest.

In Alberta, the picture is extremely bright.

"We're very optimistic," says Derek Coke-Kerr, managing director of Travel Alberta.

Coke-Kerr says the number of direct entries (people who fly directly into Alberta) was up 11.5 per cent this past January over the same time last year. The Canadian average was -4.4 per cent.

"A big chunk of that was in air traffic from the U.S," he adds. "We hope that holds up because the U.S. market was a sore spot on the overall Canadian inbound scene last year and also for Alberta. We had a reduction on inbound U.S. tourists as well. It was not as bad as many other provinces, but it was down."

Coke-Kerr predicts a reasonable increase in visitations this year, with visitors from across Canada expected to rise as well as increases from the Asian and European markets. Travellers from the U.S. are expected to decline by less than one per cent.

British Columbia is Canada's other strong tourism market. The province is looking forward to a nice economic bounce from the Winter Olympics, which it will stage in 2010.

It also plans to double tourism revenues to $18 billion by 2015.

In the current three-year period - 2006 through 2009 - tourism officials say visitor expenditures will increase by 10.9 per cent.

In Manitoba, the number of U.S. visitors is expected to drop by more than 200,000 by 2010, with a cumulative drop in tourism receipts over the next three years of $64 million.

Visitors from the U.S. now account for approximately 10 per cent of total visitors to Manitoba each year (675,000 person-visits), and 13 per cent of tourism revenue ($1.85 million per year), says Linda Deger, manager of corporate communications for Travel Manitoba.

However, the province still expects tourism revenues to increase by 3.4 per cent this year and 4.3 per cent in 2008.

To combat the expected drop in visitors from the U.S. - blamed in part on the new U.S. passport requirements - Travel Manitoba has ramped up its marketing efforts in key short-haul markets, including North Dakota, South Dakota and Minnesota, as well as long-haul fishing and outdoor markets, including California, Florida, Texas and Colorado.

TIAC, meanwhile, says it will look into the concerns about the U.S. travel market when it holds its annual conference later this year.

(Laura Severs can be reached at laura@businessedge.ca)