Despite being battered by high fuel prices, there are some bright spots for Canada’s tourism sector this summer.
Major summer tourism attractions such as Toronto's Canadian National Exhibition (CNE) and the Calgary Stampede are holding the line on ticket prices and say they expect attendance numbers to be in line with past years.

But this good news is tempered by the fact that the Canadian tourism industry appears to be on the precipice of an unprecedented decline, which could impact the 1.6 million people whose jobs depend on this sector.

Canada's travel deficit ballooned to $10.3 billion in 2007 and the latest quarterly numbers for 2008 show "a continued deterioration," says the Ottawa-based Tourism Industry Association of Canada (TIAC), founded in 1930 to encourage the development of tourism in Canada.

In 2001, the travel deficit was just $1.3 billion.

Photo courtesy of CNE
CNE general manager David Bednar says this year's fair is adjusting to the new realities of increased fuel costs.

"We think that we're in the 11th hour," says Christopher Jones, vice-president of public affairs for TIAC, noting that U.S. visits dropped from 44 million to 27 million between 2000 and 2007.

Canada no longer has the luxury of a low dollar and cheap gas prices to keep it competitive, he adds. "We're forced to compete with other destinations with these things," he says.

Jones also says 134 countries have approved destination status (ADS) - bilateral agreements facilitating the visits of tourists - with China. "We are amongst the few remaining countries that have yet to secure one."

TIAC says other than the airlines - Air Canada's announcement of fuel price-related layoffs has sent shudders through the aviation industry - it's still too early to judge the total impact of the escalating price of oil and gas.

"Our initial feedback is that people will still travel this summer by vehicle but they will travel not as far as they would of," says Jones. "I would argue we have yet to hit the tipping point on the price of fuel, but we are edging up there. In places that don't have airports or aren't marine accessible and rely on road traffic, that's going to be a concern."

In Vancouver, hotels and attractions are already feeling the pinch of higher fuel costs.

"Vancouver's most significant drop-off has been in the U.S. day-trip rubber-tire market, meaning car day-trips from cross-border states, because they tend to be more spontaneous and more directly affected by economic factors," says Stephen Pearce, vice-president of leisure travel and destination management for Tourism Vancouver.

Overnight visits from the U.S. are down 5.5 per cent over last year. However, Pearce adds that more Canadians are choosing to vacation in Canada and that has meant growth through the first quarter, with overnight demand increasing by five per cent.

The rising price of fuel has also hit the Canadian National Exhibition (CNE), the 18-day August fair that draws approximately 1.25 million visitors each year. It's Canada's biggest annual fair and the fifth largest in North America.

"From the midway to the exhibitors, their cost to get here is going up," says CNE general manager David Bednar. "It really is like the stone in the pond, the ripples just keep on going. Our pricing is pretty well set for this year. We just have to knuckle under and get it all figured out. There are some variable costs for us that will go up."

These include the fair's "people-mover" trains that are powered by diesel tractors. Officials have also had to adjust the per-kilometre reimbursement given to employees for their business travel.

"All of this stuff starts to add up when you put it all together," says Bednar.

One likely casualty is a modest trim to the CNE's air show. One or two acts could be cut, reducing the 31/2-hour spectacular by 15 to 30 minutes.

Higher attendance levels could possibly offset those higher costs, but it remains to be seen if people in Greater Toronto cancel vacation plans that would have taken them farther away. However, the sting may be felt for the eight per cent of the CNE market who travel more than 1.5 hours to get to the fair.

At the Calgary Stampede, a 10-day midway and exhibition starting July 4, there are as of yet no visible effects of the impact of high oil prices.

Stampede officials say they are introducing new free and family-friendly areas and programs, trying to offer as much value as possible.

Admission prices have not been raised. The bulk of Stampede attendance is local, between 70-75 per cent, and local tickets sales are on par with last year.

"We do know that our American visitors will be down this year, just from packages that have been booked," says Doug Fraser, the Stampede's manager of media relations. "On the flipside, traffic from Europe, Australia and New Zealand is up because they made these plans before."

High fuel prices also aren't expected to sidetrack Canada's only Indy car race, the Rexall Edmonton Indy, being held at the end of July.

In fact, ticket prices will be cheaper than last year and include free passes to the Capital EX fair - resulting from a new alignment between the motor race and fair organizer Northlands.

With more than 2,500 events and four million visitors per year, Northlands is Edmonton's second-largest tourist destination after West Edmonton Mall.

"Of course, everybody is concerned about rising petrol prices on all aspects of our lives," says Edmonton Indy general manager Jim Haskins. "Teams factor in increasing fuel prices when they do their yearly budgets. Indy cars are running on ethanol this year and we have not heard that (rising fuel prices) expressed as a concern."

Haskins sees rising fuel prices as an opportunity to reach Albertans who might otherwise have travelled further to a vacation destination.

The fact that the Edmonton event is the only Indy car race in Canada isn't hurting either. "We're obviously aware of the soaring gas prices," says Haskins. "It has had no impact on our ticket sales. There's an awful lot of excitement around our event, the only Indy event in Canada this year, it's historic."

Capital EX starts July 17 and is expected to draw about 775,000 attendees.

Brian Leadbetter, the director of government and community relations for Northlands, says admission prices remain the same as in 2007.

"We haven't seen any significant cost escalations for us, that's my understanding," says Leadbetter. "We're still looking for our attendance to be consistent with years in the past and with the new offerings we expect that will increase."

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