Record high gasoline prices are not expected to stall Ontario's $20-billion travel and tourism industry.
"People aren't going to stop travelling because of higher gas prices. They'll travel differently," says Randy Williams, president of the Tourism Industry Association of Canada (TIAC).
Between January and August, the average price for regular unleaded gasoline in Ontario increased to $1 per litre from 73.3 cents, a 36.4-per-cent increase. The impact of hurricane Katrina on U.S. oil production and gasoline refining in the southern U.S. recently sent prices above $1.25 a litre.
Historically, travel has not been affected by high gasoline prices because tourists can reduce spending in other areas, such as eating fewer restaurant meals or buying fewer souvenirs, says Gary Wheeler, a spokesman for the Ontario Ministry of Tourism.
In 2004, Ontario had about 118 million visitors, a three-per-cent increase from 2003, according to the tourism ministry. Another three-per-cent increase is expected this year, which would bring the total number of visitors to about 121.5 million.
Of the visits in 2004, 80 per cent were made by Canadians, of whom 94 per cent were Ontarians travelling inside the province. About 18 per cent of the visits were made by people from the United States and two per cent were from overseas.
Travel by Ontario residents within the province in 2005 is expected to increase by 2.5 per cent from last year, according to the tourism ministry, which would bring the total number of visits to about 91 million. Visits from overseas including the United Kingdom, Europe and Asia are expected to be 10.5 per cent higher, or about 2.3 million visitors.
Despite growing numbers of overseas visitors, the number of U.S. visitors - which represents more than 85 per cent of non-resident visitors to Ontario - if falling. A total of about 21.4 million U.S. visitors came to Ontario in 2004, down from 2003's approximately 22 million visitors.
U.S. border crossings to Ontario totalled 8.6 million from January to June 2005, a decrease of 8.1 per cent from the same period in 2004, according to tourism ministry statistics. Visitors from the United States are not expected to exceed 2002 levels before 2009.
More than 85 per cent of all U.S. visitors to Ontario come from nearby states such as Michigan, Ohio, New York and Pennsylvania. About 20 per cent of the $20 billion spent annually in Ontario is generated by U.S. visitors.
"Everyone who depends on American tourists and the dollars they bring is concerned," says Guy Lepage, media relations officer for the Ministry of Tourism. "For the past two years, Americans have been travelling less, not just to Ontario but elsewhere as well."
"Ontario has had a number of issues affecting travel from the U.S. including SARS, the Iraq war, higher Canadian dollar, passport restrictions and higher gas prices," Wheeler says.
Rising gasoline prices are not a major contributing factor to the decline in the number of U.S. visitors arriving by car, TIAC's Williams says.
The decline has more to do with confusion about the documentation required because of increased border security and strained Canada-U.S. relations as a result of issues such as the Iraq war and mad-cow disease. "To some, Canada may seem less friendly," he says.
It is, however, a temporary situation that should fix itself in the next few years because of the long-standing relationship between Canada and the U.S. Williams says. "The relationship has been too strong for too long to permanently change travel between Canada and the United States."
Ottawa-based TIAC is seeking a postponement of all new passport requirements until 2008 to allow the tourism industry and the public time to adapt.
While persistent high gas prices will result in fewer people arriving by car, more visitors will use air travel, specialized motorcoach tours and trains, Williams says. "With gasoline prices expected to continue to rise, tourists from the U.S. will begin making adjustment in their modes of travel."
But for the thousands of Ontarians who migrate every winter to the southern and southwestern United States, "higher gas prices are not going to make them change their minds," says Lawrence Barker, executive director of the Canadian Snowbird Association, which is based in Toronto.
"It may affect whether they stay longer or come back sooner or eat more meals at home rather than in a restaurant. For people on fixed income, cutting the time short by a few days or eating more meals at home will offset a rise in the price of gas," he says.
Once people arrive at their U.S. destination, the transportation cost will be the same as at home, Barker says. He adds that the increased cost of gasoline will affect people who move about in recreational vehicles rather than staying in one specific location.
The exchange rate between the U.S. and Canadian dollars and the cost of travel insurance has more impact on the decision whether to travel to the U.S. than does gasoline prices.
Christiane Theberge, vice-president of public affairs for the Association of Canadian Travel Agencies, says the increased cost of fuel is not having much impact on Canadians travelling overseas.
Although airlines increased fuel surcharges earlier this year and are likely to do so again, the increases are modest in comparison with the total cost of the overseas travel. Air Canada recently reduced its total baggage allowance and introduced a $5 to $8 fare increase to reflect increasing fuel costs.
"We haven't seen any impact on travel," Ottawa-based Theberge says. "It's been a good year. Better than last year, which was also a good year."
Between January and July 2005, Canadians made about 11.7 million trips abroad, a 13- per-cent increase from the same period in 2004. Overall, overseas travel was 10.8 per cent higher in 2004 than in 2003.
"We've had two straight years of increases," Theberge says, adding that it reflects the global increase in travel since 2004 of about 10 per cent a year, the highest growth since 1984.
Theberge also says there is no indication of any slowdown and that two years ago the Conference Board of Canada predicted that between 2003 and 2008 Canadian spending on travel would increase by 43 per cent.
"I've seen nothing that changes that estimate," she says.
"People are aware of rising energy costs. But I doubt it really affects their travel patterns," says Shalini Singh, a faculty member in the recreation and leisure studies program at Brock University in St. Catharines.
"When people have to visit friends or go on holiday, they will go regardless of the cost (of fuel) because they are in the habit. Habits die hard," she says. "It takes people a long time to realize that travel is a huge burden on their purses. It will take a considerable period of time and considerable rise in price to affect travel patterns.
"They may choose to travel closer to home or take public transit. Or buy fewer souvenirs while on holidays. But they don't stop travelling because of higher gas prices," Singh adds.
(Charles Wyatt can be reached at wyatt@businessedge.ca)
