Tourism industry hit by 'worst period' in its history
Industry sees revenues falling another $3-5B
Last Updated: Tuesday, September 29, 2009 | 4:59 PM MT
By Dave Simms, CBC News
Canada's tourism trade is suffering through the worst period in its history, according to the head of an industry association.
"This is worse than any other recessionary period that we've seen, Travel Industry Association of Canada CEO Randy Williams told CBC News on Tuesday. "This has been the most challenging that many [in] our industry have seen in their lifetime," he said, in terms of reduced demand and revenue.
Canoeists enjoy Lake Louise in Banff National Park on Sept. 27. International tourism spending in Canada in the three months ending in June fell by 1.6% from the first quarter. (Dave Simms/CBC) The same day, Statistics Canada reported tourism spending in Canada fell for the fourth straight quarter in the three months ending in June. It fell by $128 million, or 0.8 per cent, to $16.4 billion.
Tourism was hit in that quarter by tougher passport requirements for people crossing the American border that took effect on June 1 and the cancellation of Canadian flights to Mexico after the outbreak of the H1N1 influenza virus.
Williams said there are additional factors that have worked against his industry throughout the year: the recession, rising global competition as an increasing number of countries promote themselves as destinations, Canada's comparatively high airline costs, and the lack of approved destination status with China, something 127 other countries do have.
Visitors to Canada spent $55 million, or 1.6 per cent, less than in the first quarter. That was the sixth straight quarterly decrease and the 15th decline in 18 quarters. Canadians who stayed in the country for their vacations also spent less, down $72 million or 0.6 per cent from the first three months of the year.
'Our industry is suffering a lot more than during that year (SARS).'—Randy Williams, Tourism Industry Association of Canada
The overall value of the Canadian tourism industry shrank by 1.1 per cent in the second quarter, its fourth straight quarterly decrease. Tourism employment fell 0.9 per cent.
The industry association has revised its forecast of just how much the industry will contract this year. At the beginning of 2009, it expected revenue to shrink by three to five per cent. Only in three of the last 30 years has the industry contracted. Now it looks more like five to eight per cent, a drop in revenue of $3-5 billion over 2008. The association doesn't expect recovery to begin until 2012.
Over the last year, spending on tourism in Canada has dropped 2.9 per cent, making it the longest downturn in the industry since the early 1990s, but not the deepest, according to Statistics Canada.
Tourism demand dropped 5.8 per cent in the first six months of 2003, largely as travellers stayed home during the outbreak of severe acute respiratory syndrome or SARS. Since then, Williams said, the downturn has become worse than 9/11 or the SARS outbreak six years ago. "Our industry is suffering a lot more than during that year," he said.
Williams expected an upside for travellers, though. Some companies won't last and will be taken over by rivals, who will lower prices to survive. "You'll see a lot of consolidation of businesses, a lot of cuts in pricing in order to get the volumes there," he said. "There'll be a lot of bargains available to travelers."
