Could sesquicentennial celebrations and the weak loonie help Canada to finally bridge its 15-year tourism gap?
Canada hasn’t yet bounced back from a tourism slump that started after 9/11, with security-conscious Americans skipping on international travel, and was later exacerbated by the financial crisis and a strong Canadian dollar, according to RBC economist Laura Cooper.
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But in a newly released report on international tourism flows, the banks are sounding a positive note, if not quite forecasting full recovery.
The number of American visitors has climbed back to levels seen before the Great Recession, although it’s still far off from the highs seen just before 9/11.
Also, Canada’s mix of international guests is becoming more diverse, with one in five tourists who travelled to Canada last year coming from countries other than the U.S., twice the rate seen only a decade ago, according to RBC.
Low-loonie stimulus
The loonie’s continued plunge — it has been the worst-performing major currency of 2017 so far — should help maintain that trend.
“The steep drop in the Canadian dollar that followed the plunge in oil prices in 2014 provided a much-needed boost to the travel sector,” wrote Cooper.
That should keep propping up U.S. visits, especially, which have been steadily rising since dropping to a 20-year low in early 2014.
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The weak loonie likely also fuelled a surge of nearly 185,000 in the number of European visitors last year, according to the report.
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Canada: beautiful, not just cheap
But the exchange rate isn’t the whole story, noted Cooper.
Visitors from China and South Korea were up by a whopping 164,000, or 23 per cent, in 2016, even though the Canadian dollar appreciated against China’s Yuan and was roughly at parity with South Korea’s Won last year.
Similarly, the number of Mexicans and Britons recorded double-digit percentage increases despite sharp currency depreciation against the loonie. Visits from the U.K. stood at an eight-year high in 2016, according to Cooper.
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More tourism jobs across Canada
RBC’s analysis suggests growing visitor inflows may outlast currency swings — and that would be good news for Canadian pocketbooks.
The tourism industry accounts for only 2 per cent of GDP but has expanded faster than the broader economy since 2014, according to RBC.
The sector, which accounts for about 1.7 million jobs across the country, outpaced overall employed growth in most provinces, the RBC report shows.
“Nearly every province saw its share of tourism-related employment increase to near-record highs, with jobs in the sector making up anywhere from 7-11 per cent of total employment,” wrote Cooper.
Canada 150 effect
Canada’s big birthday bash will likely build on last year’s momentum, RBC notes.
Guidebook giant Lonely Planet and the New York Times have both ranked Canada at the top of their list of places to visit in 2017, gushing over our country’s reputation for friendliness and national beauty.
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Celebrations for Canada 150 promise to be “heavy on bonhomie and highly welcoming to international gatecrashers,” wrote Lonely Planet.
Canada is “a world unto itself, with cosmopolitan cities, barely explored natural wonders and everything in between,” raved the New York Times.
Ottawa is trying to capitalize on the hype, with this year’s federal budget making permanent some $38 million in annual funding for Destination Canada, the government’s tourism marketing arm.
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“A boost in immigration levels led by a push to attract and retain foreign students and skilled workers may have also piqued the curiosity of foreigners,” noted Cooper.
Canada can look forward to a “banner year” for tourism, she wrote.
It would be one more reason to celebrate this year.
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