Advertisement

High gas prices driving change in Canadian tourism: ‘Cost of doing business’

Click to play video: 'Surging gas prices in Canada taking a toll on summer tourism' Surging gas prices in Canada taking a toll on summer tourism
WATCH: Surging gas prices in Canada taking a toll on summer tourism – Jun 12, 2022

How do you build a more fuel-efficient water taxi?

With sky-high gas prices top of mind, Alex Ferris and the team at Tiki Taxi are trying figure that out as they work on crafting four new boats to add to their fleet.

“It’s quite the expense. Last year, we went through around 50,000 litres,” said Ferris, manager of the water taxi service in Toronto, which has nine 12-seater boats in operation.

“It is something that’s played a role as to how we’re developing the business going forward. These new pontoons we’re building right now, they’re supposed to reduce our gas consumption by about a third, or maybe even up to hopefully half.”

Read more: Gas prices are at record highs. How the cost of fuel for 5 cars has changed

Story continues below advertisement

Record-high gas prices are forcing tourism businesses that rely on fuel to rethink their operations as Canadians enter a summer mostly free of COVID-19 restrictions.

That is likely to bring more customers through the door, but rising costs of fuel and goods associated with it means companies like Tiki Taxi, which fuels its boats with regular gas, have to reconsider their pricing model.

Click to play video: 'Gas prices set to soar across Canada in coming days, weeks' Gas prices set to soar across Canada in coming days, weeks
Gas prices set to soar across Canada in coming days, weeks – Jun 6, 2022

At Tiki Taxi, fares went up to $12 this year from $10, which was the base rate for more than a decade, Ferris said.

“We did have to increase our fares just because the gas prices went up,” he added.

“Everything else has gone up as well, so the only real way forward is to increase our prices just to make up that difference.”

Story continues below advertisement
Click to play video: 'High gas prices lead to sports teams changing tournament plans' High gas prices lead to sports teams changing tournament plans
High gas prices lead to sports teams changing tournament plans – May 20, 2022

Gas prices have spiked over the last year due to limited supply that has worsened with Russia’s invasion of Ukraine and the punishing western economic response that has come with it.

And with the economy reopening from COVID-19 restrictions ahead of an expected busy travel season, strong demand has pushed prices even higher.

High gas prices are impacting all Canadians as the cost of fuel has influenced prices on most goods and services, including tourism-related businesses that rely on it.

A water taxi travels on False Creek as boats are moored in a marina near Yaletown condo towers, in Vancouver, on July 13, 2014. Darryl Dyck/The Canadian Press file photo

In British Columbia, BC Ferries hiked its fuel surcharge rate to 2.5 per cent from one per cent on June 1 due to the current market.

Story continues below advertisement

The ferry service “closely monitors” the cost of fuel and applies a rebate or surcharge, or neither, under a regulatory process that is set by the BC Ferries commissioner, it said in a May 9 news release.

BC Ferries added it’s also working to reduce its consumption of fuel and use cleaner, lower cost fuels, such as liquefied natural gas to replace the use of diesel, which is costing Canadians more than it usually does.

While most Canadians have been fixated on the price for regular gasoline in recent weeks – which averaged at $2.08 a litre in Canada on Tuesday, according to CAA – other fuels are priced even higher at the pumps.

Click to play video: 'Could high gas prices reduce the amount tourists spend while vacationing in the Okanagan?' Could high gas prices reduce the amount tourists spend while vacationing in the Okanagan?
Could high gas prices reduce the amount tourists spend while vacationing in the Okanagan? – May 24, 2022

Premium gasoline, which GTA Exotics uses to power its fleet of roughly 25 supercars, averaged around $2.28 per litre in Canada on June 7, according to figures provided to Global News by GasBuddy.com.

Story continues below advertisement

In Ontario, where Stewart Wilson’s business operates, the average cost of premium gas sat around $2.33 on Tuesday.

“We spend at least $10,000 a week on fuel, which is at least 30 to 40 per cent higher than it was last year,” said Wilson, manager of GTA Exotics, which offers rentals, test drives and race track experiences.

Read more: Will gas prices ever go down? Why Canada is likely to set ‘new records’ at the pumps

The exotic car company, which has been open throughout the COVID-19 pandemic, has had a lot of customers through its doors and hasn’t had to raise prices to make up for costs, said Wilson.

But if gas prices continue to go up, they’ll likely have to increase their rates, he added.

“It comes down to supply and demand. If our demand is growing, we can absorb some of that cost (but) it’s a tough one; there’s kind of a psychological barrier with pricing, and if you exceed that then the numbers will drop,” Wilson said.

“Yes, you can raise the prices, you’re going to get less customers but overall you’re going to end up with the same amount of money at the end of the day. I prefer to keep prices a little lower and have more volume coming in and have more exposure to increase the business, so it’s definitely a balancing act for sure.”

Story continues below advertisement
Click to play video: 'Are higher gas prices here to stay?' Are higher gas prices here to stay?
Are higher gas prices here to stay? – May 11, 2022

High gas prices, however, have made GTA Exotics stricter when it comes to renters returning their vehicles with gas in the tank.

“We were kind of lenient when we were renting out a car with the fuel coming back a little lower, we really didn’t care,” Wilson said.

“Now it’s just starting to affect us, so we give the customer a full tank and we expect it to be full when it comes back or we’re going to charge X amount for the fuel upon its return, which we never did before.”

Read more: Here are 10 ways to spend less on gas this summer as prices soar

For Tiki Taxi, Ferris said he hasn’t seen a big difference in terms of customers staying away from the business in the current economy.

Story continues below advertisement

However by being reliant on fuel, Tiki Taxi not only needs to cover its expenses in the interim, but it needs to look at ways to save on costs in the future to remain competitive, Ferris said.

“It’s just the cost of doing business,” he said.

“This is something we need to operate, and it’s so out of our control so the only thing we can do is try and manage how we use that information going forward.”

Sponsored content