Story by Rod Charles
Vacay.ca Deputy Editor
You don’t need to be an economist to understand what’s going on with Canada’s currency. Our dollar is under pressure and this isn’t great news — unless you’re exporting goods from Canada. It just so happens that tourism is an export business.
International visitors are one group that will benefit from the currency exchange. At present, one US dollar is worth $1.21 Canadian. With the dollar being lower than it has been in years, many travellers from abroad will no doubt view Canada as a place where they can stretch their money further and get more out of their vacation than they might in other destinations.
While a low loonie should entice more people to visit our country, Canadians thinking of travelling outside of our borders may rethink that trip in 2015 and keep their dollars at home. That’s bad news if your kids are eager to get to Disneyland this year. But it’s welcome news for tourism boards across the country, which can expect more domestic travellers and a long-needed increase in American visitors, who will take advantage of both the deflated loonie and exceptionally low gas prices.
Americans Bring the Most Tourist Dollars to Canada
Canada’s greatest tourism partner — without question — is the United States. According to the Canadian Tourism Commission, Canada welcomes approximately 10 million overnight visitors from the United States each year. In recent times, no other country has contributed more than 1 million travellers. Tourism is an $82-billion industry in Canada that directly employs 603,400 workers and supports another 1 million jobs, according to the Tourism Industry Association of Canada. That’s 9.2% of all jobs in the country. Anything that can boost the industry is viewed as a pleasant change after a flurry of events since the start of the century caused headwinds.
Gabor Forgacs, associate professor at the Ted Rogers School of Tourism and Hospitality, explained that Canada lost half of US visitors because of a much higher dollar and new passport requirements that were introduced in the wake of the September 11, 2001 terrorist attacks. Canada also had to withstand the negative news around the SARS crisis in 2003-04 and, like just about every other country, was adversely impacted by the global economic recession from 2008-12.
“We are confident that all those Americans who live in border states and who used to be our largest market for incoming tourism will see that their money is now going further,” says Forgacs. “We look at two key indicators. One is the head count, the number of people coming in. And the other is basically the money they spend. So if you start to break it down, the largest loss [since 2001] was from rubber-tire traffic, those who drive across the border and same-day visitors. They don’t necessarily look for hotels, but they come in, they do shopping, they enjoy attractions, and that’s where the biggest losses occurred in terms of degrees of those visitors. But as we see the American dollar appreciate against the Canadian, and as [US visitors] recover from the shock of the passport requirement, hopefully things should continue to improve — especially with low oil prices.”
Low Dollar + Cheap Gas = More Tourists to Canada
Forgacs expects the decline in the Canadian dollar and less expensive gas to entice Americans living in border states to check out Canada in search of bargains.
“Those who live in upstate New York, Michigan, or other border states, they are in driving distance and are only a couple hours away. We know from research that there is a strong preference on the part of the American traveller to get to their destination within three hours. Over three hours, they start to think twice if they want to go there,” says Forgacs. “But if they can get in within three hours, they are at their destination and they like that. And they understand the implication of the exchange rate because of their close proximity and they know, ‘Oh, there’s something new in Toronto like the new aquarium or a new show,’ or they can watch the suddenly hot Toronto Raptors play and they can make the trip. So there are a lot of people out there to whom it’s worth it to come to Toronto versus New York City because while the driving distance could be comparable, it’s more affordable to these small-town, upstate visitors.”