Industry will take years to regain momentum

The recovery, which began in May, is likely to be slow for several sectors strongly affected by the most marked economic contraction of the post-war period .

The tourism industry will in particular pay for COVID-19 for years to come. Its full recovery will depend on several developments, including the permanent reopening of interprovincial and international borders, the emergence of a treatment or vaccine against the coronavirus, a return of consumer confidence and the survival of companies in the sector. here there.

The Importance of Tourism to the Canadian Economy

Canada is the 18 th most visited country in the world , according to the World Bank. The country welcomed a record number of more than 21 million international tourists in 2018. The international organization estimates the corresponding inflows of money at 22 billion dollars. (Destination Canada has since reported a new record of 22.1 million visitors in 2019 ) Tourism is not limited to international travelers. The sector also welcomes tourists from other provinces or regions of Canada. A significant proportion of tourism-related spending is even made by local consumers, particularly for cultural outings, entertainment and restaurants. However, these expenses do not benefit the hotel industry as much.

Enlarge the table

Estimates of the economic contribution of tourism therefore depend on what is categorized as tourism spending. Interprovincial and international tourism generated 1.9% of national GDP ($ 35 billion) and 3.6% of employed jobs (643,000), according to Statistics Canada data for 2014 (latest available year).

The importance of tourism vary from province to province: while 2.8% of jobs in Manitoba depend on visitors from outside the province and the country, this figure rises to 6.7% in the '' Prince Edward Island and 5.1% in British Columbia. The latter are likely to suffer more from the slowdown in the current sector.

Measuring the extent of the damage for 2020

The emergence of real-time data provides us with more information on the development of recovery in various tourism-related activities. For example, Google's mobility data for July 5 in Canada reveals that ridership in businesses and leisure places was down 13% from the benchmark level last January. According to data from OpenTable, restaurant reservations were down 57% nationally from July 2019 In the US, bookings of hotel rooms remained down 30% in early July compared with a year earlier, indicate real-time data provided by Capital Economics. Airport traffic was down 75%. (Data not available to date in Canada).

Enlarge the table Meanwhile, Statistics Canada reports a 98% decrease in non-resident admissions between April 2019 and April 2020, having dropped from 1.4 million to less than 25,000 during this period. This represents by far the lowest inflow of non-residents in the past fifty years Despite the opening of the borders with the European Union since July 1, the extension of the closure of the Canada-border to non-essential travelers will greatly harm the tourism industry, which should experience a halving of its activities in 2020, estimates the analysis firm Oxford Economics (OE)

4 years to recover from September 11 in the United States

Beyond 2020, the behavior of travelers remains difficult to predict. Beyond the loss of revenue, increased caution could lead to lean years for the industry. For example, it took the United States four years to return to the level of flights prior to the September 11, 2001 attacks.

The repercussions even reached Canada, which experienced a rather difficult decade thereafter. However, this period also coincided with a Canadian dollar which remained around par with the US dollar.

The Canadian tourism industry is likely to depend on short-haul travel this year and in 2021. Hotels outside of major cities and national parks may be particularly surprised by their resilience, while the postponement or cancellation of conventions and other international events risk disproportionately affecting metropolitan areas.

Short and medium-term horizon: an untapped potential

The global tourism industry is expected to return to normal in 2023, OE estimates. Canada should not stand apart In the immediate future, the Canadian economy could be disproportionately affected by the consequences of reduced international tourism. According to OE, the Canadian tourism sector may experience more difficulties in the short term, as its hotel industry is more dependent on visits from non-residents than those of several other countries, including the United States, Australia, and Germany. Enlarge the table But if 2020 will be a year to forget, some believe that Canada has untapped domestic tourism potential. OE also considers that the country has the second greatest potential for organic growth after the United Kingdom. Indeed, notes the firm, Canadians are among those who travel the most and also have a greater propensity to spend their holidays outside the borders of their country.

Canada has a trade deficit in tourism: its residents spend more elsewhere than tourists visiting Canada. This net deficit amounts to more than 10 billion US dollars according to the World Bank . In 2018, Canadians would have spent nearly US $ 34 billion on foreign tourism compared to US $ 22 billion in revenues made by international tourists on Canadian soil.

This is an excellent opportunity for the Canadian tourism sector. By encouraging Canadians to redirect spending that would have been made in France, the United States , or elsewhere in the world to our local industry, Canadian businesses will be able to more easily survive the current crisis.

Canadians who plan to vacation this year seem inclined to do it differently: almost 9 in 10 Canadians plan to stay home this summer - the vast majority within their province, according to a BDC poll. Among those who planned to travel, less than 25% planned to do so outside the country. Between 2017 and 2019, that figure was over 40% according to the Conference Board of Canada .

What does this mean for entrepreneurs?

Companies working in tourism will have to be patient. Those who want to continue operating will have to keep their cash flow in sight.
Betting on local tourism will remain the preferred avenue for the next two years. Collaborate with your municipalities to ensure that your business is part of the regional service offer.
For Canadian entrepreneurs less affected by the current crisis, continue to encourage local merchants by planning a vacation closer to home.