What a difference a year makes. For much of 2015, and stretching back several years, Western Canada was the darling of the Canadian economy, enjoying a flurry of economic growth and activity. Then the bubble burst. A year later, much has changed. Blame it on the declining price of oil (down from almost $100 a barrel to $39 in a little more than a year), a fragile resource sector and the low Canadian dollar. Not surprisingly, business travel to the region has dwindled, and a dearth of resource workers means reduced spending is hurting many communities in Alberta. Certainly, since late last fall, the faltering economy has been front and centre in most of our daily discussions.
Still, despite the challenges that plague pockets of Western Canada, including stalled hotel development, declining average rates and plummeting RevPAR levels, the hotel industry across most of the country is faring well. While it’s easy to get mired in the negative news, there’s also a flip side we can’t discount — a low dollar spells good news for tourism, a reality recently reflected in surging tourism numbers, especially from the U.S. market.
Certainly, the low Canadian dollar is a catalyst for many Canadians to vacation at home. After all, Canadians considering southern getaways now need to factor in a 30- to 40-per-cent exchange rate. Conversely, for Americans making travel plans, the low Canadian dollar can’t help but make Canada look attractive. According to a story appearing in The Globe and Mail on Feb. 14, “The tourism sector is emerging as one of Canada’s economic bright spots at a time when overall growth has been sluggish, at best.”
In fact, the tourism segment’s growth has suddenly outpaced the rest of the economy. According to numbers from Statistics Canada for the last quarter of 2015, cited in The Globe and Mail, tourism’s share of the Canadian GDP was up by 2.8 per cent year over year, compared to 1.2 per cent growth from the overall economy. And, tourism’s direct contribution to total GDP hit an 11-year high of 1.94 in the last quarter of 2015, more than any other sector.
Barring any unforeseen changes, many tourist attractions are salivating at the possibility of an influx of tourists for the summer season. Key destinations across the country are already benefiting. In Toronto, for example, last year’s Pan Am Games and the recent NBA All-Star Game (generating receipts of $100 million) have helped spur visits.
Through the roller-coaster ride that is the economy, cycles will come and go and the dollar will rise and fall, but it’s what the industry consistently does to develop, nurture and market our destinations and our hotels that will ultimately determine just how successful it really is.
Volume 28, Number 2