Illustration by Jacqui Oakley

Canadian tourism enjoyed one of its best years ever in 2016, and experts say praise from esteemed sources such as Lonely Planet (number-1 on its 2017 “Best Places to Visit” list), combined with a favourable exchange rate, increased air capacity and a revamped tourism policy, will keep travellers coming for the foreseeable future.

Canada attracted 19.9 million international visitors in 2016 according to Destination Canada, just 0.4 per cent off the record-high established in 2002. Travel from overseas markets increased 16 per cent, while U.S. travel rose 10 per cent. Its success comes amid a global tourism boom (globally, tourism is a US$1.5-trillion industry) that saw 1.2 billion people travel internationally last year, a four-per-cent increase from 2015.

Jon Mamela, chief Marketing officer for Destination Canada, says Canada is on pace to establish a new tourism record this year, with visitor numbers up 6.7 per cent during the first quarter (in May, the Conference Board of Canada predicted that overseas visits to Canada would increase 8.4 per cent this year, with U.S. visits growing 5.3 per cent). Mamela says the high-profile Canada 150 celebrations provided Destination Canada with a “fantastic story” to entice would-be visitors, while it continues to benefit from its enduring reputation as a safe, ethnically diverse and welcoming travel destination. Tourism growth is also being fuelled by continued increases in seat capacity, particularly from leading carriers such as Air Canada and WestJet. According to Destination Canada data, total international air capacity rose 2.7 per cent during the first quarter and 6.5 per cent in its 11 international markets.

In July, Air Canada announced the introduction of a four-times-a-week direct flight from Mumbai, India to Toronto — the latest in a series of expanded international routes for the country’s largest airline.

Air Canada also announced it had set a new single-day record for passengers carried (166,850) on June 29. “The ability for international visitors to come directly into the country without a stop is benefiting us immensely,” says Mamela.

Lyle Hall, a Toronto-based consultant specializing in the tourism, hospitality and gaming industries, says it’s unlikely Canada will be able to sustain its torrid year-over-year growth, but predicted increased visits and tourist spending in the near-term.

He says Destination Canada’s increased emphasis on marketing to key U.S. markets — after largely ceding those responsibilities to provincial and municipal marketing bodies several years ago in order to focus on long-haul markets — has also yielded dividends. Overnight arrivals from the U.S. reached 1.2 million in the first quarter according to Destination Canada, a two-per-cent increase over the corresponding 2016 time period.

Canada also attracted a record number of visitors from several key long-haul markets, including South Korea (244,442 arrivals, a 30-per-cent increase over 2015); China (610,139, up 24 per cent); Australia (333,437, up 16 per cent) and India (215,664, up 13 per cent).

All indications are the travel boom will continue. The most recent economic-impact report from the World Travel & Tourism Council predicts Canada’s visitor numbers will grow 3.8 per cent to 20.6 million this year; rising to 29.1 million by 2027.

Its predictions are based on several key factors, most notably this year’s sesquicentennial celebrations and an 80-cent dollar.


Domestic and international tourism generated $90 billion in revenue in 2016, and the Canadian government has publicly stated its intention to aggressively grow the tourism industry over the next decade.

The government’s “New Tourism Vision” announced earlier this year boasts three ambitious objectives: become a top-10 global travel destination by 2025; generate a 30-per-cent increase in international overnight visitors by 2021; and double the number of Chinese tourists by 2021.

It also outlines plans to increase travel among key constituencies such as millennials and the LGBT community, as well as specific international markets such as China, and market sub-sets such as culinary and Indigenous tourism.

Destination Canada had a hand in formulating the Tourism Vision and continues to optimize its marketing mix in response to current trends. For instance, the continued growth of the Chinese tourism market (Mamela predicts it could surpass the U.K. as Canada’s leading long-haul market within 12 to 24 months) warrants increased marketing investment. “There’s massive outbound demand and the affluent travellers who may have been to other destinations are giving Canada a look, in terms of a place they haven’t been before,” he says.

Mamela also calls culinary tourism — a broad purview that includes emerging chefs and a fast-growing craft beer industry — one of Destination Canada’s main marketing pillars. The organization also continues to work with groups such as Travel Gay Canada, the country’s gay-and-lesbian-tourism industry association, to further develop its LGBTQ strategy.

While applauding the tourism vision, Hall says the government might be slightly overreaching in its stated objective of becoming a top-10 travel destination. “Any time the federal government is looking to support the tourism industry it’s a good thing and marshalling those resources can only be helpful,” he says. “[But] what we have to do is temper expectations as to what the impact is going to be.”

While Mamela is confident that Canada can outpace projected global-tourism growth of four-to 4.5 per cent per year, Hall says becoming a top-10 destination would require matching Russia’s 2016 visitor total of 34.5 million visitors per year — which translates to an additional 14.5 million visitors (a 72-per-cent increase).

That is a minimum requirement, assuming flat or negative growth for Russia. According to Hall, that will be difficult to achieve without “significant development” of commercial accommodation and/or an “explosion” in Airbnb listings (according to the website, Toronto had 12,714 listings in mid-July, Montreal 10,619 and Vancouver 4,728). Hall says 14.5 million additional tourists equates to an additional 4.35 million room nights.

“The reality is that if we get anywhere near the growth the federal government is saying we’re going to get, we don’t have enough hotel rooms to accommodate it,” says Hall. “The challenge is always that you never have enough rooms when you need them and you’ve got too many when you don’t.”

Hall says the hotel industry currently remains focused more on acquisition than property development, particularly in large urban centres.

“We’ve seen lots of 100 to 200-room properties in the suburbs and the fringes of downtown, but we’ve seen very little development of large, full-service downtown hotels,” he says. “We’re going to need that in cities such as Toronto, Montreal and Vancouver if we’re going to generate anywhere near the visitation numbers we’re talking about.”

But Hotel Association of Canada president Susie Grynol says adding inventory, particularly in an industry so susceptible to peaks and troughs, needs to be done in a considered manner. She says one potential opportunity for increasing visitor numbers is promoting lesser-known regions and emphasizing their appeal during the shoulder and off-peak seasons.

“There are lots of beautiful places in the country that largely remain undiscovered by tourists from around the world, and even within Canada, and there are tons of hotels in those regions that would very happy to host guests during those periods,” she says. “It doesn’t make any sense to build new hotels in high-tourist areas that are going to see a significant drop for half the year.”

While the U.S. remains Canada’s largest tourism market and China’s size makes it impossible to ignore, the Trudeau government has also identified Mexico as a key growth opportunity. In December, it lifted the visa requirement for Mexican nationals, which was implemented by the Harper government in 2009 in response to a decade-long surge in refugee claims.

This policy change comes as the U.S., and President Donald Trump in particular, have put forward an unflattering view of Mexico and its citizens.

Global research firm Tourism Economics predicted earlier this year that the U.S. stands to lose 1.8 million visits from Mexico alone this year, resulting in a direct economic loss of $1.1 billion. The company predicts the number of lost visits will rise to 2.6 billion in 2018.

April figures from Destination Canada, meanwhile, indicated what it called a “spectacular” 126-per-cent increase in the number of visitors from the fast-growing Latin-America market.

More than 95,000 Mexicans visited Canada between January and April — fifth behind the U.S., the United Kingdom, France and China — representing a 56.8-per-cent increase over the previous year and a 50.2-per-cent increase over the previous high established in 2008. Mamela declined to speak directly to the possible impact of U.S. policy on Mexican tourism, except to say Canada was already seeing increased demand from Mexico — as well as other international markets — “well in advance” of the U.S. election. “Momentum for Canada has been building since 2013, and year-over-year we’ve continued to move forward,” he says. “Any decisions being made south of the border are irrelevant to how we’re making progress.”

But Mexico isn’t the only country responsible for huge jumps in tourism. Visits from the U.K. were up 48 per cent in April, followed by Germany at 46 per cent, South Korea at 40 per cent, India at 37 per cent and Australia at 25 per cent. HAPPY HOTELIERS This increased travel has been a boon for Canada’s hoteliers, with Grynol saying she expects 2017 to be a “peak year” for the industry. “Our numbers show we’re going to continue to see those positive year-over-year numbers,” she says. “We’re not forecasting a drop anytime soon, but people certainly don’t celebrate a 151st birthday the same way they do the 150th, so naturally there’ll be some downturn.”

According to numbers provided by the Hotel Association of Canada, its members saw a 1.5-per-cent increase in occupancy rate, to 59.3 per cent, during the first five months of the year, accompanied by a 3.7-per-cent increase in Average Daily Rate ($143.53) and a 6.3-per-cent increase in RevPAR ($85.18).

“Those are good numbers,” says Grynol. “What has made us happy is that some of the regions that have been hard-hit in years prior have seen an increase. From a broad perspective, that’s being welcomed by the industry.”

Manitoba posted the biggest gain in occupancy rates for the first four months of 2017 according to Destination Canada, jumping 3.9 per cent to 63.5 per cent. At the other end of the spectrum, occupancy rates in Saskatchewan shrunk 2.3 per cent to 48.7 per cent. The “Wheat Province” also saw marked drops in ADR, which fell 5.1 per cent to $121.13, and RevPAR, which fell 9.4 per cent to $59. B.C. posted the highest ADR in the industry for the first four months of the year, at $151.66, followed by Quebec ($148.24).

There has also been considerable speculation about the impact of U.S. policy on Canadians’ travel plans, which has even led to a phenomenon dubbed the “Trump slump.” According to a June release by the U.S. Travel Association however, the U.S. attracted four per cent more international travellers in April than the previous year, with even its president and CEO, Roger Dow, admitting the numbers were surprising.

But Grynol points out a travel-intention survey of more than 1,500 Canadian travellers — 1,002 leisure and 511 business — conducted on behalf of the HAC earlier this year, which found 65 per cent of Canadians planned to vacation either abroad or within Canada rather than the U.S., with 35 per cent saying their decision was directly attributable to president Trump’s policies (the low dollar was the most common reason). More than a quarter of leisure travellers (26 per cent) also said they would be travelling less to the U.S. in 2017.

However, Destination Canada data suggests U.S. politics haven’t entirely dampened Canadians’ enthusiasm for our neighbour to the south. Canadians made 6.45 million overnight trips to the U.S. between January and April, a 7.8-per-cent increase over the previous year that far out-paced a 4.4-per-cent increase in travel to other international destinations.

Written by Chris Powell


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