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Foreign travel to Canada sinks as fewer Americans head north

First quarter tourism was held back by weakness in the American market, as overnight visits from U.S. tourists declined by 2.9 per cent.

Ben Nelms/The Globe and Mail

Fewer travellers journeyed to Canada in the first part of the year, marking the worst change in non-domestic tourism since the first quarter of 2011. It's a sign of ongoing difficulties in an industry that has struggled to boost stagnant growth over the past decade, as U.S. tourists have been more reluctant to make the trip across the border.

Foreign travel to Canada declined by 2.4 per cent in the first quarter, Statistics Canada data show. Overall seasonally-adjusted tourism increased 0.3 per cent – the same as Canadian GDP in the quarter – on the strength of domestic tourism, but the number was the lowest increase for the tourism industry since the first quarter of 2013.

Éric Desjardins, an economist with Statscan, said that tourism has been mostly flat due to the non-domestic market. "International tourism is limiting the overall growth," he said. "A large part of that slow growth is decreased travel from the U.S."

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First quarter tourism was held back by weakness in the American market, as overnight visits from U.S. tourists declined by 2.9 per cent. U.S. GDP also declined by 2.9 per cent in the quarter.

The tourism industry is particularly important for small and medium sized companies – an estimated 98 per cent of related businesses fall into the two categories, according to Statscan. Tourism represents 2-per-cent of Canada's GDP, and is directly responsible for 600,000 jobs.

David Goldstein, CEO of the Tourism Industry Association of Canada, says that there's always some volatility in quarterly data, and thinks the data will improve. "We're cautiously optimistic it's going to be a better year," he said in an interview.

Mr. Goldstein pointed to longer term trends, including the fact that passport ownership among Americans has doubled since 2002. Since 2007, passports have been mandatory for travel between the United States and Canada.

But Mr. Goldstein called on the federal and provincial governments to increase efforts in luring the lucrative U.S. market to Canada, "The biggest barrier is our lack of marketing investment in the U.S. And that needs a co-ordinated effort between Canada, the provinces, and industry." Mr. Goldstein added that Canada is currently the only G7 nation that does not have a tourism advertising campaign targeted at the U.S., and that prohibitive airline fees contribute to low growth.

To that end, on Wednesday the minister of transport, Lisa Raitt, announced that former industry minister David Emerson would lead a panel to review the Transportation Act, as well as its fees.

According to the World Economic Forum, Canada ranks 124th of 140 countries in economic competitiveness for airline prices, and 136th in airport fees and levies.

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