Three years after abandoning the promotion of Canadian leisure travel to Americans, the federal government is poised to jump back into that market to take advantage of the low Canadian dollar.
What's not clear, however, is whether Ottawa will actually boost its overall tourism marketing budget, or merely shift money to the United States from spending in other countries.
In 2012 the Canadian Tourism Commission, the Crown agency responsible for selling Canada as a travel destination, had its budget slashed by 20 per cent and cut back its U.S. activities. While it continued to promote Canadian business and convention travel in the United States, it shifted its tourist marketing to other countries and halted all U.S. leisure travel promotion.
Many in the travel industry felt the move was short-sighted, given that Americans make 70 per cent of all trips into Canada. The commission said at the time that it would get a better return on investment in high-growth nations where travellers spend more per capita, and left it up to the provinces and other organizations to promote themselves south of the border.
Now, the low loonie – relative to the U.S. dollar – has made it a priority to resume selling Canada as an affordable tourist destination to Americans. It is especially important since growth in travel to Canada from the United States has essentially stalled, while the number of travellers from other countries is increasing sharply.
"We are in the process of going back into the U.S. market," CTC president David Goldstein said in an interview. "We are currently in negotiations with our partners in the industry on a U.S. leisure market campaign." The CTC hopes to resume marketing in the United States this spring.
The partners would include private companies and provincial governments – exactly the kind of joint effort the travel industry has been asking for. Indeed, the Tourism Industry Industry Association of Canada (TIAC) has outlined a plan it calls "Connecting America" which would see the federal government put in $35-million a year for three years – to be matched by the private sector – to "re-energize the U.S. consumer"
It is not certain, though, that Ottawa will come up with more cash. Maxime Bernier, the federal minister responsible for tourism, said in an interview that he supports the CTC's shift back to the U.S. and has asked for more funding. Whether that happens depends on the federal budget set for the spring.
More money for promoting tourism "was part of the budget consultation," Mr. Bernier said. If the finance minister "says yes to the request, they will have more money to invest in the U.S.," he said. If not, the CTC will have to make do with its current resources, shifting money to the United States from its spending elsewhere.
Mr. Goldstein said the world of marketing has changed, and it is possible to make an impact on a reduced budget. "There are ways to reach the consumer now that are far less expensive and far more efficient than when we were in the market four or five years ago," he said. This would include digital campaigns that don't take as much investment as traditional advertising, but are "extremely effective," he said.
Private travel companies are also heavily spending on their own in the United States, he said, and are not "sitting back and waiting for a federal investment." However, "they know the power that [federal] investment can lever."
The private-public partnership route has been highly successful in promoting tourism into the United States. Five years ago the U.S. government created Brand USA as the agency to promote inbound travel, with federal funds matching private sector investment to generate an annual budget of more than $150-million (U.S.). The federal money helps, says Brand USA president Chris Thompson, but equally important is government input to deal with visas, entry policies, and embassy issues. "They had to be at the table," he said.
Our travel market is over-reliant on domestic tourists, said Rob Taylor, president of the TIAC, which represents Canadian tourism businesses. The low dollar exacerbates this, he said, because Canadian travellers are more likely to stay at home.
Travel from the United States into Canada has been slack for years because of a range of issues, Mr. Taylor said, including the new rules that require Americans to have passports to cross the border, and – until recently – a Canadian dollar at close to parity. The number of U.S. travellers making overnight trips to Canada was down 25 per cent in 2014, compared to the peak year of 2002.
Over all, travel and tourism is vital to the Canadian economy, and not just for tourist industries. According to a recent study from Deloitte, every 1-per-cent increase in travel into Canada generates a $817-million increase in exports. Deloitte partner Ryan Brain said that is because people who have travelled to a country are more likely to do business there. "Basically, travel stimulates trade," he said.
Marketing is key to get new travellers coming here, Mr. Brain said. "We shouldn't lose sight of how truly important it is to promote our country in a meaningful way, to have marketing muscle to line up against other destinations that are looking to attract that same traveller."
While Canada contemplates cranking up its tourism promotion in the United States to take advantage of the low Canadian dollar, the Americans are working hard to keep their travel industry juggernaut in motion.
Brand USA, the marketing organization funded by the travel industry and the U.S. government, sees Canada as a crucial and established source of travellers, said president Chris Thompson. Canadians accounted for 23 million of the 70 million visits to the United States in 2013, and represented 15 per cent of all tourist spending – by far the largest single source of inbound travel.
Mr. Thompson said there isn't any statistical evidence yet that the slumping value of the Canadian dollar is hurting cross-border tourism from Canada. But anecdotal reports suggest that day trips across the border are down, he said.
A 10 per cent difference in currency is not enough to affect cross-border travel, Mr. Thompson said. But a loonie at its current level, around 80 cents (U.S.), can result in lower spending or shortened stays.
Mr. Thompson said it's up to individual travel businesses to come up with creative offers to deal with the exchange issue – such as taking Canadian dollars at par. His organization's job is more general – "to keep the United States top of mind when individuals are choosing where they are going to go," he said.
Mr. Thomson is not surprised Canada would try to take advantage of exchange rates to attract more U.S. travellers. "This is a perfect opportunity for Canada to reach out to Americans and say: 'Come on up.'