November 23, 2009
Canadian tourism dips amid hotel construction slowdown
It has been a tough year for the Canadian tourism industry and the construction sector that relies on it. The value of hotel and motel starts in October plunged 83 per cent compared to the same period last year, according to statistics compiled by CanaData.
This represents a 78 per cent decline in construction square footage.
Meanwhile, year-over-year business and tourism travel to Canada in September dropped 11.6 per cent versus a year ago.
“The cycle for new hotel construction has slowed down and it will take a year or two to recover,” says CanaData chief economist Alex Carrick.
There are signs of improvement, however.
Business and tourism travel increased by 1.6 per cent in September versus August. And total overnight visits to Canada were up by 1.2 per cent in September compared with August, though year-over-year they were down 9.1 per cent.
The U.S. remains the most significant source of tourists by a large margin. Indeed, 83.7 per cent of travelers who came to Canada in September originated from the U.S.
Fewer Americans came to Canada during September versus the same period last year, however: 192,000, a drop of 10.3 per cent.
Heightened border security and new passport restrictions are to blame, Carrick says.
As of June 2009, a valid passport is required by American and Canadian citizens for travel between the two countries.
The rise of the loonie relative to the weak greenback has also played a role in the tourism decline, Carrick notes. On Nov. 19 the Canadian dollar was trading 17.5 per cent higher on a year-over-year basis.
The negative effects of a stronger dollar on tourism are exacerbated by a decline in business travel as companies cut back on discretionary expenses amid the recession.
Canadians took fewer trips in September compared to August, contributing to a year-over-year decline of 6.5 per cent.
But travel by Canadians to destinations other than the U.S. grew 0.4 per cent in September, a 2.3 per cent jump on a year-over-year basis.
