Christopher Reynolds, The Canadian Press
Published Tuesday, April 23, 2024 5:37 amEDT
Maureen Gordon has already fallen on hard times.
She and her husband began running ecotourism team Maple Leaf Adventures in Vancouver about a month before the 9/11 terrorist attacks devastated international travel in 2001.
The rebound was relatively quick. The consequences of COVID-19 have proven much longer.
“The pandemic, of course, was incredibly tumultuous and scary, as I think it was for most tourism businesses in Canada,” said Gordon, who organizes weeklong stays on a schooner, a converted tugboat and a catamaran along along the Pacific coast.
“It was a really traumatic moment. We were unable to operate at all during several government shutdowns,” she recalled. “We were scared, our bank was scared.”
While 2022 was “amazing” as Canadians looking to burn off pent-up energy returned to domestic travel, 2023 saw a “setback” amid rising interest rates that discouraged some residents.
“While the tourism industry – in terms of travel interest and bookings – is recovering, businesses are really hurting,” Gordon said. “I think all of us are carrying the biggest debt load we’ve ever had. We certainly are.
“We crossed the ocean from our sunken ship and now… we’re all trying not to die on the beach.”
Tourism has rebounded strongly from pandemic lows, but operators say the sector has yet to reach pre-COVID levels and debt remains a significant burden for thousands of small businesses across the country.
International visitor numbers remained below four years earlier, with tourists from the U.S. at 85 per cent of 2019 levels and those from further afield at 78 per cent, according to Crown Destination Canada corporation.
The industry generated more than $109 billion in revenue last year, about four per cent more than in 2019, but significantly less in real terms after accounting for inflation, according to the Tourism Industry Association of Canada. .
Beth Potter, who heads the association, has called on the federal government to create a new low-interest loan program and a stream of temporary foreign workers, both specific to the tourism industry.
“We haven’t had any kind of indication that we’re going to see this,” he said. In fact, the government aims to reduce the proportion of temporary residents in Canada’s population over the next three years.
The impact will not be “as extreme” in tourism as in agriculture or food processing, he said. But it will affect ski resorts and areas dependent on tourism, such as northern Canada and Niagara Falls, Ontario.
Travel, hospitality and recreation offerings are effectively a perishable product, meaning it is especially difficult to recover lost profits.
“If you don’t book the hotel room tonight, you won’t be able to book that room twice tomorrow night,” Potter said.
The sector’s recovery continues to lag behind that of the business world in general. The number of businesses linked to active tourism was slightly below pre-pandemic levels in December, while the number of businesses overall exceeded 2019 figures, data from Destination Canada showed.
Across all sectors, two in three small and medium-sized businesses still had pandemic debt at the end of last year, with an average of $107,700, according to a Canadian Federation of Independent Business survey of 3,148 members. Of the 14 sectors surveyed, hospitality and transport operators are among the most pessimistic about the year ahead. Only retail trade fared worse.
Ski operations and tourist hotspots like the Okanagan Valley have had a particularly difficult year.
“We had winters that were not winters for us,” Tourism Minister Soraya Martínez Ferrada said in a telephone interview.
“Last year we were really affected by climate change in terms of fires, droughts and floods,” he continued. “In fact, people were canceling their trips to Canada because they thought the whole country was on fire. Do you remember the smoke in New York?
While some tourism statistics for Canada’s four largest cities (Toronto, Montreal, Vancouver and Calgary) are now on track to surpass 2019 numbers, more remote parts of the country continue to struggle.
“Regions a little further away from those big centers had a harder time regaining momentum,” the minister said. Business travel and conventions also continue to lag, he added.
Regional transportation has also failed to recover, with domestic seat capacity at 84 per cent of 2019 levels in the fourth quarter of 2023, according to Destination Canada. That may affect domestic travel and leisure markets.
“If people want to go between Prince Edward Island and Newfoundland in the winter, when the ferry is not running, they would have to fly to Toronto,” Potter said, pointing to the deterrent.
The minister cited commitments set out in the federal budget to support tourism. The government has committed to providing new funding to replace Via Rail’s aging fleet on routes outside the corridor that runs between Quebec City and Windsor, Ontario. — an amount has not yet been specified due to an upcoming acquisition process.
Martínez Ferrada also highlighted $124 million for ferry operations in the Atlantic, as well as investments in development opportunities in the North and for indigenous tourism operations announced last year.
While there are no new sector-specific loans on the horizon, she framed the $2.5 billion in carbon rebates scheduled to hit the bank accounts of small and medium-sized businesses in the coming months as a financial buoy.
Back in Vancouver, Gordon said the year looks promising, with a few caveats.
“Most people don’t trust their projections 100 percent,” he said. “It’s not a straight-line recovery… We all feel like the market is really unpredictable right now.
“People in our industry are very passionate about what they do and very determined. It is not a pessimistic story,” she reflected.
“But it is a huge, and perhaps partly unnecessary, story of struggle and burden for a key industry that brings so many benefits to Canada and promotes our brand to the world.”
This report by The Canadian Press was first published April 23, 2024.