The loss – caused by the high dollar, fewer Americans visiting and greater competition from other destinations – isn’t just counted in direct spending by tourists.
Canada may also be missing out on billions of dollars in exports that flow from foreign tourism, based on estimates by Deloitte contained in the 24-page report, “Passport To Growth.”
“Tourism is a much bigger deal than it’s been presented in the past,” explained Ryan Brain, a Deloitte partner and head of its consumer business. “When you look at the correlation between travel and trade, it’s a different way of looking at the industry.”
Deloitte calculates that every 1-per-cent annual increase in foreign visitors would generate $817-million in exports over the next two years.
If Canada had merely kept pace with the rate of foreign visits to the United States in 2011, Canadian exports would have gone up by more than $4-billion – roughly equal to what the country exports to Brazil and Russia combined.
There is “statistically significant evidence” that changes in foreign visits drives exports to the visitors’ country in the following year, based on the experience of the United States and other countries. That’s because tourism fosters business relationships, stimulates demand for Canadian-made products and opens new markets.
“Business travellers develop connections that in turn open up pathways into new markets and create a foundation for trade relationships,” the report explained.
Not only does tourism drive export volumes, it also may expand the range of goods Canada would sell, according to the report. “Our research suggests there are some strong links between inbound Canadian tourism and Canadian exports, and that strengthening tourism could have a positive impact on Canadian companies and Canada’s economy overall.”
Even as it loses global market share, Canada’s tourism sector remains a major and “unheralded” economic engine. It generates $15.4-billion a year in revenue, or about 2 per cent of gross domestic product. The industry also directly employs 600,000 Canadians and generated $22.7-billlion in tax revenue in 2012.
The industry generates substantial indirect spinoffs – all the businesses and jobs that feed off tourist operators. The multiplier effect of these spinoffs is greater than it is for auto manufacturing, mining or oil and gas industries, Deloitte said.
The report highlights a number of ways Canada can boost inbound foreign travel, including creating new products to meet changing demographics, investment in tourism businesses, attracting and retaining talent, reducing airline fees and taxes, as well as speeding up visa processing.