Canada's Federal Tourism Strategy: Welcoming the World
1. Why a Federal Tourism Strategy?
Canada offers the world vibrant cities on the edge of nature, unique adventures in awe-inspiring landscapes, fine wines within bountiful vineyards, culinary specialties under clear skies and a friendly, multicultural and open society. This provides us with an exceptional platform for strengthening an already robust visitor economy, which generates jobs and economic growth across Canada.
In 2010, tourism was responsible for $73.4 billion in revenues and represented approximately 2 percent of Canada's overall gross domestic product (GDP). That's as much as the combined GDP of the agriculture, forestry and fishing sectors.
Approximately 594,500 jobs in Canada are directly generated by tourism in every province and region of the country. Moreover, the visitor economy drives key service industries, including accommodations, food and beverage, passenger transportation, recreation and entertainment, which account for over 9 percent of total employment in Canada. Many of these jobs are in the North, Aboriginal communities and rural areas.
International tourism is an important source of export revenues, having brought $14.9 billion into the economy in 2010. That's comparable to the export sales figures for three key natural resources—aluminium, copper and coal—combined. Tourism also represents about 23 percent of Canada's international trade in services, making it Canada's second-largest service export behind commercial services.
In addition to important economic benefits, tourism allows Canadians to share our heritage with one another and with the world. It forges links, promotes understanding and encourages respect for the natural environment.
Who's who in Canadian tourism
Small businesses are the backbone of the tourism industry. While large hotel chains, airlines and tour operators are important, about 98 percent of Canada's tourism sector consists of small and medium-sized businesses, such as lodges, wineries and spas. As such, it is mostly made up of thousands of private sector and not-for-profit organizations and associations, as well as departments and agencies at all three levels of government.
Tourism-related businesses often work with destination marketing organizations, which exist at the municipal, regional, provincial and national levels. These organizations promote development and market Canada's various tourism destinations and experiences.
The three levels of government, directly or through various agencies, run many of Canada's most important tourism attractions, including parks, museums, sports stadiums and convention centres. Governments also establish policy and legislative frameworks and administrative practices that support and affect how tourism businesses operate.
The diversified nature of the tourism sector makes it critical that all partners find ways to collaborate to build world-class destinations that offer first-class service and uniquely Canadian experiences.
Challenges and opportunities
The tourism industry is one of the most dynamic industries in the world.
Over the last 20 years, international tourism arrivals have been growing consistently at an average of 4 percent per year. In the past, international tourism was seen as the purview of a relatively limited set of affluent travellers, whereas today the number of travellers is growing rapidly and many are originating from the expanding middle class of large emerging economies. Globally, strong economic growth has generated millions of new travellers looking to purchase exceptional tourism experiences, and this trend is expected to continue. The United Nations World Tourism Organization forecasts that the number of international tourist visits will nearly double from 880 million in 2009 to 1.6 billion by 2020. Of the top five global source markets in 2010, China had the strongest growth—a 25.6-percent increase in international tourism spending in that year alone. The economies of Russia, Brazil and India are also generating large increases in the number of tourists.
On June 24, 2010, Prime Minister Harper and Hu Jintao, President of the People's Republic of China, witnessed the signing of a Memorandum of Understanding to Facilitate Outbound Tourist Group Travel from China to Canada. This Approved Destination Status is a tremendous boost for our tourism industry and has the potential to grow our visitor economy as we open up one of the world's fastest-growing outbound tourism markets. According to a Conference Board of Canada survey, the yearly number of travellers from China to Canada is expected to grow by up to 50 percent by 2015.
Where they're travelling
In decades past, the majority of tourists preferred to visit a handful of developed countries, including Canada. In the 1950s, the top 15 destinations in the world for tourism received 97 percent of international tourist arrivals. By 2010, the top 15 destinations received only 55 percent of arrivals. In 1950, Canada was in second place behind the U.S. in terms of arrivals; by 2010, it had dropped to 15th place. In this Canada is not alone: Other mature markets are facing a similar challenge from new destinations. Tourism is growing in countries such as India, China, Turkey and Thailand, each of which had a much smaller tourism sector several decades ago. These exotic destinations are offering travellers newly accessible and unique experiences.
What travellers want
Technology has shifted marketplace power to the buyer. Travellers are increasingly using the Internet and social media tools to learn about new attractions around the world and to find the least expensive way to reach these destinations. Consumer expectations of value for money are becoming more demanding, and travellers are seeking novel experiences that satisfy their curiosity. There is also growing interest in sustainable tourism, which takes the environmental and cultural impact of travel into account. As tourism demand grows and evolves, there will be even more intense competition for tourism dollars among destinations. New destinations entering the market are crowding out the established tourism products that mature destinations have traditionally offered. Canadian tourism businesses must continuously invest and innovate if they want to be top-of-mind in this ever-changing marketplace.
Canada's competitive position
Canada's tourism revenues have been growing for many years. Nevertheless, from 2000 to 2010, Canada's share of total international arrivals decreased from 2.9 percent to 1.7 percent and its share of total international revenues fell from 2.3 percent to 1.7 percent. As with many other nations with strong economies, Canada has a tourism deficit: Canadians spend more abroad than international visitors spend here.
Who's travelling here
Canada's tourism industry relies heavily on Canadians and Americans, although visitors originate from all over the world, including major markets such as the U.K., France, Germany, Japan and Australia. While volumes from these overseas markets are high, growth has been largely stagnant. There has also been an important decline in U.S. travel to Canada in the past decade. Factors that contributed to this decline include the shocks of 9/11 and the SARS epidemic, a strong Canadian dollar, the recent recession and an increasing desire by Americans to experience more exotic destinations, which are now easier to reach. As a result, the industry in Canada has become increasingly reliant on domestic rather than international travellers. In 2010, Canadians accounted for 80 percent of total tourism spending in Canada. At the same time, however, we are experiencing impressive double-digit growth in tourism from emerging markets such as India, Brazil and China. While volumes to date are modest, the trends indicate that these travellers will continue to become increasingly important to our tourism economy.
In 2009, the recession-driven decrease in global demand was challenging for Canadian businesses that rely on tourism, as it was for other sectors of the economy. However, in 2010, as Canada benefited from improved confidence and global economic conditions and its hosting of the Vancouver 2010 Olympic and Paralympic Winter Games, international overnight travel to Canada increased, reaching an estimated 16.1 million arrivals for a gain of 2.3 percent over 2009. This recovery was broadly based, with arrivals from virtually all key source markets, including the U.S., registering gains and with notable double-digit growth coming from Brazil, China, India and Japan.
Implications for the future
The increase in international arrivals this past year is encouraging. More broadly, forecasted growth in the number of tourists around the world presents a tremendous opportunity for Canada's tourism industry over the long term. However, we will face stiff competition within a dynamic and challenging global market. To be successful, Canada must better position itself to capitalize on the opportunities that lie in attracting more international visitors from more source markets while reinforcing domestic demand.
What we've heard
A wide range of individuals, organizations and other levels of government have been consulted in the development of the Strategy. The industry has expressed support for the four priority areas and recent federal actions to foster tourism, including investments in tourism infrastructure and marketing through Canada's Economic Action Plan and the signing of an Approved Destination Status agreement with China. The industry has also identified specific policy concerns with respect to the federal departments and agencies that shape the environment in which tourism business is conducted.
More broadly, the federal government is being asked for more consistency and support when making decisions that affect tourism and for the industry to play a greater part in the decision-making process. The industry wants to ensure that programs affecting tourism work efficiently together and that federal departments and agencies see the development of the tourism industry as a priority.
Working with our partners
Federal, provincial and territorial tourism ministers periodically convene to share ideas and suggest strategies on how to continue supporting our tourism industry. In 2009, the tourism ministers agreed to work toward a national tourism revenue target of $100 billion by 2015. The Federal Tourism Strategy will inspire and guide federal policies and actions over the next four years to help meet that goal.
Some governments have introduced strategies to direct and coordinate actions by various ministries and agencies according to shared goals and proposed outcomes. Some have made tourism a departmental priority, and some have consulted widely to elevate tourism opportunities. All of these elements are part of our approach.
By working together, governments and the tourism industry can build on Canada's natural strengths. The industry needs to do what it does best—leading the way and innovating in the pursuit of new opportunities. Together, public and private sector partners can boost industry performance, thereby enhancing Canada's competitive advantage as a leading international destination.
The Vancouver 2010 Olympic and Paralympic Winter Games is a shining example. All levels of government, including a number of federal departments, worked with the industry and with the Vancouver 2010 Organizing Committee to plan and deliver the hugely successful Games, showing that real partnerships can produce real results.
What we need to do
Awareness of Canada
To compete in a world in which consumers are bombarded with commercials—and given the country's relative size—Canada needs to continue its clear branding strategy and innovative marketing to increase awareness of Canada as a premier tourism destination. We must maintain a disciplined focus on key global markets and segments within these markets, based on well-founded research.
The Vancouver 2010 Olympic and Paralympic Winter Games highlighted Canada to the world as a strong, beautiful, vibrant and diverse nation. Canadians were praised for their exceptional hospitality and unfailing courtesy, and for welcoming the world in a uniquely Canadian way. This exposure has strengthened Canada's tourism brand—Canada. Keep Exploring.—and has opened up Canada to new opportunities.
Still, the global marketplace remains crowded with compelling travel brands. A strong, recognizable national brand is increasingly important the further one gets from Canada, whereas provincial or city brands are more relevant in local markets in Canada and the U.S.
Access and movement of travellers
To ensure that travellers feel welcome in Canada, we must better facilitate ease of access and movement, while ensuring the safety and integrity of our borders.
Tourism relies on the easy movement of travellers, but Canada is a vast country with a small population. These two fundamental facts underlie some of Canada's transportation-related tourism challenges. They also highlight the importance of aviation to the visitor economy: 83 percent of non‑U.S. visitors arrive by air, and tourism accounts for 95 percent of the revenues in the Canadian air passenger transportation industry.
Competition among air carriers is strong on major routes into and within Canada. Canadian air carriers have had to cope with volatile energy prices and with fluctuations in demand associated with the recession and recovery.
We have the good fortune to be a highly secure destination to visit, thanks in part to the protections in place at multiple ports of entry. The national interest in safe borders, however, can create obstacles for inbound, outbound and transiting visitors with regard, for example, to visas and border inspections. While managing security is paramount, we must continue to facilitate the flow of people, goods and services.
Product development and investment
To remain competitive internationally, we must encourage product development and investment in Canadian tourism assets and products.
Canada's products must keep pace with changing tastes and global competition. Competitor destinations are investing in memorable new attractions and so must we. Long-term, focused investments and innovation will allow us to capitalize on the full extent of Canada's inherent advantages. This will lead to the high-quality, unique and enriching experiences today's travellers seek.
We have product niches with strong growth potential. Research shows tremendous international interest in authentic experiences, whether in large or small cities, focused on Aboriginal culture, in Canada's North, or based on food, wine or sports. Capitalizing on this interest by developing and promoting exceptional experiences supports both business competitiveness and economic diversification.
Skills and labour
To enhance visitor experiences, we must foster an adequate supply of skills and labour that can deliver quality service and exemplary hospitality.
The tourism industry relies on personal contact. Every personal interaction—whether at an airport, restaurant, hotel, museum, park or show—has an impact on the visitor's experience. A culture of service and hospitality is crucial to the competitiveness of the sector.
The Conference Board of Canada forecasts that the tourism sector could face a shortage of more than 64,000 workers by 2015. This may limit the tourism industry's ability to realize its full potential.
Traditionally, the tourism sector has relied heavily on younger workers. Many young people have found their first jobs in this industry and have learned about key workplace competencies such as teamwork, customer service and taking responsibility. However, the size of the younger segment of the labour force is decreasing, and competition for it is intensifying.
The sector's business cycles are seasonal, with daily and weekly fluctuations in demand. These factors mean that the industry relies on part-time, seasonal and casual workers. Consequently, many tourism-related businesses have difficulty finding and keeping employees. The image of some tourism-related jobs as temporary placements can overshadow the competitive compensation and opportunities that come with the some 400,000 professional, supervisory and management positions across industries included in the sector.
Solutions to labour market challenges must come from all partners in the sector. Individual businesses, the industry as a whole, provincial governments and the federal government all have tools that must be used to address this challenge.
Capitalize on our strengths
In an increasingly competitive global environment, it is no surprise that mature markets are taking action to stay on top. In the U.S., the Travel Promotion Act has created the Corporation for Travel Promotion, an organization that will work to develop the first-ever program to market the U.S. as a destination.
Other countries, such as Australia, New Zealand, Turkey and Ireland, have put in place long-term tourism strategies that go well beyond marketing and promotion and include whole-of-government approaches. These approaches recognize that the global tourism marketplace is extremely dynamic and that all destinations need to be innovative, agile and collaborative to thrive. These strategies are often supported by significant financial investments in key tourism infrastructure, in events and activities, and in marketing. Global competition for business meetings, conventions and incentive travel is also continuing to rise. This high-yield and fairly stable business from international markets is worth an estimated $2.3 billion in Canada and is particularly important to major cities.
There is a tremendous opportunity for major growth in the Canadian tourism industry, based on the projected increase in global travel. Canada has much to offer new travellers from large emerging economies as well as high-yield, long-haul travellers. We have a strong foundation of natural and cultural tourism assets on which to build new world-class tourism experiences. We have safe travel infrastructure, an internationally recognized tourism brand, a well-educated workforce and some of the world's most distinctive experiences. Realizing the full potential of Canada's tourism sector will require us to work hard and work together. Through the Federal Tourism Strategy, we will be more coordinated and responsive in the areas of greatest importance.
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