Sticker shocks, border delays hopes for Canadian travel boom

OTTAWA, July 12 (Reuters) – Rising prices, border restrictions and airport chaos are threatening hopes for a post-pandemic summer travel boom in Canada, hampering a tourism recovery and taking the country’s shine as a destination, analysts and executives say. of industry. .

Tourism spending in Canada remains 34% below 2019 levels, despite strong gains over the past year, official data shows. With most of the COVID-19 restrictions lifted, the Canadian travel industry had hoped that 2022 would be the year when domestic tourism would at least return to normal volumes.

But gas prices have risen, worsening the outlook for road trips. Flying faces its own challenges: Canada’s airports are grappling with stranded tourists, canceled flights and lost luggage. Others are stuck at home due to long passport processing times. Read more

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That has the travel industry bracing for a smaller-than-expected summer boom that will delay the industry’s domestic recovery by about a year, said Beth Potter, chief executive of the Tourism Industry Association of Canada.

“At this point it looks like we could get there by the end of 2023, but we just don’t know,” Potter said.

She added that “there is incredible pent-up demand” for travel, but this has been tempered by high inflation and other challenges.

Before the coronavirus pandemic hit travel, tourism brought in more than C$100 billion ($76.7 billion) in annual revenue and accounted for over 2% of Canada’s gross domestic product. Revenue is projected to be about two-thirds of that level this year.

The biggest shortage is in international visitors.

Foreign air arrivals were down 50% in April 2022 compared to April 2019, and same-day visits from the United States, key to many border cities’ economies, are lagging behind. About 10 million people made same-day cross-border trips in Canada in 2019, and Potter estimates current numbers are half that level.

“At the big border points in southern Ontario, they would normally see 50 buses a weekend and now they’re averaging about two,” Potter said, adding that a full recovery of foreign visitors isn’t expected before 2025.

‘THE SYSTEM IS BROKEN’

While Canada has eased its pandemic restrictions, it still requires foreign visitors to be fully vaccinated, and all travelers entering the country must use a public health app to upload vaccination documents and personal information.

By comparison, most European countries have lifted all entry requirements related to the coronavirus, as have popular North American tourist destinations in the Caribbean and Mexico.

Canada needs to do more to mitigate issues with travelers seeking the border, said Perrin Beatty, chief executive of the Conference Board of Canada, a business lobby group.

“If what people are hearing from Canada is that the system is broken, they’re just going to go somewhere else where things are working better,” Beatty said.

The federal government last week reiterated that it is working to improve the airport’s efficiency. It has hired 1,200 border agents since April, is adding new customs kiosks and has ended random COVID testing at airports to ease the strain.

On the domestic front, a surge in travel spending after most COVID-19 restrictions were lifted earlier this year is falling, according to the RBC Consumer Spending Tracker.

“It hasn’t shown signs of worsening yet, short-term,” said Nathan Janzen, a senior economist at RBC. “But it stopped growing at a rapid rate.”

Inflation is chipping away at consumer purchasing power, with travel one of the first discretionary items to go, Janzen said. Interest rate hikes aimed at curbing inflation are piling up.

Saskatchewan resident Craig Bott, who recently visited Ottawa with his family, said the long-planned trip turned out to be much more expensive than expected and flight delays were frustrating, prompting them to reconsider plans for more trips this year.

“We had talked about maybe doing something else in the summer, but I don’t think we will,” Bott said. “Maybe we’ll go to a lake near the house, do some fishing.”

($1 = 1.3033 Canadian dollars)

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Editing by Deepa Babington

Our Standards: The Thomson Reuters Trust Principles.

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