Tourism spending in Canada rose 1.3% during the first three months of 2008, as spending by Canadians continued to advance, while that by international visitors declined. Tourism spending has increased in every quarter since the second quarter of 2003.
Spending on tourism at home advances
Spending by Canadians on tourism in Canada was up 2.3% in the first quarter of 2008, the fastest pace in nine quarters. This occurred in tandem with an increase in employment and solid gains in personal disposable income.
Canadians’ travel spending outside Canada slipped in the first quarter of 2008 from a record high set in the previous quarter. Same-day and overnight travel to the United States was down notably, while the number of trips overseas increased.
Outlays on passenger air, rail and bus transportation were all up, despite higher fuel prices and severe winter weather. Spending on vehicle fuel by Canadians, on the other hand, was down.
Overnight travel within Canada increased, as indicated by a 2.8% advance in spending on accommodation. Outlays on recreation and entertainment, however, slipped from a record high in the fourth quarter of 2007.
Spending by international visitors down
Spending by international visitors fell 1.9% in the first quarter of 2008, the 10th quarterly decline since the fourth quarter of 2004. With higher fuel prices and severe winter weather, Americans cut back their travel to Canada, as same-day and overnight trips from the United States were both down sharply.
Partially offsetting this, however, the number of trips to Canada from overseas countries increased by 0.8%, moderating the overall decline in tourism exports. Overseas visitors to Canada tend to stay longer and spend more on average than visitors from the United States.
Spending by international visitors was lower for all categories of goods and services, with the exception of bus transportation. The largest decline was for vehicle fuel, reflecting the sharp drop in same-day travel from the United States as well as higher fuel prices.
Tourism makes positive contribution to growth and employment
Tourism gross domestic product (GDP) grew 1.2% in the first quarter of 2008 while economy-wide GDP edged down 0.1%. The strength came from the transportation and accommodation industries. “Other tourism industries” slipped from a record high in the fourth quarter of 2007, owing to weakness in recreation and entertainment.
Despite the robust expansion of tourism GDP, the job market was more stable with tourism jobs edging up 0.3%, slightly less than the economy-wide pace of job growth. The number of tourism jobs in air transportation declined, as the industry reduced jobs in the face of higher fuel prices.
According to the latest Business Conditions Survey for the Traveller Accommodation Industry, hotel operators reported lower expectations for the second quarter of 2008 compared with the same period in 2007. The exchange rate, excess room supply and labour shortages were cited as continued impediments to business.
On the currency front, the Canadian dollar gained against the Japanese yen during April 2008, but lost ground against several other major currencies, including the US dollar and the Euro. In May, the Canadian dollar lost ground against the Australian dollar, but appreciated against other major currencies, including the Euro and the US dollar.
On the international front, the Organisation for Economic Co-operation and Development composite leading indicators for April indicate a continued weakening outlook for all the major G-7 economies (Canada, France, Germany, Italy, Japan, the United States and the United Kingdom). The indicators for China, Brazil and India point to a downturn, while the outlook for Russia is for continued expansion.
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