Canada’s tourism industry is in decline again after a brief uptick following the end of Covid-19 lockdowns.
According to a new report from TD Bank titled, A Slow Road to Recovery for Canadian Tourism Spending, the tourism sector had been slowly growing back to its pre-pandemic numbers over the last three years before dipping again recently.
Higher interest rates and a declining job market both in Canada and abroad are contributing factors, according to TD’s economists Marc Ercolao and Rishi Sondhi who published the report on Thursday.
The two don’t expect the tourism industry to reach its previous levels until 2025, as they expect a full recovery is going to take some time yet.
Domestic tourism has made a faster recovery so far compared to international tourism. International travellers to Canada rose from 2.11 million to 2.25 million from January to May of this year, which was akin to the average from 2011-2015; however, that is still 20% lower than its peak prior to the pandemic.
For the first half of 2023, Chinese tourists alone were down 80% over the same time period in 2019. This is due in part to rising tensions between Canada and China as well as certain travel restrictions that have been imposed on group tours. Tourists from India have increased on the other hand, doubling in the total amount received before the pandemic.
The report shows that Atlantic Canada has been receiving the bulk of the uptick in comparison to the rest of the country. Nova Scotia saw a 15% increase, the most of any province, with Quebec following closely behind it.
Alberta and B.C. are receiving the highest number of tourists for Western Canada. However, those provinces are both facing labour shortages which will serve as a problem during peak tourist season, noted the report.
Saskatchewan has been hit the hardest by low international travellers, with a 40% decrease in pre-pandemic numbers.
“Saskatchewan has also seen some domestic and international flight routes halted by major airlines,” the report stated. Ontario is also suffering with low levels, down 24% since before the pandemic.
The report also predicted that by the end of 2023, Canada’s job market will “lose a considerable amount of steam,”
The Bank of Canada also recently raised interest rates which will likely see Canadians focusing less on domestic travel and more on paying off debts.
“On the plus side, the Canadian dollar should remain relatively low through next year, providing a small offset to these other headwinds,” read the report, suggesting this might lead to an increase in U.S. tourism.
The report also suggests that the recovery is “likely to continue to make some gradual headway,” with the silver lining being that the industry will have time to replenish the staffing shortage that it faces in certain provinces.
