Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive environment
Product coverage
Airline capacity and utilisation; Arrivals by country of origin; Arrivals by mode of transport; Arrivals by purpose of visit; Car rental services by sector; Demand factors; Departures by destination; Departures by mode of transport; Departures by purpose of visit; Domestic tourism by destination; Domestic tourism by mode of transport; Tourism receipts and expenditure; Tourist attractions; Transportation; Travel accommodation; Travel retail services
Executive summary
1. EXECUTIVE SUMMARY
Negative growth factors of the review period are having less of an impact
The impact of crucial issues that weakened market performance over the review period has lessened significantly. The effect of the terrorist attacks on the US on 11 September 2001, increased waiting times at airports and overland border crossings, and SARS in 2003 abated in 2005 as tourism demand picked up and the travel market showed signs of recovery.
Proposed cross-border travel regulations could have a deterrent effect on travel between Canada and the US
Under the Western Hemisphere Travel Initiative (WHTI), to take effect from January 2008, travellers will be required to provide passports or other forms of documentation when travelling between Canada and the US. Should this go through as planned it could result in a sharp decline in the number of visitors and arrivals between the two countries. This is particularly the case since the US represents the strongest market for international arrivals in Canada.
The trend towards shorter trips bolsters the domestic market
A feature trend in the market saw Canadians taking shorter but more frequent trips and outings, which benefited the domestic market in terms of spending and volume. Increased competition among short haul and discount transportation operators and weekend getaway packages offered by tour operators, hotels and car rental agencies supported the rise in tourism demand across all sectors.
Canadians continue to spend more abroad than visitors spend in Canada
The international travel deficit reached C$1.5 billion in 2005, indicating that Canadians spend far more abroad than international travellers spend in Canada. The strength of the Canadian dollar, particularly vis-à-vis the US dollar is the main reason behind this trend. While continuing to promote Canada in overseas markets as a top tourist destination, the Canadian Tourism Commission is also encouraging Canadians to travel within the country, thereby strengthening the domestic market.
Termination of wage wars results in stronger performances for Canada's major airlines
The demise of discount carrier Jetsgo in 2005 signaled a new direction for airlines to follow. Jetsgo had initiated a series of wage wars through low ticket pricing, but this proved to be its downfall as it declared bankruptcy in March. However, other leading airlines such as Air Canada and WestJet prospered enormously, as the market became less crowded and the airlines were able to boost fares to more feasible prices.
Overland border crossing is the highest volume entry point to Canada for incoming tourists
The transportation market in Canada is dominated by air travel, which accounted for 84% of total value in 2005, yet overland travel led the market in terms of volume, accounting for 58% of arrivals in 2005. The high volume of incoming tourism by road is due to the high number of visitors from the US who cross the border by car either for day trips or overnight stays.
Exceedingly high fuel prices as a result of natural disasters
There were several natural disasters in 2005, with Hurricane Katrina and Hurricane Wilma both wreaking havoc in North America. The aftermath of Hurricane Katrina resulted in a surge in fuel prices, and this proved to be a tough challenge for the automobile and air transportation sectors in particular. On top of the already strong Canadian dollar, this made US visitors even more hesitant to head north, especially with overland travel being the most commonly used method of transportation.
Recovery phase in the market bypasses merger and acquisition activity
Merger and acquisition activity dropped off significantly in almost all areas of the travel and tourism industry. The tone in the industry as a whole was, at best, to maintain market share and revenue with strong efforts made to avoid losing ground because of the tough economic environment.
Casinos bring revenue and tourists back to the market
The rising popularity of casinos and development of casinos as entertainment, accommodation and dining centres attracted domestic tourists, while the appeal of gambling in Canadian currency lures US visitors to the market, making casinos the leader in the attractions sector.
Forecasts point to better times ahead, but much work still needs to be done
Growth is forecast for all three main sectors of Canada's tourism market -- incoming, outgoing and domestic. However, growth is likely to slant towards an uneven balance of payments, with the Canadian travel and tourism accounts showing an increasing deficit to 2010, which indicates the urgency of the industry to develop sound and broad reaching strategies for bringing more visitors to Canada.
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