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The Real Impact Of COVID-19 On Canadian Cross-Border Tourism

The Canada-US border has now been closed for five consecutive months, and predictably, the tourism industry continues to suffer.

  • Automobile arrivals from the US into Canada decreased by 96% compared to last year.
  • Non-essential travel across the border will remain in effect until September 21, 2020 at the earliest.

In Short: As tourism season enters its twilight, most tourism-agencies and key tourism-industries, like aviation and events, have abandoned any hope of salvaging the lost profit due to the coronavirus pandemic.

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The Impact on Consumer Behaviour

Tourism spending in Canada fell 14.2 per cent while employment in the tourism industry fell by 6.5 per cent.

  • US tourism flows over $1 billion per year into the Niagara area alone. This is one of the many areas in Canada stripped of expected earnings.

Most consumers have delayed the idea of travelling for vacation reasons due to financial worries and the fear of coronavirus. These factors, and the earlier closures of all non-essential air travel, led the remaining interested tourists to focus on outdoor tourism like hiking and camping.

Unfortunately, this had led to overcrowding in some parks and an increase in vandalism. One avid hiker in the United States noted that “[the park] has been decimated by people who have never hiked before.”

Measures taken by Private Companies and the Government

Due to the provinces’ size and immense landscape, Ontario businesses suffered in different ways.

  • While Southern Ontario tourism could still function at a limited level due to domestic travel, lodge owners who rely on cross-border anglers completely wrote off business during the apex of the pandemic.
  • The Yukon, which benefits from wilderness tourism has had to reorient its tourism packages towards the fall and winter because of the loss of American visitors.
  • Municipalities sought to revitalize this industry by promoting local tourism. In Ottawa, the #MyOttawa pass provided users full access to Ottawa’s museums and common tourist attractions. The capital city has even gone as far as now offering $100 gift cards to anyone who books two or more nights hotel stays.

Meanwhile, AirBNB changed its marketing strategy to encourage longer term rentals, in an effort to maintain profits given lower mobility.

  • While economy class hotels have had a modest decrease in activity, luxury hotels saw a 98% decline in demand due to the lack of group travel and executive business trips.

Impact on Canadian Industries

In addition to transportation, hotels and the entertainment industry, Canada, among other countries, experienced widespread losses in the oil industry, due to the falling price of oil and manufacturing, due to the closure of warehouses.

  • In Ontario, the ministry of Heritage, Sport, Tourism and Culture Industries recorded a drop of about 28 percent in April 2020 in tourism employment compared to the same month last year.
  • More crucially, the agriculture industry declined due to a labour shortage caused by the closure of the border. Many farms in Ontario depend on temporary migrant workers, but the border closure significantly decreased the amount of help needed to turn a profit.
  • While the Canadian Federation of Agriculture asked for $2.6 billion in emergency aid, the Liberal Government funded them with $252 million.

Secondly, while the supply chain between Canada and the US has not been significantly affected, it is questionable whether the supply agreements between the two countries will remain unaltered, or whether the border closures will precipitate new economic arrangements to the detriment of both parties.

Economic Projections

The United Nations World Tourism Organization projects a global loss of $30-50 billion in spending by international tourists. This reflects a 20-30% decline in international tourism, compared to 4% during the 2008 recession and 0.4% during the SARS pandemic.

  • It is also predicted that between 250,000 and 450,000 jobs will be lost in Canada over the course of the pandemic’s prevalence. Tourism spending is not likely to recover to pre-pandemic levels until 2022.

The Big Picture:

Predictably, the coronavirus and the necessitated border closures, which persist due to the failure to contain the virus in the United States, has led to severe losses for most sectors in Canada. The true economic effect of the pandemic will not be seen until regular businesses resume and government subsidies stop coming in.

Ultimately, while some clever businesses managed to mitigate their losses through their own guile, others, dependent on American and foreign tourism, have created unsurmountable deficits and may not be able to recover until traces of COVID-19 is only found in history textbooks.