The stock markets are up, housing starts and house sales are rebounding and politicians are saying the worst of the recession is over, all of which are good signs for the economy and by extension that is good for the tourism business.
But despite the hopeful signs, the deficit positions the federal and provincial governments have found themselves in, and some of the decisions made in the last two months to deal with the deficits, are going to have long-term impacts on tourism. Cumulatively, these decisions may cancel out the benefits of any economic recovery and leave tourism scrambling for years to get back to where it was.
Let's start with the provincial government's decision last month to dissolve Tourism B.C. as a Crown corporation and turn it into a department within the Ministry of Tourism, Culture and the Arts. As Jon Garson of the B.C. Chamber of Commerce told a Whistler audience last week, this will make it easier for the government to cut spending on tourism and add the savings to provincial revenues. When Tourism B.C. was a Crown corporation there was a funding formula; a percentage of the hotel tax went directly to the organization. Next year, tourism will be one department within perhaps the smallest ministry competing for a piece of the severely stretched provincial budget.
And as Garson pointed out, there won't necessarily be tourism professionals on hand to make the case for funding, as Tourism Minister Kevin Krueger will appoint an advisory council of five to nine people to replace the 15 industry professionals who used to sit on the Tourism B.C. board.
Garson told Whistler Chamber of Commerce members last week that research shows most governments that have hosted an Olympics cut tourism budgets following the Games. Presumably the thinking is: they've spent large - likely more than they anticipated - on infrastructure and the Olympic event, so tourism should suck it up for a while.
Sure enough, the Council of Tourism Associations pointed out following the Sept. 1 budget update that the tourism operating budget within the ministry is forecast to drop from $20.5 million to $10.9 million in 2011.
The Liberal government in Victoria certainly hasn't abandoned the Olympics as a vehicle for tourism, in fact it's allocated $39 million in new spending for tourism marketing related to the Olympics. It's after the Games wrap up that things get scary.
Still, the province's financial commitment to marketing during the Olympics is in contrast to the Conservative government in Ottawa. As the Globe and Mail reported Tuesday, David Emerson, formerly the Conservative minister responsible for the Olympics, has warned the federal government not to skimp on the marketing opportunity that comes with hosting the Games.
"To let this go by over relatively small budgetary amounts would be a pretty serious mistake," Emerson told the paper.
An example: B.C. and Canada shared pavilions at the Torino Olympics and the Beijing Olympics, but the Government of Canada still hasn't decided if it will have a pavilion at the Vancouver Olympics. B.C. asked the feds to partner up but lacking any commitment has decided to go it alone.
Three and a half months after the Paralympics wrap up, British Columbia will have a new harmonized sales tax. Garson, the B.C. Chamber of Commerce's vice president of policy development, said the chamber has been advocating for a harmonized provincial sales tax/GST since 1989. The B.C. Chamber has discussed the matter with industry associations and concluded that on the whole the HST will be good for most businesses in British Columbia.
The exceptions are the tourism industry, the service sector, restaurants and home builders, four sectors that cover 99.99 per cent of all business in Whistler.
"The tourism industry has stated that the HST will have a devastating impact on the sector, as most tourism-related products and services will now face a new seven per cent tax," COTA said in a release. "With the industry still reeling from the recession, new travel restrictions from the U.S., and a variety of other setbacks, the recent announcements go against the grain of the province's traditionally supportive stance on tourism."
The provincial government made the decision to bring in the HST, albeit after the Conservatives in Ottawa made an offer the Liberals couldn't refuse. The HST is here to stay, Garson said. The best the tourism industry can do is work with the province to mitigate the impacts. And Garson said the B.C. Chamber of Commerce would support the tourism industry's position if it feels the proposals are reasonable.
But the tourism industry, which met with Finance Minister Colin Hansen on Aug. 7, has yet to come forward with proposals. The home builders, meanwhile, had suggestions for mitigating the HST's impact a month ago.
Studying how much tourism grows following the 2010 Olympics should be worth a thesis or two, but it may be that decisions made in the summer and early fall of 2009 play as big a role as any economic recovery.
