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Fragile U.S. market prompts CTC study

Tourism industry braces for introduction of new passport rules

U.S. visits from the West Coast to Whistler are down this summer, despite a strong August.

It’s a trend being witnessed right across Canada and it’s worrisome enough that the Canadian Tourism Commission has launched a task force to investigate it.

"The task force was formed to investigate why this is occurring and try and get at the underlying facts about why (U.S. visitors) are not coming," said Tom Penney, vice president of research and planning at the CTC.

The segment most notably down is the short haul drive-to market.

That’s a big concern for Whistler as visitors from Washington state are a key component of the resort’s market.

The latest figures from Tourism Whistler show visitors from Washington state between the beginning of May and the end of August were down 17 per cent, while those from California were down 12 per cent. The month of August did buck the trend with Washington state visitors up 38 per cent, and California visitors up 40 per cent.

"Whistler is not alone," said Barett Fisher, president of Tourism Whistler. "U.S. business has been down in Vancouver, Victoria, Banff, Lake Louise and Ontario – we are all challenged from the U.S. market."

A recent report in the Tourism Sector Monitor found that the issues with the greatest impact on U.S. travel were the rise in gas prices, cheaper airfares to destinations other than Canada, the strong Canadian dollar and the residual impact of the terrorism attack on New York on Sept. 11, 2001.

The number of U.S. travellers has declined every year since 2001. The downturn predated the events of 9/11 but was exacerbated by them.

It’s likely the rise in the cost of gasoline has had a significant impact. The U.S. average gasoline price in April 2005 was more than twice as much as the price in January 2002 (US$1.13) and it’s unlikely any relief from high prices will come in the near future.

The strong Canadian dollar is also playing a key role. Between January 2002 and December 2004 when the value of the U.S. dollar dropped 23.8 per cent the number of same-day U.S. visitors to B.C. slumped 12.8 per cent.

"The strong Canadian currency is a huge issue," said Fisher. "There probably is not a clear understanding of what the exchange rate is doing… but when you do look at pricing on the Internet we have lost a 30 per cent advantage.

"We are dealing with that head on. As a resort we are coming out with better value packages, such as 30 per cent savings if you book early, and we recognize that we have to be more aggressive."

The CTC study hopes to look at all these factors and more. While most in the industry agree these seem to be the main issues there has been no definitive investigation done to date.

"Everyone has an idea about why they are not coming, such as the price of gas, the exchange rate, the border crossing delays or whatever," said Penney. "But nobody knows for sure what the underlying factors are."

The CTC is in the process of hiring a research firm to conduct interviews on a sizeable sample.

"We want to see if the perceptions of coming to Canada have changed and if these barriers are impacting their decisions a great amount," said Penney. "Or is it a behavioural shift in the U.S. given all what is going on there and they are saying, ‘hey, you know what we are just going to stay home for a while.’"

The results should be available early in December. That way spring tourism campaigns can be adjusted if necessary.

Adding to these factors is the recently announced Western Hemisphere Passport Initiative, a co-production of the U.S. Departments of Homeland Security and State. In essence the Western Hemisphere Travel Initiative will require all U.S. citizens, citizens of the British Overseas Territory of Bermuda, and citizens of Canada and Mexico to have a passport or other accepted secure document that establishes the bearer’s identity and nationality to enter or re-enter the United States by Jan. 1, 2008.

In the proposed implementation plan, the Initiative will be rolled out in phases, providing as much advance notice as possible to the affected public to enable them to meet the terms of the new guidelines.  The proposed timeline will be as follows:

Dec. 31, 2006

— Requirement applied to all air and sea travel to or from Canada, Mexico, Central and South America, the Caribbean, and Bermuda.

Dec. 31, 2007

— Requirement extended to all land border crossings as well as air and sea travel.

Discussions are underway to explore what type of alternative documentation may also be satisfactory in establishing identity and citizenship.

"We are gravely concerned," said Fisher of the U.S. initiative.

Part of the concern comes from the plan itself and part comes from the fact that many travellers think it is already in place and that may be affecting their vacation plans.

"While we recognize that there are critical issues that need to be reviewed from a safety and security perspective we are very concerned that at the same time such legislation does not undermine tourism, which is our bread and butter," added Fisher.

The tourism industry has every right to be concerned when you consider that the CTC has found that only 34 per cent of U.S. residents aged 18 and over have a passport. In Canada, 41 per cent of residents 18 and over hold a valid passport.

And a Conference Board of Canada report estimates that in 2008, the first full year the new rules will be in effect, there will be 4.7 million fewer visits by Americans to Canada. It estimates that will cost the tourism industry $970 million, a 12.3 per cent decline from current levels.

Both Penney and Fisher said the industry, while it understands why the U.S. is taking this step, plans to work hard to mitigate the impact and help streamline the process for travellers.

"Our efforts looking forward will be to try and ensure that there is good communication on the subject, that there is understanding of how to counter it as far as the administration side of it goes and understanding the timing and deadlines," said Fisher.