Thank you very much.
Mr. Chair, members of the committee, good evening.
Good evening, everyone. Thank you for having invited me to take part in this consultation.
TIAC really appreciates the opportunity to participate in this important dialogue.
Travel and tourism is an $88.5-billion industry. It's Canada's largest service export sector and it generates $17 billion of annual export revenue. It's an economic driver and significant job creator in every riding across this country. We employ more than 600,000 people and we are the largest employers of Canadians under the age of 25.
There are a number of factors that undermine our international competitiveness. We've circulated a brief underscoring the factors that contribute to tourism's underperformance.
Tonight I want to focus my remarks on the need to increase international tourism marketing through Destination Canada..
You may be thinking to yourselves that tourism is one of those industries that's doing just fine and that the low dollar is taking care of this sector, so nothing needs to be done. What the low dollar is doing is keeping Canadians at home this summer. While domestic tourism is vitally important to the economy, we've grown overreliant on this segment. Currently, 80% of travel revenue in this country is derived from Canadians travelling within Canada. This is up from 65% just a decade ago.
While a low Canadian dollar is good for exports, we operate in a global marketplace where we compete with countries which invest significantly more in marketing than we do, and it shows. Globally, travel and tourism is one of the fastest growing economic sectors, surpassing $1.5 trillion in revenues. Our share is only 1.5% of that growing pie.
We need to grow international visitation. That's what generates the export revenue that drives investment, economic stimulation, and job growth in this sector.
Our largest key market is the U.S., so we're going to focus on that for a moment. Canadians are very conscious of the value of their currency. It's the topic of almost as many conversations at Tim Hortons as the weather is. But the vast majority of Americans are unaware of currency exchange. They base their travel decisions on value. Travel options are advertised to Americans in U.S. dollars. The effectiveness of the advertising campaign and the value proposition is really what's attracting them.
Canada has not had a significant marketing presence in the U.S. for at least five years. Last year TIAC requested $35 million annually to re-enter the U.S. leisure market and we received $10 million a year over three years. We're very grateful for the investment, but it does fall far short of the request. It's further compounded by the fact that we're experiencing a 30% loss in buying power in the U.S. because of the currency exchange.
Since 2002 Canada has fallen from eighth to seventeenth in the world in terms of visitation. Our marketing budget has dropped from $98 million to $58 million and we've shed four million international visitors a year.
Market conditions are now optimal to drive demand.
National tourism brand advertising is not only an effective way of promoting tourism but it's a powerful vehicle to communicate a country's values, including quality of life, cultural diversity, and environmental stewardship. Advertisements depicting Canada's magnificent geography, cultural diversity, and modern cities will not only drive visitation to Canada but will go a long way to setting straight the global impression of Canada as a leading progressive nation.
The travel and tourism sector is experiencing optimal market conditions when other sectors are struggling with global commodity prices. Increased advertising in key source markets would generate significant return within the same fiscal year at a time when government revenues and cash flow are vitally important.
TIAC is therefore asking for Destination Canada's marketing budget to be increased to $150 million. In 2001 the budget was $98 million, when Canada's visitation levels were at their highest. That converts to $127 million in today's dollars. We believe this amount should be increased to $150 million to compensate for the loss in buying power in key markets attributed to currency exchange.
Mr. Chair, members of the committee, the low dollar should not be seen as a solution to the tourism industry. It's an investment opportunity that really shouldn't be missed.
On behalf of Canada's travel and tourism businesses, I want to thank you for the opportunity to participate in the pre-budget consultations and look forward to your questions.
Thank you.