It's great to have you here. Thanks very much for coming.
Good morning. My name is Craig Foley and I'm the CEO of Hospitality Newfoundland and Labrador.
I need to begin by saying that the tourism industry in Canada has not yet recovered. In Canada, total tourism spending was reported to be $94 billion at the end of 2022. That's 89% of our prepandemic level in 2019. However, this doesn't take into consideration the higher rate of inflation over the last couple of years, so the reality is probably much worse.
Businesses in the industry that were the first hit and the hardest hit by COVID-19 now face significant cost increases to operate, higher interest rates, crippling debt, labour issues and, in Newfoundland and Labrador, access issues. In Newfoundland and Labrador, there are approximately 2,500 small to medium-sized tourism businesses generating more than $1.1 billion in annual spending and accounting for 9% of all provincial jobs, offering part-time, full-time, seasonal and year-round employment.
In December of 2022, the Department of Tourism, Culture, Arts and Recreation, in partnership with Hospitality Newfoundland and Labrador, released “Transition, Transform, Thrive—A Tourism Vision and Strategy for Newfoundland and Labrador” or “Vision 2026”. Vision 2026 is a five-year strategy to transition the tourism industry through its recovery from the COVID-19 pandemic and transform this into a thriving tourism destination.
Our first priority for tourism in budget 2024 is access. Newfoundland and Labrador, considering we're an island and then there's Labrador, are over 400,000 square kilometres combined. If it were a U.S. state, it would be ranked fourth behind Alaska, Texas and California. When we think about access in Newfoundland and Labrador, we always think about affordable access to, from and around the province. Access isn't just one form of transportation. We depend on a multi-modal system of marine, road and air. Access in the province means more than transportation. It's actually an economic generator for all sectors of the provincial economy. It allows for the import and export of products and people.
Airlines, airports and the complete aviation sector have not recovered from the impacts of the pandemic. Specifically, in Newfoundland and Labrador, we do not have a direct route to Europe or to the eastern U.S., which severely limits our ability to attract visitors from these markets. Inbound non-seat capacity is down 16%, and air visitors are down 20%, year to date, from August 2019. Routes are limited. Plane configurations are changing to wider-body aircraft. Fares and fees are higher. All of these are putting pressures on air access to Newfoundland and Labrador. Investment in route development and infrastructure is required.
Marine Atlantic connects the island of Newfoundland to the rest of Canada. It's a vital link to the province, affecting residents and travellers. As a major piece of national transportation infrastructure, the Marine Atlantic fleet requires an immediate recapitalization and infrastructure. Auto visitors are up 19%, year to date, from 2019. Planning for increased capacity is essential. Furthermore, Marine Atlantic's sole shareholder requires a 65% cost-recovery rate. Hospitality Newfoundland and Labrador feels this cost-recovery rate is too high and that it limits affordable rates.
Our second priority is tourism business debt. For many tourism businesses, government loans provided through CEBA, RRRF and HASCAP were essential lifelines to keeping businesses whole. A recent Nanos survey demonstrated that increased costs, labour shortages, rising interest rates and mounting debt loads have added significant financial pressure to businesses across each of the tourism industries. The alarming results reveal that 45% of Canadian tourism businesses report that they are likely or somewhat likely to close within the next three years without government intervention into their mounting debt.
Furthermore, 55% of tourism sector businesses are somewhat not or not confident that their company will be able to repay debt, including the above-noted loans. Greater flexibility is needed to allow companies to address the massive financial implications of the COVID-19 pandemic.
Priority three is immigration and labour supply. Due to the extent of the labour force impact of the pandemic and tourism's unique workforce needs, tourism employment numbers remain volatile during a crucial time of recovery and regrowth for the sector. While demand may be high, many industries have not returned to full capacity. Significant shortages in key tourism occupations remain and threaten to tarnish Canada’s global reputation as a tourism destination.
Hospitality in Newfoundland and Labrador endorses TIAC's recommendations in their pre-budget submission. Hospitality NL members have reported, additionally, that the adjusted unemployment rate has put many seasonal workers in a position to be either short on qualifying weeks or short on qualifying hours. The fear of many is that this will force those in an already small labour pool to move to another sector or a different geographic location.
In closing, the growth of the tourism industry is vital to the economic well-being of Newfoundland and Labrador. The strength of our industry is based on renewable resources: our land, our culture, our heritage and our people. Managed correctly, tourism can flourish, preserve and sustain our culturally rich urban and rural communities throughout the province.
Thank you very much.