Industry Committee on Dec. 4th, 2007

[The Chair, Conservative, James Rajotte]

Members, let's gather in our seats here.

We have two of the three witnesses here this morning. I will explain. I understand Mr. Pollard is driving in from Pembroke. He's been in traffic for three hours. He will hopefully join the committee after the first group has presented; if not, he will join for the question period.

This is the eighth meeting of the Standing Committee on Industry, Science and Technology. The orders today, pursuant to Standing Order 108(2), will be a review of Canada's service sector.

We have two organizations that are scheduled to appear. First of all, we have the Tourism Industry Association of Canada. We have the president and chief executive officer, Mr. Randy Williams. Welcome, Mr. Williams. And we have Mr. Christopher Jones, the vice-president for public affairs. Welcome, Mr. Jones.

Secondly, we have the Hotel Association of Canada. We will be expecting Mr. Anthony Pollard, the president.

Mr. Williams, perhaps we can begin with you and Mr. Jones, and if Mr. Pollard does arrive, he can deliver his remarks right after you. You have up to ten minutes for an opening presentation.

[Randy Williams, President and Chief Executive Officer, Tourism Industry Association of Canada]

Thank you very much, Mr. Chair.

As you know, Mr. Jones is with me today. He's our vice-president, public affairs, and he'll be certainly involved in any of the questions and answers later on in our session.

First, let me thank the committee for the opportunity to appear before you to help situate the tourism sector within your investigation of Canada's service sector.

Tourism in Canada is a $66.9 billion sector and accounts directly for more than 633,000 full-time jobs. That indirectly employs almost 1.6 million Canadians in total. Tourism is indeed a service sector.

The economic impact of tourism is felt in all regions and communities across Canada. I can assure you that within all of your ridings there are tourism enterprises that employ your constituents and help fuel the economy in your particular regions. There are more than 200,000 tourism businesses in Canada, and almost eight out of ten of these are small and medium-sized enterprises with fewer than twenty employees. I'm sure the members of the committee won't need to ponder very long to conjure up tourism businesses operating in their areas.

Tourism is a key generator of tax revenue for all three levels of government. In 2006 an estimated $19.4 billion in tax dollars were generated, including $9.1 billion at the federal level.

While the tourism sector is vibrant and there is tremendous potential for growth, we face significant challenges. I have chosen to group these challenges together under the rubric of access to Canada.

Globally, tourism continues to grow at a steady pace, with travel and tourism activity expected to increase by 4.3% per year between now and 2017. However, Canada lags behind, struggling to revive its inbound international visitation. The current state of our borders and airports has led to a situation where there are a number of disincentives for foreign travellers to visit Canada, or for meeting planners to hold conventions and trade shows here.

Furthermore, it has created an incentive for Canadians to spend their tourism dollars abroad. Over the last five years, Canadians have spent increasingly more on travel outside of Canada than our foreign visitors have spent while they visit here. Canada's tourism deficit has grown from $1.7 billion in 2002 to $7.2 billion in 2006, and all indications are that we will surpass the $8 billion mark in 2007.

The reason for these struggles lies predominantly in the fact that it is increasingly difficult and economically unfeasible for many travellers to reach our shores. As with many other sectors, the U.S. is our biggest trading partner: 86% of non-resident travel to Canada comes from our neighbours to the south. However, the number of Americans visiting Canada has slid precipitously, falling by 34% over the past five years. We are currently seeing the lowest numbers of visits from the United States since we began monitoring this number in 1972.

In recent months we have seen the escalation of the value of the Canadian dollar vis-à-vis the American greenback. The loonie's value has also increased by 6% versus the euro, 13% versus the pound, and 10% versus the yen. But this historic appreciation is only one part of the puzzle. High fuel prices, lengthy wait times at the border, and confusion surrounding passport requirements have combined to alter fundamentally what had been longstanding leisure travel patterns in the northern United States and border areas in Canada.

If we are to stem these losses and bring American tourists back to Canada, we have an urgent need to improve the infrastructure at our land crossings with United States, to help manage the flow of traffic across the border. This includes improving the physical infrastructure of the border crossing facilities so that they can efficiently process both commercial and leisure travel vehicles while ensuring that security concerns are accounted for.

We need to increase the investment in our NEXUS card infrastructure, including dedicated lanes for these high-frequency, low-risk travellers between our countries.

We also need to explore and develop new methods of helping people cross the border, like new biometric-based, radio frequency identification-linked, and machine-readable forms of identification. These would include enhanced drivers' licences, such as those we have seen in trials between the State of Washington and British Columbia.

Another important area where we need to improve access to Canada is at our airports and via air travel. Currently Canada is one of only three countries in the world in which the federal government charges rent to airports, the other two being Ecuador and Peru. As a result, destinations in Canada are put at a significant price disadvantage when competing against destinations around the world to attract visitors. The tourism sector as well as the Canadian economy and Canadian citizens will benefit from further open skies negotiations that would increase competition and result in more choices in flights, destinations, and fares.

Significant reductions in airport rents at Toronto's Pearson and other NAS airports and funding of air travel security from the general tax base would help to address the reality that air transportation fees and levies are too high and they act as a deterrent to travel to and within our country.

Another key challenge facing the sector is the ability to attract and retain employees, resulting in significant skill shortages across a number of occupation classifications. Some segments of the sector, such as accommodations, recreation and entertainment, and travel services, have seen a decline in the number of people they employ. At the same time, the number of jobs created in these areas will increase over the next ten years, leaving the sector unable to fill all of its positions. The Canadian Tourism Human Resource Council projects that the tourism sector will be short more than 100,000 workers in Canada by 2015.

We are taking steps to address this problem through agencies such as the CTHRC. We hope to create a greater awareness of the opportunities for skilled professionals in our field.

While access to Canada and the recruitment of skilled workers may pose a challenge for our sector, we have tremendous opportunities in the coming years. The projects that are to be funded by the building Canada infrastructure program will help greatly in providing a strong foundation for our tourism sector.

The funds earmarked towards improvements to the core national highway system, VIA Rail, regional and local airports, and museums and convention centres can help us create a coherent system of transportation and new tourism products catering to both business and leisure travel. We look at this commitment to improving our infrastructure as a tremendous opportunity to develop an innovative vision for Canada in the 21st century.

Let's begin to showcase a faster, cleaner intermodal transportation system by investing in more air, rail, and rubber-tire linkages. I look at Europe and see the integration of air and high-speed rail, such as those that exist at the Paris Charles de Gaulle Airport and at the Deutsche Bahn system linking Frankfurt airport to a number of other cities. These are the sorts of initiatives that are crucial for a country as expansive as Canada if we are to remain a desirable destination.

We also have a great opportunity, going forward, to promote our many aboriginal tourism products, especially in the north, and to help provide them with the funding necessary to adequately promote themselves to visitors from around the world.

The 2010 Winter Olympics and Paralympics in Vancouver and Whistler will place Canada at the sporting world's centre stage for 17 days, and will offer us an unparalleled opportunity to show the world what a rich and diverse destination we are.

The tourism sector welcomed the announcement by the Honourable Diane Ablonczy, Secretary of State for Small Business and Tourism, of new funding for the Canadian Tourism Commission to capitalize on the attention generated by the Olympics to market Canada around the world. But if we cannot resolve the issues involved with bringing foreign visitors to Canada, and to staffing the multitude of attractions, venues, and accommodation facilities across our country, we will not be able to fully benefit from this once-in-a-lifetime opportunity.

We appreciate the opportunity to appear before you today, and now would be prepared to answer any questions you might have.

Thank you, Mr. Chairman.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Williams, for that presentation.

We'll now go to Mr. McTeague for six minutes, opening round.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Willams, thank you for being here.

Mr. Jones, it's good to see you again. It's been 25 years on the Hill, and I think the pair of us have actually ended up as vice-presidents one way or another. Maybe in the next 25 years we'll actually wind up being chairmen or presidents. Goodness knows.

I wanted to ask a question of Mr. Williams concerning the percentage of tourism that comes from the United States. Since you started gathering statistics, what has been your best year for tourism in Canada? What was that year, your best year in tourism coming to Canada?

[Randy Williams]

It was 2002.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

What percentage of that would have been from the United States, roughly?

[Randy Williams]

About 90%, or just over 90%.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

What are other countries doing, in your view, to attract tourism? You've mentioned a couple of examples with respect to high-speed rail, for instance, in Europe. What countries in particular could you cite as models doing a much better job at getting their act together as far as attracting international tourism is concerned?

[Randy Williams]

We won't even talk about Dubai, which is investing billions and billions of dollars into infrastructure and new products, because that's an anomaly, I believe. But certainly there are more countries marketing their destinations than ever before for tourism. The World Tourism Organization, our international body, released a study that showed that out of all the countries that were marketing their destinations, in one year their advertising had gone up 11% on average. At the same time, Canada's investment at the national level in marketing our destination had gone down 12%. So when the rest of the world seems to have understood the benefits that tourism can bring to their economy, Canada seems to be pulling away from its marketing.

There are many countries, like Australia, that have taken their advertising budget for marketing tourism and it's now double ours. New Zealand is doing a great job. We believe Australia is another country that's doing a great job in tourism. Obviously, the exotic and unique countries now seem to be taking on more interest to travellers. Africa and Russia are countries that are becoming more and more appealing to travellers because of their unexplored nature, not their natural environments but their unexplored countries.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Setting aside Australia and New Zealand, would any of those countries have infrastructure and tourism comparable to Canada's? I'm thinking of Russia, for instance.

[Randy Williams]

Yes, Russia wouldn't have.... Of course I'm talking about the exotic nature that Russia would offer, and China is another example.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Environmental tourism, do you have anything on that--people who are looking for rain forests in the south, perhaps, or unspoiled...? How are we doing in that area?

[Randy Williams]

Canada used to lead in those areas, but right now I think countries like Costa Rica, New Zealand, and Australia are positioning themselves far better than we are as being destinations for eco-tourists or for sustainable tourism. Those are areas we should be excelling at, because we are known as a natural destination and one with lots of pristine, open environments. So we should be owning that market, but unfortunately Australia, New Zealand, and Costa Rica are taking it from us.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you, Mr. Williams.

In 2002, your best year, we all know--and certainly I do, being a member of Parliament from Toronto--what happened in 2003 with SARS. The echo of SARS in your mind, does it still have any impact in terms of potential tourism? That was the year your numbers declined precipitously.

[Randy Williams]

In 2003, obviously, it was a poor year, but 2004 rebounded somewhat. SARS is not on the radar screen any more. In the surveys that are being done, the concern over SARS is under 1%, it's so minuscule.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Chair, do I still have time?

[The Chair, Conservative, James Rajotte]

Yes. Go ahead.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

You've pointed out the decline in the United States and the number of ways in which we can improve our border facilities. I won't get into the airports issue for now, because I think that's quite an issue. But I'm wondering about alternative countries, and I'm thinking, for instance, of where there is the fastest growth of entrepreneurs, wealth being generated. Mr. Van Kesteren and I were in China last January, and one of the things we found a little vexing was the fact that the country had not been really pursued in terms of giving Canada the most-favoured destination as far as tourism is concerned.

How far has your industry, your association, gone in trying to secure that, and is the government here responsive to that obvious opportunity that exists for tourism?

[Randy Williams]

We've been pursuing ADS status--approved destination status--with China for at least five to six years. The first country to get it in 1999 was Australia. We were at that time considered to be a frontrunner with Australia for approved destination status in 1999. Now if we got approved destination status, we'd be something like the 90th country to get it.

So this file has not moved--from our understanding--one inch. It's stagnant. It's not for the tourism industry to negotiate. This is for the foreign affairs department of government.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I just came from there, for two and a half, three years. Would it be something that you would find worthwhile for the government to pursue in that case?

[Randy Williams]

We've been pushing the government for negotiations for five years.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Williams, I think my time is up. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McTeague.

We'll go now to Madame Brunelle.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Thank you, gentlemen. Thank you for being here. I would like to talk to you about a problem that is peculiar to Quebec, namely festivals.

We have major festivals, such as the Montreal International Jazz Festival, which attracts an American following, and Just for Laughs. There are festivals like that all over Quebec.

What impact do you see major festivals like that having on your industry?

[Randy Williams]

Festivals and events are what animate our country and what put us as a great attraction to visitors from other countries. For example, at the highest level, obviously, are the Olympics, which I've mentioned, but there's the winter carnival and other events, the Grand Prix in Montreal and so on, which are critical as drivers and motivators for travellers to come to any destination. They're critically important and seen as a key part of the tourism industry in Canada.