Industry Committee on Dec. 4th, 2007

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Nash.

We will now go to Mr. Pollard.

[Anthony Pollard, President, Hotel Association of Canada]

Thank you very much, Mr. Chairman, ladies and gentlemen. I do apologize for being late. I have no excuse whatsoever, and I appreciate your indulgence. Thank you very much.

I believe my colleague Randy Williams has already gone over a whole litany of figures for you. I don't want to bore you with all those numbers again, but let me say at the outset that the hotel industry in Canada last year generated $17.9 billion. And as I always love to point out to committees, we generated about $6.9 billion in taxes, $3 billion of which goes to the federal government. So I always like to say that we're the good news industry and we're contributing a lot of money to the feds.

Having made that point, what I would like to do is very quickly go through the challenges we have ahead of us today. At the outset, though, I do want to say that we commend the federal government for a lot of the investment in travel, tourism, and hospitality, specifically the $430 million in border infrastructure. We recently had Secretary of State Ablonczy provide us with $26 million for the Canadian Tourism Commission for use with VANOC and with the Paralympic Games.

This is where I want to go into some detail about the issues we have today. In the federal budget in February, Minister Flaherty contributed an additional $50 million toward the temporary foreign workers program, and this was followed up by Human Resources Minister Solberg moving forward with a pilot project for a temporary foreign workers program with the expedited labour market opinion. At the same time, the minister announced there would be changes in terms of the processing of this. These are all very good initiatives, and we commend the government for them.

However, what are we up against today? Well, we have economic pressures, infrastructure bottlenecks, the desire for increased border security, and now very much of a severe lack of people working in our hotels. I know Mr. Stanton's very familiar with this. We've had these discussions on numerous occasions. So we had it really good for a long time, but this has slipped away.

To put it bluntly, Canada is no longer a cheap destination and it is no longer our card to be able to play, particularly with Americans coming here. I know Randy would have spoken about how the travel deficit has ballooned right up.

Let me give you an example. Only a few short years ago, if you were an American family, let's say going away for three to five days, you'd probably spend about $1,500. Now that cost would be upwards of about $2,000, and you'd end up having to wait at the border for several hours, as well as all the other factors that have come into play. What are people doing now? They're just staying in the States.

The best example: five years ago the attraction to Canada was really simple. You stayed two days and basically the third day was free. That's fundamentally what it would come down to. Another example, and I'm sure you've heard this one before: if you were an American buying breakfast in a restaurant in Canada with a $20 U.S. bill, you could buy the breakfast, enjoy the breakfast, and get a $20 Canadian bill back in change. Again, very effective marketing, and it worked well.

So how is the hotel industry really addressing this maelstrom? We're focusing on value. We have to focus on value. And to support higher costs we must provide greater value, and this, in part, translates into service.

Each year the Hotel Association of Canada undertakes an annual travel survey, done for us on our behalf by Fleishman-Hillard. In this it shows that the most important feature travellers are looking for--and I'm sure it's the same for all members of the committee, as you all travel a great deal--is friendly service. Of respondents to our survey last year, 90% said this is the most important component of travel. This is up from 87% in 2006 and 85% in 2005. It far and away exceeds the next most important thing, which is how far you are from a destination.

But I ask you: how can we deliver on the service value component when access to our country is becoming such a great challenge? This is now compounded by the fact that we cannot attract and retain sufficient numbers of people to work in our hotels.

Mr. Chairman, I can give you all kinds of examples of restaurants that close early. Last spring I was driving out to Jasper, Alberta, and I stopped in Hinton on the way. I won't name the restaurant chain, but the little sign on the door said “Closed at 9”. There were not enough people to work there.

We've seen examples of whole floors of hotels not being able to open. Perhaps, if I may, Mr. Chairman, I'll give you an example of a hotel that opened this year in Edmonton. The hotel opened. Everything was great. Everything was fine, except we didn't have enough people to be able to work in the banquet room and to do all the conventions, so that part had to stay closed because of a lack of individuals.

So what is required? Our request is really twofold, and it's pretty clear. We need to ensure visitors to Canada and to deliver on the service to meet the new value proposition for them, and we need to be able to provide for more workers in our country, through expediting the temporary foreign workers program.

Specifically, we need to have the government have some physical infrastructure at Canada border-crossing facilities. We need seamless and well-communicated implementation of passport rules. We need to clarify acceptable border-crossing documents and the resources at Passport Canada. I'm sure we talked a little about Blue Skies earlier this morning. This will facilitate longer stays and higher-yield guests. Reduction in airport costs: Ms. Nash, you referenced Pearson Airport, and so forth. We need to be able to ensure a better return on investment for both the public and private sector. All of those we've put under the heading of “access into Canada”.

The second part of our request is for the government to enhance its support for the temporary foreign workers program. This program must become a permanent budget line item in the Department of Human Resources and Skills Development, and the expedited E-LMO project must be expanded for all of Canada. The government needs to enhance the resources required at our embassies, high commissions, and missions abroad to be able to process individuals coming to Canada.

So to sum up, Mr. Chairman, members of the committee, we need to improve access to Canada. We need to ensure we have sufficient employees to fulfill the new value proposition for our country. We ask the government to address these two very important questions.

Thank you for this invitation.

[The Chair, Conservative, James Rajotte]

Okay. Thank you very much, Mr. Pollard.

We will now go to the second round of questioning. We'll start with Mr. Simard, please.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you very much, Mr. Chair, and welcome to our witnesses.

Mr. Williams, first of all, you don't have to convince me of the economic benefits of tourism. I used to head an economic development corporation, and we had a huge focus on tourism and built a whole infrastructure around it. What we found, though, is that governments don't necessarily see it that way; they don't see the economic benefits. We found there was substantial money going to the Canadian Tourism Commission to promote Canada abroad, but we wouldn't invest in local tourism events or infrastructure. So that was extremely frustrating. Economic development agencies actually excluded tourism from their criteria. That's something, it seems to me, we should maybe be focusing on as a government.

[Randy Williams]

I agree. Your question is right on the mark. It's a great question.

The CTC, the Canadian Tourism Commission, is much maligned, and I think a little unfairly. Its job is to put Canada in the minds of potential foreign visitors to our country. It's a tough job, with a budget that's half that of Las Vegas and half that of Australia, and we're supposed to promote this country around the world.

The $26 million that was recently announced is a welcome addition to the $75 million that the CTC has, but that's $26 million over five years. That's $5 million a year. We've been asking for $100 million for the last three years. So it's a drop in the bucket. It's a step in the right direction, but we need more to be able to compete on an international stage.

You talk about local promotion. Once we put Canada in the minds of foreigners, the provinces and the communities can follow behind with their sell messages. But if foreigners are not thinking of Canada as a destination in broad terms, then they're not going to be open to a message from Montreal or the Outaouais or anywhere else. They just don't know those communities well enough. They have to be thinking of Canada first saying, “Do you know what, dear? One day we should go to Canada” when they hear the ad, and then they'll open their minds to “Oh, Montreal is in Canada. Why don't we go there?”--or Quebec City or wherever.

It's important. Members of Parliament we've met have said, “Yes, the CTC's budget hasn't been increasing, but the provincial budget has.” Well, that's great, but we don't want 13 messages of Canada in foreign lands. It's just going to confuse the marketplace.

When you think of Australia, do you know what provinces or states are there? You don't buy Australia by province or state. You don't buy any country by that means. Maybe France, because of the wine regions, you might buy on a regional basis. But certainly Canada shouldn't be presenting itself in foreign countries by province or territory. They should follow up this Canadian message with their sell messages.

[Raymond Simard, Liberal, Saint Boniface, MB]

Good point.

Last week we had the insurance industry spokesperson here imploring us to not neglect global warming. I'm just wondering if you've been looking at that, the possible impacts of global warming on tourism here.

I think of Manitoba, for instance, and the polar bears, and how it's changing. That's a very tangible example of how things can change over a very short period of time.

[Randy Williams]

We've been involved in the question of sustainable development since 1992, when we first developed a code of ethics. In 2001 Canada signed an accord with Parks Canada, the only one in the world between the national tourism organization and the national conservation agency for the environment and parks. That was signed in 2001.

Chris was just in Davos at a tourism and climate change conference. I'll let him address that question.

[Christopher Jones]

Just very briefly, Monsieur Simard, tourism is in the front line of facing the effects of global climate change. A lot of the iconic tourism destinations around the world, including the Canadian Rockies, the Swiss Alps, and the Great Barrier Reef in Australia, are under assault from climate change. We're seeing it in the loss of coral reefs in the Caribbean. We're seeing the loss of the polar...the recession of glaciers, and so on.

So while some are suggesting that Canada may benefit in the short term because of the warming of our areas, and certainly, the access to the north may be promoted a bit, the longer-term prospects are not good. The industry recognizes that. We would like to become a world leader as a destination for sustainable tourism, and we've made that commitment recently at our conference.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Simard.

We'll go to Mr. Carrie, please.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair, and I'd like to thank our witnesses here today.

You mentioned visitors and attracting more visitors. Of course, that's one of the major objectives. And we talked about tourists outside of North America. The government instituted open skies agreements. Would you be able to comment on those agreements in terms of your industry? Also, could you perhaps comment on where we should be expanding them?

[Randy Williams]

Thank you for that question.

Access to Canada we've spoken about jointly here, and certainly open skies or blue sky bilateral agreements with other countries are critical in accessing our country.

Since 1995, when we first had an open skies agreement with the United States, that helped tremendously in increasing visits from the United States to Canada. We encouraged discussions with the European Union that are now under way, and we support that wholeheartedly. We believe that's critical. But we also need lift from China. China is the fastest-growing outbound market in the world. Our planes leaving Asia right now are running at close to capacity. We can't seem to get more lift, and if they can't get here, obviously our industry is going to suffer. Business travel will also suffer, which means commercial activity between the two countries.

So we need more lift from Europe, open skies agreements. We need more lift from Asia, particularly China and Japan. We also have other areas—Israel—we need to.... There was an announcement just the other day from Air Canada, I believe, looking at some travel from.... Was it Air Canada? No, it was....

[Christopher Jones]

The British Columbia market, for instance, is in desperate need of lift from a number of markets, like Singapore, India.

Just the other day in B.C., Premier Campbell announced the prospect of a direct flight from Delhi to Vancouver, with a new airline out of India. I think it's called Kingfisher. But those markets need more airlift to grow and prosper, and we need more of these reciprocal arrangements with these countries.

One of the problems, I understand—and this goes back some years—is we don't have a lot of negotiators in the Department of Foreign Affairs and in Transport Canada to conduct these negotiations. As I understand it, while they're working on this open skies agreement with Europe, there won't be a lot of other negotiators left to pursue other countries, so there may be a resourcing issue there that's worth looking at.

[Colin Carrie, Conservative, Oshawa, ON]

Is your industry doing something specifically in these markets to attract people to Canada? You mentioned India, Singapore. Are you over there doing it as well?

[Randy Williams]

Not our organization, as we're not a marketing organization, but our membership is certainly in those markets, trying to grow demand. Obviously, if we need lift from there, we need to create the demand to make the lift sustainable when it's put in place. So our membership is in these markets, trying to increase visits. CTC just opened an office in Beijing over the last 12 months, and other tourism marketing organizations have done the same in emerging markets.

[Colin Carrie, Conservative, Oshawa, ON]

From what I understand, despite a decline in U.S. tourism, the statistics are showing tourism spending in Canada increased in the second quarter for the sixteenth consecutive quarter. Is that right ?

[Randy Williams]

Yes.

[Colin Carrie, Conservative, Oshawa, ON]

So it appears fewer people are coming, but they're spending more money. Are you attributing that to more of a niche market? Are there things the government can do to help promote these niche markets?

[Randy Williams]

Tourism spending is growing. We're growing at 2% to 3% per year on the strength of domestic travel and some growth in other foreign markets—like China, Mexico, and the U.K. But Japan and the United States are big challenges for us. The growth by 2% or 3% is mostly driven by domestic tourism, and that's not sustainable, in our view. The rest of the world is growing between 4% and 6% per year, so we are growing at half the rate of the international standard. So we see growth, but don't let that fool us; we're not keeping up with the global pace of travel growth.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Carrie.

We'll go now to Monsieur Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Good morning, everyone.

Mr. Williams, you said that provincial tourism and promotion budgets should not be increased, but that the national budget for promoting Canada, but not the provinces, should be increased.

What do you think this promotion of Canada overseas would look like if provinces and their attractions were not included? Earlier, you talked about provincial tourist destinations like spas, about heli-skiing, and about all sorts of new things that entrepreneurs are coming up with for tourists from abroad.

How can you promote Canada without talking about the provinces?

[Randy Williams]

If I misled you, I'm sorry. My suggestion was that the Canadian Tourism Commission's budget needed to be increased by $100 million to present the Canada brand in foreign lands, then to be followed up by the provinces with their particular sell messages.

So it's important that the provincial budgets are increased or certainly maintained in some cases, but I wouldn't suggest that the provinces not follow in foreign lands with a sell message of their particular destination. They're going to be less successful if people aren't predisposed to travel to Canada first. It's going to be difficult for Calgary or Alberta, for example, to be selling in Mexico or Australia or China, if they've never heard of Canada. And in many countries they haven't heard of Canada. We're only this white spot on a map in their minds. So when you present an idea about Canada and create a desire to travel to our country, then you create fertile soil for Alberta or British Columbia or Quebec to follow in with that message.

My suggestion was that the provinces have seen that challenge. And as I indicated earlier, about the value of tourism, they have increased their budgets for marketing, but they're going to be less successful because the CTC's budget has dropped by 12%, rather than increased to keep pace with the rest of the world and the provinces' increases.

[Robert Vincent, Bloc, Shefford, QC]

Why is the federal government refusing to increase tourist budgets in Canada? You said that at least 30% of the money comes back to government coffers. If it is in the government's interests to invest in tourism, why does it not do so? Why does it cut money from tourism as we saw it do this summer?