Industry Committee on March 8th, 2016

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

I think that's one of the other issues. We had spoken about trying to get the minister here as quickly as possible so we could talk about what the mandate letter is. Of course, you have your own that is going to be tied into what the expectations are, so hopefully that can happen soon and we'll be able to talk about the issues that are important there.

[David Goldstein]

Can I circle back to your point on trade, which I thought was very important?

Deloitte released a report about two years ago—and we'll furnish it for the committee–that drew a direct line through econometric data that for every 1% increase we do in visitation to Canada, it leads to $820 million in additional trad, not just the dollars it stimulates in the actual visitation, but additional trade and investment. That is just the basic intuitive principle, that you do business with people where you visited or people you like and trust, and countries that have bilateral travel and tourism do exceptionally well.

Within the context of other trade agreements or our main partners, to us, stimulating that bilateral tourism or that bilateral business travel is really important as well.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Do you look at student exchanges as well? Those become another aspect if you're trying to get the correlation between someone else's country and our country. Could you perhaps comment on what you have going on in that?

[David Goldstein]

The short answer is yes, some of the small Canadian companies we work with are actually in the educational business. Not only are they good customers, they're great future customers as well.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Now we have Mr. Arya for five minutes.

[Chandra Arya, Liberal, Nepean, ON]

Going back to the Auditor General's report, the report recommended that you add a formal fraud risk assessment to your enterprise risk management process, which you agreed to do and planned to implement in the later part of 2015. Has it been done?

[David Goldstein]

Yes, it has. That's been filed as part of our corporate plan with Treasury Board.

[Chandra Arya, Liberal, Nepean, ON]

You know, 2017 is a big year, both for Canada and for Ottawa, because it is the nation's capital. I know personally that the City of Ottawa is investing quite a huge amount to promote the city of Ottawa as the place for Canadians and overseas visitors to come. Are you working with Ottawa Tourism so that you can synchronize marketing activities?

[David Goldstein]

Well, I had breakfast with the new president of Ottawa Tourism this morning, and I had a meeting with City Hall today.

First of all, Ottawa Tourism is a very close partner of ours on a number of projects, in a number of markets. We have a 150th program, which we spoke of, that's going to be from coast to coast to coast, and Ottawa Tourism is one of the partners in that program as well. In the 150 vignettes, if you will, or experiences that we'll be canvassing across the country, I expect that almost everyone around this table, or the regions that they're from, will be represented in that campaign as well.

[Chandra Arya, Liberal, Nepean, ON]

Looking at your marketing and sales expenses, I see that almost an equal amount has been invested in the core markets—the U.K., France, Germany, and Australia—and the emerging markets—India, Brazil, Mexico, Japan, South Korea, and China. I also see from your reports that the number of visitors from China is going up tremendously, with some 440,000. When I look at the emerging markets, those seem to be growing at a much faster pace. Do you think the spending on marketing and sales should still be at the same ratio?

[David Goldstein]

This dovetails with the previous answer. We actually spend a lot of time going through economic modelling on these issues. You also have to factor in the yield of that customer. When we crunch through the model, it really looks as though the best way to deploy our investment is with about 45% in the U.S., about 27% in Asia Pacific, about one quarter in Western Europe, and then that last 4% or 5% in Brazil and Mexico.

We monitor that on an annual basis, knowing two things. First of all, you can't pull in and out of markets too quickly, because sustained marketing takes some time to get traction. There's a different visitor mix in some of those markets, so that some of them are more visiting friends and family, some of them are more doing business travel, some of them are more doing independent leisure travel. That figures its way into the mix as well.

We also look at air access as an important piece of that. I'll use both China and India as an example. We've had fairly limited air access to those markets over the last few years, so even though the growth numbers, from a percentage basis, look pretty dramatic, the numbers themselves are not that dramatic because of the limits on the amount of air access available to us. We see in both those markets a tremendous increase in air access over the last 12 months, and probably going forward in the next 14 to 18 months, so that factors into our decisions there as well.

[Chandra Arya, Liberal, Nepean, ON]

I see that the visitor spending from China is $890 million by 447,000 travellers. From the U.K., it's 644,000 travellers with $911 million. It's almost as though the Chinese and the Japanese travellers or South Korean travellers are spending much more money when they visit here. I guess marketing to them is growing at a faster pace than that to the core market.

[David Goldstein]

It's a difficult decision to make. It's easy to say I love all my children, but we're trying to achieve a balanced market approach, or a balanced portfolio approach. That means not putting our eggs into too many baskets. Some destinations saw the growth by China and just put so much, a very high percentage, of their marketing budget into that market. We're trying to create a balanced approach, again based on where we think the best yield is.

I'm sorry my answers are very long and I'm taking all of your time, but it's interesting and I think it's important for the committee to know that we're actually punching well above our weight in some of those mature markets. We're doing well in emerging markets, but you can look at a market like Japan. The outbound numbers from Japan are flat or up 1%, and for us they were up 6% last year, which means that Canada's actually growing market share.

It's the same with the U.K., and we're getting almost record numbers out of France right now. Those are very high-yield customers, so we're doing our best to create a balanced portfolio approach with your investment, and the investment of our co-investors, to achieve the best results we can.

[The Chair, Liberal, Dan Ruimy]

Our final question goes to Mr. Masse. You have two minutes.

[Brian Masse, NDP, Windsor West, ON]

Mr. Goldstein. I really respect your work. We've worked before on different issues related to your different portfolios.

I just want to challenge you to think about a couple of things when you go away from here. I looked at your board of directors. There are two each from Toronto and Niagara Falls, and one each from St. John's, Vancouver, Banff, Richmond, which is next to Vancouver, Ottawa, Whitehorse, and Quebec City.

Then your brand experiences committee has three from Toronto, one from Winnipeg, one from Halifax, and then the other ones aren't noted in here. I know you went from 45, which is rather unruly—and I think that was a good move, by far—but you're down to 11. I would just suggest that this is not representative. I'm not saying these people aren't qualified.

I would argue this. Let's take the example, of the Western Hemisphere Travel Initiative for passports. Generally speaking, 30% of Americans won't get a passport for privacy reasons.

Do they know about my region where we had the War of 1812? We were in the front lines of the Underground Railroad, the rum runners, and all those different things. We see nothing from the Canadian Tourism Commission.

Also, I would disagree with you about the low Canadian dollar. Actually, we need to be quick in acting on that, because our casino numbers are up significantly again. It wasn't by any federal fault. We were promised a new casino. We watched the Detroit regime being built up of three, and we finally got into the game again for the second time, but far after the damage was done.

Also, cross-border shopping goes down, for sure, and then we do have Americans coming, because they're visiting here, and we have a lot of Canadians who are staying home. My dad is one of them; he was in Florida. They're coming back earlier. They're spending less money there.

I would just argue that at some point in time to consider consulting with some of those communities that are right along the border. Niagara Falls, obviously, is there, but they're weighted heavily in your group here, in my opinion.

Again, I'm not saying that these people do not have the experience or capabilities of understanding that, but I'd just question that, because we really haven't had much of a CTC presence in my riding for a long number of years. That's not to criticize the previous administration either. I'm just giving you the facts.

[David Goldstein]

On the larger issue of the American market, that takes a long time.

Let me talk about the representation issue, because our board is regularly under renewal. There are two vacancies right now. And the Governor in Council is well aware of that. We welcome diversity, regionally and otherwise, on the board.

For the committee structure, what you don't see in that report, because it's just been done this year—and that is last year's report—is that we have actually changed the committee model. We've broadened it so there are now four committees. The membership of the committees has increased by 20%. We have tried to be far more representative of different parts of the country and, I would say, more representative of small and medium-sized businesses from across the country.

You've asked me to consider that. Consider it considered. It's something we've actually been working on quite actively, because it's an important part of our annual planning process. Consider the point well-taken.

[The Chair, Liberal, Dan Ruimy]

Thank you very much. That concludes our question period.

I want to thank you for coming down, and, again, I apologize for our being late. I realize that we're all passionate about the things we believe in over here. Hopefully we've made an impression on you as much as you've made an impression on us.

[David Goldstein]

Mr. Chair, thank you very much for the opportunity. As I said in my opening statement, we're very glad to come back at any point in time within whatever study context the committee would like to hear from us.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

This meeting is adjourned.