Thank you very much, Mr. Chair.
Good afternoon and thank you for the invitation to present here today. This is the first time in recent memory that TIAC has been called as a witness before the international trade committee and to us it serves as a bit of a victory of sorts. We’re finally being recognized as an export sector.
We are often compartmentalized as a domestic industry based on the fact that our services are delivered and the spending occurs within Canada. Most export businesses develop products and services and seek out foreign markets and distribution channels to get their products to market. Travel and tourism businesses must bring the market to their products. The distribution model is challenging, mired with public policy obstacles like visitor visas and national security polices, aviation cost structure, currency exchange, as well as other commodity issues.
In my remarks this afternoon I’ll provide an overview of the travel and tourism industry and the challenges and opportunities we are facing, and discuss the impacts of the global markets action plan and air transport agreements to date.
Established in 1930, TIAC represents the full breadth of the travel industry's four major segments: transportation, accommodations, destinations, and attractions. As an umbrella organization TIAC focuses on the issues that ultimately influence consumer decisions: pricing and convenience. These are the factors that determine Canada's competitiveness in the global marketplace.
As Canada's largest service export sector, travel generates annual revenues of $84 billion, of which $20 billion is export revenue. We employ over 600,000 Canadians in every riding of the country and are the largest employer of young Canadians. We’ve provided a sheet for you that gives a breakdown of your local ridings in terms of our industry.
The global competition to attract international travellers is fierce, where price point, quality of experience, ease of access, and reputation dictate value. Globally, in 2013, there were over a billion international travellers generating over a trillion dollars in receipts and recording 5% growth for the second straight year. However, Canada's growth in international arrivals was only 1.5% in 2013, while the U.S., our biggest competitor, achieved 4.6% growth. Don't get me wrong, Canada is doing well, and the numbers for 2014 so far look encouraging, but under the right conditions we could be doing much better. In 2002 Canada was the seventh most popular travel destination in the world, welcoming over 20 million foreign visitors.
In 2013, we ranked seventeenth, with 16.3 million visitors, a drop of nearly 20%. Canada is one of the only countries in the top 20 to lose both rank and volume. Currently, 81% of travel revenue is derived from Canadians travelling within Canada, up from 65% just a decade ago. So while domestic tourism is healthy, we are losing ground with high-yield international visitors. In simple terms we are far from realizing our full potential and far from getting our fair share of the global opportunity just beyond our reach. Our industry has set a goal of matching the global growth rate of 5%. It's not world domination. We’re not seeking to own the podium. Right now we just want to get on the podium.
What does 5% growth look like for Canada? It's just shy of a million new foreign visitors, creating 4,600 new jobs—2,500 of which are for young people—and generating an additional $81 million in federal revenues. By maintaining 5% growth we can recoup the losses of the last decade in less than five years. And things are looking up. Back in October, Minister Bernier announced strong performance and growth from CTC's foreign market investments. Unfortunately, the numbers from the United States, a market larger than all others combined, remained flat and dragged down the overall performance.
The U.S. is our industry's top priority and key growth market. Unfortunately, Canada has not had a national leisure marketing campaign in the U.S. for four years. The entire industry is waiting anxiously for the April budget to see if we will be successful with our co-investment campaign with the government under the connecting America program.
While we are excited about the success of China, it's important to remember that it would take a 40% increase out of China to match just a 1% uptick of the United States market. Most of the factors contributing to the decline in U.S. visitation to Canada are beyond the control of industry or government, but the solutions are not. Over the past decade Canada’s tourism industry has endured every challenge and scourge short of locusts. SARS, 9/11, WHTI, border wait times, the recession, dollar parity, the entrance of new exotic destinations, and the emergence of social media disruption have all contributed to Canada's slide.
This is where we get to the importance of government initiatives such as the global markets action plan, the federal tourism strategy, the blue sky policy, and other programs that facilitate trade. The key to these programs is to break down silos, find efficiencies, and focus on interdepartmental outcomes to benefit Canadians.
Tourism's inclusion among priority sectors in the GMAP program is a welcome show of support and will reap benefits beyond the money spent on restaurants and hotels. The preconceived notions associated with tourism undervalue its importance to the economy. Facilitation of leisure travel, vacations, excursions, and relaxation do not parlay well into a government's ambitious economic and industrial agendas. That is why, despite our name, we prefer to speak of it as the travel industry.
In fact, travel is a key element of business, investment, and trade. TIAC uses the term “mobility economy” to describe the overarching benefits derived by facilitating the movement of people for the purposes of business or leisure travel, and the expanded economic opportunities that come from these new connections. Intuitively, people do business with people in countries that they know. This is shown in a recent study by Deloitte, which found that every 1% increase in international arrivals to Canada will stimulate over $800 million in broader exports with our trading partners.
Canada's trade policies seek to enhance the movement of goods, capital, and people across the borders. While much has been accomplished, many obstacles remain that limit the movement of people. At TIAC we've categorized these issues into three buckets: marketing, access, and product-people. That is our map, so to speak, to growth.
Canada's low dollar alone is not enough to attract increased visitors, including Americans. Canada needs larger and better aligned national marketing funding in light of recent cuts to the CTC. National brand marketing is about more than generating tourism demand. It's a hearts and minds statement about a country's landscape, people, quality of life, culture, and ingenuity. It's a country's value proposition to the world and Canada's brand is strong but under attack.
Since 2011 Canada has not had a national marketing presence in the U.S. In many parts of the U.S., the only Canadian images seen in various media are 1990s images of tailing ponds and smoke stacks in northern Alberta, all part of political action around the Keystone project. Regardless of your position on the project or the resource, the lack of Canadian marketing in the U.S. is undermining our competitiveness.
A recent survey of 6,000 U.S. travellers commissioned by numerous Canadian tourism leaders identified very good levels of latent demand for Canadian vacations, but it also identified the top two reasons why Americans would not travel to Canada. First was the cold climate—enough said—but the second was the perception of Canada being a polluted nation.
A major area of concern for the travel and tourism industry in Canada is air access. While the World Economic Forum has ranked Canada as number one for infrastructure and number 12 for openness of air transport agreements, it has placed Canada as 136 out of 140 in terms of taxes, fees, and levies.
The Senate Standing Committee on Transport found the difference between Canadian and American round-trip flights averaged $428 per passenger. It also found that 43% of the price, including airport rent, in Canada was taxes, fees, and levies, while a similar flight from a U.S. border airport consisted of only 14% taxes and fees.
TIAC has been engaged in the whole-of-government approach laid out in the federal tourism strategy and believes that in order to encourage visitation by air, air transport agreements should be considered in tandem with facilitation, visitor visas, and perhaps more importantly, the cost of flying to Canada. In fact, cumbersome visa policies and expensive air travel essentially act as export tariffs dissuading leisure and business travellers from doing business and spending money in Canada.
It's TIAC's opinion that liberalized agreements by themselves do not seem to have as much impact on air capacity as seen by the 0% growth out of Brazil, U.K., and France, after ASA agreements were signed. In fact, it's our opinion that other policies may have more of an impact. Visa policies resulted in a 73% decrease out of Mexico, while the approved destination status agreement with China resulted in a 77% increase of arrivals. This data dictates that there is no clear correlation between the signing of a liberalization agreement and increased seat capacity without other policy considerations taken into consideration.
It's important to pause and recognize what has been accomplished to date and what directly benefits travel and tourism: the introduction of multi-year, multi-entry visas; investments in visa application centres; the CAN+ program in India, Mexico, and Brazil; infrastructure funding for Parks Canada; the inclusion of tourism in the GMAP; numerous air liberalization agreements; and Minister Raitt's recent decision to include the high cost of air travel to and within Canada in the Canada Transportation Act review.