BUSINESS

FOR FUN AND PROFIT

Tourism is booming in Canada

BRENDA DALGLISH August 7 1995
BUSINESS

FOR FUN AND PROFIT

Tourism is booming in Canada

BRENDA DALGLISH August 7 1995

FOR FUN AND PROFIT

BUSINESS

Tourism is booming in Canada

For seven years, Ron Steers paddled his two-man kayak down the rivers of Jasper National Park in Alberta with just one paying passenger per trip. But 17 years ago—after a large whitewater raft passed him carrying 40 rafters, more customers than he and his business partner Bryn Thomas could each take in their kayaks during the whole summer—the two men recon-

sidered their business strategy. They decided to start White Water Rafting Jasper Ltd., and this summer Steers, a gregarious 55-year-old,

traded his job as a high-school teacher and guid ance counsellor to spend five months a year raft ing on the Athabasca, Maligne and Sunwapta rivers. Steers says that he now turns most of the administrative duties of the company over to employees so that he can lead the raft rides with customers. "I love it," he said last month between raft runs during a busy-if rainy-summer sea son. "Every trip is a journey." And Steers does not expect to miss the classroom. "Teaching is a very stressful, even physically demanding, job," he said. "Rafting is fun."

Between organizing several river runs a day and overseeing such chores as hanging 210 wet suits out to dry each night, Steers says that he spends little time pondering the economics of Canada's tourism industry. But if he did, he would be encouraged by forecasts for the coming decade. Tourism in Canada has grown rapidly since the mid-1980s. And next year, when the first of the baby boomers begin to slide into their 50s-the demographic start for two prime decades of leisure travel-tourism is expected to boom. According to

research conducted by the Canadian Tourism Commission (CTC), worldwide tourist arrivals increased by 5.5 per cent a year in the past decade, while revenue jumped by 12 per cent annually. In the next decade, a study by the federal labor ministry estimates that tourism-related employment will grow at a rate almost double that of the rest of the economy, as long as the value of the Canadian dollar does not rise much more than five cents above its current level. In fact, a relatively low dollar is a key stimulant for tourism within Canada.

And the dollar, which is currently trading at about 73 cents (U.S.), is cited as one of the main reasons why the Canadian tourist industry is expecting a boom year in 1995. In general, most tourism opera tors say that they are expecting revenues to in crease by between 10 and 15 per cent this year, as the lower dollar keeps Canadians at home and en courages more foreign tourists to visit. For their part, consumers are showing a steadi ly stronger interest in travel. A recent Royal Bank of Canada survey of consumers indicated that of all the big-ticket items, vacation spending ranks at the top of a list of priorities-regardless of the

consumer's income category. Even though Canadians are practical about most of their spending, says Anne Lockie, a senior vice-presi dent at the bank, "they scrimp all year long and then splurge on that one item to have some fun." Strong demand combined with other factors like improved com munications and transportation technology, which should lower prices and increase accessibility, suggest that tourism is a service in-

dustry with big potential for small entrepreneurs. Jim Clare, until recently general manager of Destination Canada, an industry association representing group travel companies, declares: “Tourism is the best growth industry in the world.” Although it is difficult to calculate an exact number of tourism businesses in Canada—because many businesses, such as restaurants, serve regular customers as well as tourists—it is estimated that there are currently about 60,000. Judd Buchanan, chairman of the federal government’s newly formed tourism commission, says consumers are now spending more money on such intangibles as travel than ever. “There is a sea change taking place,” said Buchanan, who owns the Silver Star ski resort in Vernon, B.C., as well as an auto dealership in Victoria. “People are upping holidays and vacations on their list of priorities and they’re reducing their spending on material goods like cars.”

The Canadian economy stands to benefit from this sea change in two ways. For one thing, the country offers a wide range of attractions—from mountains to sea coasts, backpacking to ballet—which appeal to foreign visitors. And Buchanan says Canada has only begun to exploit its tourist attractions in an organized way. He

said that in a recent meeting with one of Japan’s largest tour operators, he learned that Canada ranks 14th among countries most visited by the Japanese. “But Canada places fourth,” said Buchanan, “when the Japanese are asked which country they would most like to visit.” Buchanan cites that gap between desire and actual visits as proof that Canadian tourist operators have not made the most of the opportunity to bring foreigners to this country.

At the same time, however, Canada is running a huge tourism deficit with the rest of the world. Spending on tourism within Canada amounted to $10 billion in 1994, but Canadians spent almost $16 billion travelling outside the country. While Canadians’ traditional midwinter urge to head south is part of the explanation for the deficit, Buchanan says statistics also show that the country’s tourism deficit peaks in the prime summer months. Jim Smith runs a dinner attraction called Le Festin du Gouverneur in the old fort on St. Helen’s Island in Montreal where tourists come to pretend to take part in a historic 17th-century feast. Smith says that Canada should do a better job of selling itself as a tourist destination, particularly to Canadians.

‘We’ll spend millions of dollars going down to the southern United States or Europe,” said Smith, “before we visit other places in Canada.” In fact, less than 15 per cent of the nearly one million guests who have visited Le Festin since it opened in 1973 have been Canadians from outside the Montreal area.

To encourage more foreign tourists and to help overcome the reluctance of Canadians to travel within their own country, the federal government this year replaced the old Tourism Canada agency with the Canadian Tourism Commission. The commission, a joint government and industry agency, has a budget of $50 million—up from Tourism Canada’s last budget of $14 million—to promote Canada as a tourist destination both at home and abroad. Among other things, the commission intends to resume travel promotion advertising within Canada. That campaign is reinforced in the private sector by several new trends that are creating opportunities for tourism entrepreneurs. One of the fastest-growing segments of the market is adventure tourism, travel that gives people a greater sense of involvement and participation than simply sightseeing. Whether the trip includes white-water rafting, a visit to a dude ranch or a trip with other music buffs to a jazz festival, more travellers are seeking participatory experiences. “People want to learn something when they go on a vacation,” said Harry French, director of the Canadian Tourism Research Institute of the Conference Board of Canada in Ottawa. “They want to get more out of a destination.”

Technological advances are also expanding the horizons of tourism. Computer databases are beginning to allow travellers to take interactive multimedia tours through several cruise ships or seaside resorts before they book reservations. Industry insiders claim that improved communication technologies will help the best travel opportunities reach a larger share of the market. In addition, the new open skies agreement with the United States is expected to increase the number of direct flights between the two countries and over time to reduce the cost of airline travel.

Another important travel trend is the popularity of shorter but more frequent vacations. “People are much more spontaneous,” said French. “They’ll take short-term getaway vacations—some of them very highly priced.” Instead of the traditional twoor three-week vacations of the past, many people, are opting for threeor four-day vacations, because they either lack money or time.

Despite the potential of the tourism industry for small entrepreneurs, tourism—like any other business—has its drawbacks. Although many tourism enterprises can be set up with minimal amounts of capital, those low start-up costs mean that competitors can

also enter the business easily. And as in all service-related industries, which rely more on labor than physical assets, bank financing can be difficult to negotiate. Tourism, furthermore, tends to fall off more abruptly during economic downturns than many other sectors. At the Home Place Ranch midway between Calgary and Banff, any problems in the tourist industry are on hold for the busy summer season. The dude ranch, owned by Mac Makenny, offers guests a taste of the cowboy life—with all the modem luxuries. Makenny says business is so hectic that after several seasons of having to turn away customers during the busiest summer months, he opened a second guest ranch this spring. Still, Makenny says that tourism is never going to make him rich although it does allow him to keep 50 riding horses and entertain such guests as former prime minister John Turner and his family. “It’s an interesting business,” he said, “and it lets me do exactly what I’d do if I was independently wealthy.” And not many other businesses can make a claim like that. BRENDA DALGLISH