Maclean's SPECIAL REPORT

Sayonara, turistas

The $54-billion travel industry takes a huge hit

JOHN DEMONT October 8 2001
Maclean's SPECIAL REPORT

Sayonara, turistas

The $54-billion travel industry takes a huge hit

JOHN DEMONT October 8 2001

Sayonara, turistas

The $54-billion travel industry takes a huge hit

JOHN DEMONT

At Keltic Lodge, nestled on Cape Breton Island's spectacular Cabot Trail, the world’s troubles normally seem far away. But that was before the seismic shocks that hit the United States on Sept. 11 reverberated around the globe. Within four days, the 104-room lodge received 100 cancellations, most of them from Americans unwilling or unable to make the trip to Nova Scotia. “For a while, it looked awful,” says Ian Green, Keltic’s general manager, who recently laid off four staff due to the wave of cancellations. Then, within a week of the terrorist attacks, a curious thing happened: Keltic’s reservation phones began to ring again. The callers were mosdy Nova Scotians and other eastern Canadians who would rather drive to Cape Breton to see the leaves change than take a vacation in the United States or overseas. The upshot: rather than going into free fall, Keltic’s occupancy rate is expected to slide just 10 per cent during September from the same month last year.

It’s just one lodge in one corner of Nova Scotia. But at a time like this, anything less than a total collapse is reason for jubilation among those dependent on the tourism dollar in Canada. The Keltic Lodge scenario provides at least a glimmer of hope for a $ 54-billion industry in crisis. A looming recession, even before Sept. 11, was bad enough. Now, in the wake of the attacks, the Association of Canadian Travel Agents has calculated that business and pleasure travel in Canada could each plunge by up to 30 per cent in coming months. Furthermore, if full-blown war breaks out on the global stage, there is no telling where the bottom is. “Everyone is holding their breath, wondering what is going to happen next,” says FLolly J. Wood, a spokeswoman for Toronto-based Fairmont Hotels and Resorts, which owns 36 properties across Canada and the U.S.

There is a recent precedent: the war in the Persian Gulf, which saw global tourism revenues plummet 21.5 per cent in 1990. But that was a one-sided brawl in the Middle East, not a conflict that has already killed more than 6,400 in the United States. This time, worldwide traveller confidence may be more deeply shaken.

In Canada, the damage is everywhere. Air Canada last week cut 5,000 jobs even as it begged for billions in aid from Ottawa. Montreal-based Transat A.T. Inc., which operates Air Transat, laid off 1,300 of its 4,600 workforce. On the east and west coasts, some cruise ships made port nearly empty. Travel agencies, already whacked by Air Canada’s recent decision to cut commissions, continue to slash staff. And major tourist centres are in rough shape. Foreign package tours, especially of Japanese, have virtually dried up in Niagara Falls, Ont. Hotels in Banff, Alta., where business is estimated to be down 30 per cent since Sept. 11, are asking staff to take holidays. “There really aren’t any precedents for something of this magnitude,” says Scott Meis, research director for the Canadian Tourism Commission.

Desperate times demand desperate measures. In an attempt to bolster the industry’s cash flow, the Hotel Association of Canada has asked the tourism commission—a federal government body that markets Canada to overseas travellers—to forgo the $90 million it gathers annually from the travel sector. Across the country, hotels, rental-car companies, restaurants and even pro sports franchises are banding together to offer packages to visitors. Hotels, in particular, are searching for ways to get travellers back. The Westmont Group—which operates hotels in Canada under such well-known names as Ramada and Holiday Inn—has doubled travel-agent commissions to 20 per cent. The Radisson chain has tripled the air travel points guests earn by staying at its hotels.

Have you reconsidered vacation or travel plans in light of the Sept. 11 terrorist attacks?

Where will they find the travellers? Some analysts say Canada could benefit by attracting more overseas visitors worried about the tensions in the U.S. Mainly, though, Canada’s tourism operators think it’s a better bet to spend their marketing dollars at home rather than in the travelshy international market. “We have to shift our focus to the north rather than the south,” says Jim Watson, president of the I tourism commission. Unfortunately for the travel industry, things look gloomy in just about every direction.