People line up before entering the security zone at Toronto Pearson International Airport, on Aug. 5, 2022.Nathan Denette/The Canadian Press
A full recovery in the tourism industry is unlikely until next year, Destination Canada predicts, even as the rebound comes quicker than expected ahead of a bigger bounce back forecasted for 2025.
In a new report, the Crown corporation said Tuesday the number of overnight leisure and business visits in the country will fall two percentage points short of 2019 levels by the end of this year. Projections show it beating prepandemic figures by a whisker in 2024.
Destination Canada, which promotes tourism across the country, said nominal spending in the sector will hit $109.5-billion in 2023, topping 2019 levels of roughly $105-billion. But the total for this year was fuelled partly by inflation, and would actually need to reach about $122-billion to match prepandemic spending in real terms, according to the Bank of Canada’s inflation calculator.
“Spend has been propped up of course by inflation,” Meaghan Ferrigno, Destination Canada’s chief data and analytics officer, said in an interview.
One bright spot is the value that many still place on travel, despite rising interest rates taking a bigger bite out of disposable income.
“Travel is remaining a key priority for consumers. Even in today’s economic climate, globally consumers are really allocating a larger share of their wallet to experiences over goods. And that’s what’s really driving to our current state of recovery,” Ms. Ferrigno said.
The report said there’s an opportunity for the tourism sector to hit $160-billion in annual revenue by 2030, but that “capacity constraints” could limit that total to $140-billion, “which when adjusted for inflation shows no real growth.”
Luring wealthier tourists, building out the work force and attracting more visitors outside of peak season are all key to industry growth, organization chief executive officer Marsha Walden said.
“This is a truly pivotal moment for our industry,” Ms. Walden said in a news release.
“If we work together, we can achieve what’s possible and recapture our position as a top destination for global tourism and create wealth and well-being for all of Canada.”
The projected annual tourism growth rate of nearly 6 per cent through 2030 is expected to exceed overall economic growth in Canada, according to Destination Canada. But that pace looks sluggish next to global tourism revenues that are forecasted to climb by more than 7 per cent each year.
The Crown corporation said that leisure comprised the main driver of travel over the past two years, hitting prepandemic levels in 2022 with $72.4-billion in revenue. Now, business travel is finally starting to pick up, too – a critical part of filling hotels, restaurants and conference centres outside of peak season.
“We’re seeing leads come back next year, but the events actually happening two to three years out,” Ms. Ferrigno said. “That’s where you see that longer tail.”