OTTAWA, ON, June 17, 2014 - Today the Tourism Industry Association of Canada (TIAC) released Gateway to Growth: Creating Investment Opportunity in the Canadian Hotel Industry. This report examines the current investment climate, identifies the challenges undermining profitability and provides practical recommendations to address the public policy issues which impede growth and deter investment.
“The global competition for capital investment is fierce. Simply put, capital is not patriotic; it is mobile and seeks out the most profitable returns. If we don't act investment opportunities in the Canadian hotel sector will be passed-over for more attractive opportunities in competitor markets and other sectors," stated TIAC’s President and CEO, David Goldstein.
Investors look to specific indicators to help them decide where to invest. Hotel performance, market demand and government policies all factor into the equation. It’s from these indicators that two desirable characteristics of an asset need to be satisfied: stability and growth.
A key factor that is undermining investor confidence is the drop in international visitors to Canada. In 2000 one-in-three travellers in Canada was an international visitor and by 2013 the number fell to less than one-in-five. This drop in international travel demand has had negative consequences for Canada’s hotel industry and travel sector at large. Average Daily Rate (ADR) and Revenue per Available Room (RevPAR), both key indicators for the health of the accommodations sector, are not meeting their potential for the industry.
"Hotels are creating employment and tax revenues, but not generating desired profits for the pension funds, private and corporate investors seeking competitive returns. Hotel profitability requires both visitor volumes and the right visitor mix. A healthy balance of domestic vacationers, business travellers and international tourists provide stable revenues, drive up rates and increase ROI," concluded Goldstein.
Canada needs to increase the number of international visitors. World tourism is growing at an average pace of 5%, Canada is not keeping pace, tracking annual growth at 1.5%. Canada, with its wealth of compelling tourism experiences, considerable market demand from the US and overseas, along with its strong brand worldwide is in an opportune position to realize significant growth.
Through the 5% Growth Plan TIAC is engaged with the federal government through the following recommendations to increase Canada’s global competitiveness and attract its fair share of international travellers:
- That the government increase funding for co-investments with industry in strategically aligned marketing campaigns led by the CTC to drive demand in key markets, particularly the US.
- The government should launch a review of the competitiveness of Canada’s air transportation cost structure and continue to pursue strategic air access agreements.
- Modernize the visitor visa process by reducing red tape and investing in processing infrastructure.
- Reform federal labour programs to reflect the unique needs of the tourism industry.
Vice-President, Public and Industry Affairs
Tourism Industry Association of Canada