When COVID-19 struck, the tourism industry was the first hit, hardest hit, and will be the last to recover. The impact on the tourism economy has been greater than SARS, the 2008 economic crisis and 9/11 combined.
Prior to COVID-19, tourism was one of the fastest-growing industries in the world. As Canada’s fifth-largest sector, tourism was responsible for $105 billion in GDP, sustained more than 1.8 million jobs, and was made up of 225,000 small- and medium-sized businesses across Canada.
Canada’s hardest hit industries are at critical risk without continued federal support. Tourism businesses have faced devastating revenue losses due to COVID. The industry has lost two summer seasons, drained financial reserves, taken on massive debt and now has difficulty attracting enough employees as it strives to relaunch.
The Tourism Industry Association of Canada (TIAC) is the national body for the industry. We have been advocating for sector-specific support to help the visitor economy recover from the pandemic.
In a recent industry-wide survey of tourism businesses in every province and territory, TIAC found that:
- One-third of respondents expect up to or over a 50% decline in revenue in 2021 compared to 2020
- One-third of respondents lost between 75% and 100% of revenue compared to the same time in 2019.
- 64% of respondents indicated low cash flow as a challenge facing their business, with a majority citing financial shortfall and burden as the biggest risk currently impacting them.
- Over 40% of respondents had to lay off over half of their staff due to COVID-19.
- Almost 55% of respondents noted either loss of revenue or labour shortages as the biggest threat to their businesses.
- Almost half of respondents have taken on over $50,000 in debt to keep their business afloat.
- Almost 40% of respondents say they would have to shut down their businesses today if they no longer received support from government programs.
- The majority of respondents predict it will take between 1 to 3 years for sufficient tourism demand to return to the pre-pandemic level of profitability.
- 65% of respondents accessed the Canada Emergency Wage Subsidy (CEWS), and 35% accessed the Canada Emergency Rent Subsidy (CERS).
Even with extensive vaccinations and the gradual lifting of restrictions, a bleak fall and winter is certain. There will be no conventions, limited business and government travel, and the wind-down of support programs (CEWS & CERS) could not come at a worse time. Programs like this have been lifelines for the industry.
TIAC urges all parties to support a qualified and limited financial support program from September 2021 to May 2022 to the hardest hit businesses. Specifically:
- Survival support for the hardest hit tourism, hotel and event businesses of any size that have experienced a 40% loss in revenue in any 12-month period after March 31, 2020.
- Government support would cover negative cash flow from normal financial operations (i.e., excluding capital expenditures and non-cash items such as depreciation or accruals). Support not to exceed 75% of normal cash expenditures.
- Program to run from September 1, 2021 to May 31, 2022. Cash flow calculated on a cumulative basis inclusive of CEWS and CERS.
COVID-19 has caused significant disruption to the tourism labour market, much greater than the economy overall – disproportionately impacting youth and minority populations. The industry sector employs over 500,000 fewer Canadians than it did this time last year.
TIAC recommends, in consultation with the tourism industry, the elected party commits to:
- Conduct a comprehensive review of all current Immigration, Refugees and Citizenship Canada (IRCC) programs to identify opportunities and align policies that will work for tourism, and to create a dedicated immigration pathway for the sector.
- Launch a campaign to promote employment opportunities in the sector and to address reputational damage or growing negative sentiments of the industry.
- Invest in a comprehensive Indigenous tourism workforce strategy to increase the number of Indigenous workers in the sector and boost the skills and cultural knowledge to help Indigenous tourism businesses thrive while firmly establishing Canada as a premiere destination for authentic Indigenous tourism experiences.
Tourism businesses will largely recover if there is a bridge that supports them well into 2022. But they need a committed federal partner to help build that bridge in collaboration with tourism industry leaders.
To read more about TIAC’s recommendations for the elected party on how best to support the economic driver that is Canada’s tourism industry, visit www.tourismvotes.ca.