Tourism spending was up 1.0% in the third quarter, as outlays by international visitors grew for a second consecutive quarter and expenditures by Canadians continued to advance as Statistics Canada reported.

 

Back-to-back gains in international spending

Spending on tourism by international visitors travelling to Canada (tourism exports) edged up 0.2% during the third quarter. While only a modest gain, this was the first back-to-back increase in tourism exports since the fourth quarter of 2004.

The increase came despite fewer same-day and overnight visitors. The number of visitors from the United States was down 1.7% from the second quarter, while visitors from other countries slipped 0.5%.

International tourism spending on transportation services and other non-tourism commodities both gained 0.6% during the summer of 2007, while spending on accommodation advanced 0.4%.

On the down-side, outlays on recreation and entertainment by international visitors fell 1.4%, while consumption of food and beverages slipped 0.5%.

Spending on tourism at home continues up

Spending by Canadians on tourism in Canada was up 1.3% in the third quarter of 2007, after growing 1.2% in the second. This was the 13th consecutive quarterly advance since the second quarter of 2004.

The strength in domestic spending came despite a 5.7% jump in the number of Canadians travelling to the United States, the largest quarterly increase in four years. The Canadian dollar appreciated a sharp 5.1% vis-a-vis its US counterpart during the third quarter, making it cheaper for Canadians to travel and shop across the border.

Gains in tourism domestic spending were recorded across all the major categories of spending except transportation. Outlays on accommodation, recreation and entertainment and other non-tourism commodities were notably strong.

Domestic spending on transportation was flat, as higher expenditures on airfares were offset by lower expenditures on ground transportation.

Higher spending on accommodation

Spending by resident and non-resident visitors on accommodation was up 2.1% during the third quarter of 2007, the fastest pace in nearly two years.

Other tourism commodities (which include recreation and entertainment, travel agency services, pre-trip spending and conventions fees) posted a strong 1.8% gain for the quarter.

Total tourism spending on air transportation was up 0.5% as both domestic and international outlays on flights with Canadian carriers increased. Spending fell notably on rail transportation (-1.9%) and vehicle repairs and parts (-2.7%).

Tourism GDP outpaces economy-wide GDP

Tourism gross domestic product (GDP) increased 1.0% in the third quarter of 2007, outpacing the 0.7% growth of the Canadian economy overall.

Tourism GDP advanced in all tourism industries, led by accommodation (+1.9%). Food and beverage services and the transportation industry trailed with gains of 0.6% and 0.4%, respectively.

Tourism employment

Employment attributable to tourism rose 0.2% in the third quarter of 2007, after growing 0.7% in the second.

Notable job gains were registered in transportation, food and beverage services, recreation and entertainment and travel agencies.

Tourism employment edged down in accommodation and other non-tourism industries (e.g., industries that produce commodities occasionally bought by tourists including groceries, alcoholic beverages, motor vehicle parts and repair, vehicle fuel, toiletries).

Looking ahead

According to the Business Conditions Survey for the Traveller Accommodation Industry, Canadian hoteliers expected improvements in the fourth quarter of 2007 in the number of room nights booked, average room rates, occupancy rates, the number of corporate travellers, and the number of hours worked by employees.

On the currency front, the Canadian dollar continued to gain strength against its US counterpart in October and November. The dollar also advanced against the Euro, the British pound and the Japanese Yen in October, only to retreat in November.

On the international front, the Organisation for Economic Co-operation and Development composite leading indicators for October 2007 indicate a weakening performance for all G7 economies (Canada, France, Germany, Italy, Japan, the United States and the United Kingdom). The latest indicators for China, India and Brazil point to continued expansion but a weakening outlook for Russia.