Canada’s global market position slides

By John D. Cunningham
Georgian College

According to the United Nations World Tourism Organization (UNWTO) international tourism arrivals to Canada declined from 18.6 million (2005) to 18.2 million in 2007, while receipts increased from US$13.6 billion (2005) to $US14.6 billion in 2007.
 
The decline in arrivals to Canada comes as no surprise as Canada’s international market share continues to erode due to an increase in the number of new entrants vying for their share of an increasingly competitive global marketplace. The increase in revenue could be attributed to fewer international tourists spending more money. However, since both years were reported by the UNWTO in $US the strong Canadian dollar we experienced in 2007 vs. 2005, is more likely.

While international arrivals and receipts in Canada appear to have stagnated, or declined, Canadians travelling abroad have spent record amounts of money in foreign countries. According to Statistics Canada (2007), Canada’s international travel deficit reached a record $CDN 10.3 billion, representing a staggering increase of 43 per cent over the previous record set in 2006 ($CDN 7.2 billion).  This means that Canadians travelling abroad spent $10.3 billion more than what Canada received from international visitors.

These figures show that on one hand Canada is losing its appeal, internationally, as an attractive international destination for tourists during a time when the global outlook for international travel is projected to reach record levels. On the other hand, Canadians are demonstrating that they are more attracted to international destinations by travelling and spending significantly more in these international destinations than ever before.
 
In a previous edition of Canadian Lodging News I wrote an article titled “Canada losing its competitive edge on the international tourism stage”.  In that article I introduced the Travel and Tourism Competitiveness Index (TTCI), as a potential tool to measure and determine a country’s competitive position in the context of the global tourism marketplace. Though every instrument has its critics, the TTCI is one of few that are available which enable an “apples to apples” comparison of a country’s competitive position relative to others.

The purpose of this article is to provide a comparison of the changes in Canada’s competitiveness ranking worldwide, between 2006 and 2007, using the TTCI.
The second annual TTCI provides a comprehensive evaluation of many factors and policies that make it attractive to develop the travel and tourism sector in the 130 economies studied.  The TTCI report stems from the World Economic Forum’s Global Competitiveness Report (GCR).  The GCR has “evolved over the past three decades into the world’s most comprehensive and respected assessment of a country’s competitiveness.”  This year’s GCR and TTCI reports represent economies totaling 98 percent of the world’s GDP.

Changes to the second report

Cultural and Heritage Resources have been separated into two distinct pillars. After further collaboration between the UNWTO and WTTC Environmental Regulation has been revised to Environmental Sustainability; Prioritization of Travel and Tourism is now referred to as Affinity for Travel and Tourism.
 
Canada’s overall competitiveness ranking declined from 7th (2006) to 9th internationally (2007) and its individual rankings varied widely by “pillar”.  There were positive and negative changes when comparing the two reports. Some of these changes are listed in the table shown above.

According to the TTCI, Canada made some substantial gains in its competitive position since the last report with its abundance of natural resources providing a key strength.  Also, Canada’s eight World Natural sites places our country in 4th position internationally. Some positive changes in Canada’s competitive position (2006/2007) include: Airport density (improved from 9th  to 3rd), effectiveness of marketing and branding (improved from 46th to 36th) and departures per 1000 (improved from 31st to 11th).
 
However, Canada’s position slipped in several key areas including: Total country competitiveness ranking (declined from 7th to 9th), visa requirements (declined from 43rd  to 66th),  business cost of terrorism (declined from 74th to 87th), business costs of crime and violence (declined from 29th to 39th), ticket taxes and airport charges (declined from 117th to 122nd) and purchasing power parity (declined from 100th to 113th).

The WEF’s TTCI is one of a few comparative instruments of tourism competitiveness on a global scale.
 
According to the TTCI Canada’s competitive position in the global tourism marketplace declined from 7th in 2006 to 9th in 2007.
 
During this time some significant gains have been made in the areas of air accessibility, support facilities and efficiency (primarily due to the major overhaul of Toronto’s Pearson Airport) and an increase in Canada’s brand recognition in the international marketplace.
 
However, increasing costs associated with airport charges, increased security, the high Canadian dollar and significant increases in energy and food costs are contributing to a lack of price competitiveness when compared to our US neighbours and other international destinations.
 
The tourism sector is an important contributor to the Canadian economy in terms of tax revenue, investment and direct, indirect and induced employment. With more than one million Canadian jobs dependent on tourism, there is a great deal at stake for Canada to be competitive in the global marketplace.
 
Using the TTCI to track year over year changes in Canada’s competitive position worldwide may be a helpful supplement to the resources used by tourism researchers and practitioners.  It is hoped that the information obtained through the TTCI and other research efforts will assist tourism stakeholders in Canada in setting a direction which builds on our strengths and helps mitigate our weaknesses so that we might regain a more significant share of the international tourism market.

John D. Cunningham is a member of the Faculty, Hotel and Resort Programs, Georgian College, Barrie, ON. If you have questions please email: jcunningham@georgianc.on.ca. To download the report go to www.weforum.org/en/initiatives/gcp/index.htm.