Staycations help Ontario tourism rebound, but still a long road to recovery

Thestar.com
July 26, 2022

Staycations have helped Ontario’s battered tourism sector rebound -- but when it comes to recovery, there’s still a long road ahead.

On top of the “staycation” tax credit that covers a portion of hotel or other accommodation costs, some local tourism organizations are offering gas cards or discounted hotel stays -- Ottawa has a “stay two nights, get one free” offer -- the lifting of many COVID travel restrictions has helped bring travellers back.

“It is, without a doubt, the best summer that we’ve had during the pandemic -- and we’re seeing numbers in some areas of the province that match or surpass previous levels of activity back in 2019, before the pandemic. But the recovery certainly is not even across the province,” said Christopher Bloore, president and CEO of the Tourism Industry Association of Ontario.

“Our border towns and cities, and northwest and northern Ontario are still struggling,” he added. “Land border crossings with the United States are still only 50.6 per cent of what they were before the pandemic -- and American travellers and tourists are a huge part of our industry, they are the biggest part of our market.”

“We’re far from out of the woods yet,” he also said.

Overall, tourism economic activity is down about 35 per cent from pre-pandemic levels.

Bloore said mandates and the return of random COVID testing at airports still deters visitors “because it’s a perception of whether Canada is open or not. And compared to other countries, particularly our G7 rivals -- the U.K., Italy -- who’ve gotten rid of vaccine mandates to get into the country, we’re obviously still lagging behind them. When people are making decisions at the dinner table when they’re going to travel, they want to have a risk-free and bureaucratic-free experience as possible and Canada is unfortunately not at the top of that list right now.”

The recent spike in inflation and rising gas prices are also hurting the sector.

While help from the provincial and federal governments has help and wage subsidies made a difference, many tourism businesses took on a lot of debt and some in the sector are pushing for interest forgiveness.

Others are asking that Ontario’s staycation tax credit -- which covers up to $200 of an individual’s $1,000 hotel, campsite or cottage rental bill and up to $400 for a family spending $2,000 -- be made permanent.

The province has budgeted about $270 million for the tax credit this year, estimating some 1.85 million Ontarians will take advantage of it.

Manvir Hundal, press secretary for newly appointed tourism minster Neil Lumsden, said “our government has taken serious action to help the tourism and hospitality sectors following the impacts of the pandemic, including the Ontario Staycation Tax Credit to encourage Ontarians to support local tourism.”

The credit, he added, “is just one way our government is putting money back into the pockets of families, boosting main streets in communities across our province, and supporting a strong economic recovery. By giving families relief at the pumps and cutting the gas tax by 5.7 cents per litre, we are making it more affordable to explore Ontario this summer.”

Jantine Van Kregten, director of communications for Ottawa Tourism, said leisure visits have picked up and in June, hotel occupancy was 120 per cent higher than in 2021, and 235 per cent higher than in 2020 during the lockdown.

“But it’s still just over 10 per cent below what we saw in 2019,” she said, noting that major conferences and events have yet to rebound.

The capital city has begun offering an incentive -- the third night is on Ottawa Tourism if travellers book three consecutive nights at a participating hotels. It has worked, with average stays increasing by a day.

Victoria Clarke, CEO of Tourism Mississauga, said funds collected via the municipal accommodations tax created an “it pays to stay” program where visitors who book two nights or more at a local hotel receive a prepaid $100 credit card that has proved popular.

The tourism industry is not expected to recover until 2025 or 2026, and an ongoing labour shortage has also added to the sector’s woes.

Andrew Weir, executive vice-president of Destination Toronto, said recovery has been mixed “but I think everyone is feeling a sense of momentum -- cautious, but momentum for sure.”

Toronto, he added “has always been very fortunate to have a diversified visitor economy -- we benefit from both leisure and business travel. In almost equal measure, they’re both highly important, and similarly, we benefit from both domestic and international travel.”

However, he added, “throughout the pandemic, the business has been almost exclusively domestic leisure,” which plays a big part, but not enough on its own.

June was a good month for Toronto, he added, in part because of two large conferences. Hotel bookings were at 90 per cent occupancy for several weeks, but since then have fallen well below 80 per cent, “which is unusual for July.”

In the north part of the province, businesses rely on U.S. visitors for more than 90 per cent of their bookings, so “they’ve had a real tough time through the pandemic,” said David MacLachlan, executive director of Destination Northern Ontario.

While they’ve boosted domestic bookings, that’s nowhere near enough to make up for the loss.

If there are going to be restrictions at the borders, safety measures taken as new variants and successive COVID waves hit the country, “what we would like to see is more from the federal government, in terms of those supports that were there in the first two years of the pandemic. It’s not over ... and while those restrictions are there, there should be support for the businesses that they impact.”

Pre-pandemic, the province’s tourism, sport, heritage and culture sector pumped $75 billion into the provincial economy.