Ontario’s tourism sector won’t fully recover for years, report says

Thestar.com
Dec. 12, 2022

Ontario may be yours to discover -- but for the province’s struggling tourism industry, it’s also yours to help recover.

A new report on the state of the sector to be released Tuesday, obtained by the Star, says the post-pandemic rebound has been slow and won’t be back to near-normal levels for another few years -- even warning the situation “looks grimmer” given current economic troubles.

“Ontario can and should be at the top of every tourist’s bucket list,” said a statement from Christopher Bloore, president and CEO of the Tourism Industry Association of Ontario, which produced the report with the Ontario Chamber of Commerce.

Tourism, which was a $36 billion sector before 2020, was “disproportionately impacted by the COVID-19 pandemic” and while there are signs of improvement, “it is not fully expected to recover from the pandemic until 2025,” said the chamber’s vice-president of policy, Daniel Safayeni, in a telephone interview.

“And if you take a look at the backdrop -- concerns of a looming recession, cost of living, supply chain disruptions, workforce woes and perhaps even dampened consumer spending -- there is a need for a more comprehensive strategy as it relates to supporting Ontario’s tourism sector,” he said.

The two organizations are calling on all levels of government to help with that strategy -- with everything from easing the workforce shortage through immigration reforms and promoting and encouraging tourism careers for students, to easing taxes on booze and accommodation, as well as improved public transportation and broadband access.

Minister of Tourism Neil Lumsden said the provincial government continues to work with the industry.

“Tourism activity has recently reached its highest level since the onset of the pandemic, though we know that the industry continues to face challenges,” he said. “We are working to ensure Ontario’s tourism industry re-emerges as an economic powerhouse, welcoming visitors and showcasing all that Ontario has to offer.”

Safayeni said that prior to the pandemic, Indigenous and Francophone tourism were “emerging as new areas of interest,” and noted strong interest in nature-based activities. He also said it’s time for Ontario to capitalize on the fact that Canada was the first G7 country to legalize cannabis.

“This is another area we know international tourists are increasingly interested in,” he said. “We have a uniquely domestic industry and supply chain around cannabis and with a couple of policy changes here at the provincial level, we can potentially unlock a whole aspect of tourism that revolves around the cannabis economy” and attract both domestic and international visitors.

That could entail cannabis companies hosting special events, with product available on site, or consumption zones at big sporting events and concerts.

Safayeni also said fast, reliable internet “is a prerequisite for businesses of any size and in any sector, to be able to access talent, digital resources and, increasingly, their customer base. Unfortunately, for many small businesses located particularly in rural, remote, northern and First Nations communities, lack of reliable high-speed internet is a major barrier.”

He added that “poor internet connectivity is going to have significant implications for businesses and hinders their online market presence ... It limits their access to labour, and it disincentivizes migration and tourism in their communities as well. That is a big concern for us right now from a regional economic growth perspective.”

Tourism is a key part of the economy and “there really isn’t a strategy right now either in Ontario, or Canada, to develop a coherent and co-ordinated approach for long-term economic growth,” said Safayeni. “And when you look at the tourism industry, that has to be a part of any government’s vision for long-term economic growth. This is an industry that has been hobbled badly by the pandemic. ”

He said the province’s staycation tax credit -- which allows Ontarians to claim a portion of hotel, cottage or campground rental costs for travel within the province -- needs to stay, and with better promotion.

Overall, tourism activity has declined about 35 per cent from pre-pandemic levels. Tourism operators are, on average, making just 64 per cent of revenues they did pre-pandemic.

The report notes that operators took on enormous debt during the pandemic and only four in 10 expect to be profitable by 2024.

Northern Ontario was particularly hard hit, as was business travel in the south -- referring to conventions and conferences in big cities like Toronto and Ottawa.

The provincial government recently announced $5 million in funding for 24 tourism projects in the north, including refurbishing campgrounds and marinas, as well as a new resort and event centre in Echo Bay east of Sault Ste. Marie, and for guided ATV and snowmobile trips in Kapuskasing.

David MacLachlan, executive director of Destination Northern Ontario, said “with the domestic market staying close to home, northern Ontario did well during the pandemic once we were out of lockdowns.”

However, he added, “we did have a couple of sectors that continue to experience challenges, especially the (resource-based tourism) in the northwest, but with the last of the border restrictions removed, we expect to see a bounce back in 2023.”

During question period at Queen’s Park, Lumsden recently acknowledged that “the industry continues to face challenges,” but said he is “very confident they will continue to get better fast.”

MacLachlan would like to see the labour gap addressed as well as improved transportation and visitor services, including year-round public restrooms.

Safayeni said transportation infrastructure must also be a focus of the Ford government, which could improve travel to destinations in the winter and “increase the length of the tourism season so not everyone is focused on trying to jam all their revenue in just over a two- or three-month period when things are very warm in Ontario.”