Ontario can boost tourism by tapping into emerging markets

Ontario can boost tourism by tapping into emerging markets

Ontario’s tourism industry accounts for 1.7 percent of the province’s GDP and supports over 300,000 jobs, according to the latest available Ministry data. Since 1980, total tourism receipts in Ontario have grown from $15 million to over $23 million in 2012 dollars.

Yet these numbers mask the sharp decline in overall visitors to Ontario from their high during the 1990s. While tourism receipts from Ontarian and other Canadian tourists have increased by 62 percent in real terms since 1980, international tourism receipts have only increased 41 percent. This lag is readily explained by the number of visitors to the province.

Since the 1970s, American tourists have represented the vast majority of tourists in Ontario (Exhibit 1). However, beginning in the early 2000s, the number of American visitors declined sharply due to increased border restrictions and the rise of the Canadian dollar. In 1998, Ontario received an all-time high of 30 million US visitors. By 2007, this figure was cut in half and in 2013, just 11 million Americans visited Ontario.

Exhibit 1 The number of American visitors to Ontario has declined sharply since the 1990s

This drop in tourism from south of the border is a Canada-wide phenomenon. In fact, the Canadian Tourism Commission (CTC) announced in 2012 that it planned to redirect leisure tourism marketing initiatives away from the US due to consistently declining numbers of visitors and tourism receipts. Instead it has chosen to focus on top-spending markets like Brazil, Australia, China, South Korea, and Japan.

Overseas visitors are a growing presence in Ontario. While in 1980, overseas visitors accounted for 4 percent of total international visitors to Ontario, in 2013 they accounted for 15 percent of the total. The number of overseas visitors has increased more than 50 percent over this period and tourism receipts from overseas visitors have nearly doubled in real terms between 1980 and 2010. The UK is Ontario’s top overseas tourist market; however, China, Brazil, India, Mexico, Australia and South Korea are rapidly growing segments of overseas visitors. More important, these international visitors spend far more on average during their visits than Canadian or US tourists, according to CTC data (Exhibit 2).

Exhibit 2 Overseas tourists spend more on their trips in Canada than Canadian and American tourists

The need to focus on attracting overseas tourists, particularly from emerging economies, is a prevalent recommendation across tourism strategy documents. Yet this approach can be further refined. Identifying areas that can stimulate both economic growth and tourism activity will have tremendous positive effects for the province.

For example, Ontario’s wine industry has been a strong and growing part of its tourism. Over 1.8 million tourists visit Ontario wineries every year and this is expected to grow by more than 20 percent amongst North American tourists by 2025. Overseas tourists in particular have enormous potential for growth in tourism amongst Ontario wineries. Since 2003, exports of Ontario wine to China and South Korea have increased more than 20 times in real terms, according to Industry Canada trade data. Exports to Australia have increased 85 times since 2003. Ontario should leverage the high popularity of its wine in these regions to generate tourism dollars and boost its exposure for further export growth using targeted marketing campaigns.

In addition, Ontario should focus on ways to increase business tourism, as this is a highly lucrative area for visitor spending. In Toronto, where most Ontario business tourism is generated, average per visit spending from business tourists was $741, whereas each for-pleasure tourist spent on average $606 in 2011.  Promoting Ontario as a destination for meetings and high-profile conventions is an important step towards being recognized as an international business hub, and will in turn generate higher levels of visitor income.

Tourism is an important industry for Ontario, but has been declining due to low visitor numbers from traditional markets. To promote Ontario as a global destination, more effort should be made to advertise Ontario to tourists outside of the US and expand on areas with proven international success.

Photo Credit: primo-piano, Getty Images

Category: Economic Progress