Canadian tourism heavily affected by downturn, passport requirement

tourism downturn

In a previous article we explored how the sex industry is a forgotten economic barometer never used in analysis.   However, economists do use tourism statistics in their findings — a similar industry to the adult entertainment sector — indeed, the two are often inter0connected.

About a week ago, I saw a documentary on the CBC (the Canadian equivalent of CNN) News, which detailed just how the tourism industry in Canada has been affected by the economic recession and the new passport requirement which went into effect in June of 2009. This is obviously disappointing but I remain hopeful that the situation improves. Here is the report CBC News, which was also conducted online by Yahoo! Canada:

According to the head of the tourism industry association (Commercial Tourism Canada), the market for tourism is suffering through the worst period in its history:

“This is worse than any other recessionary period that we’ve seen,” Travel Industry Association of Canada CEO Randy Williams told CBC News on Tuesday. “This has been the most challenging that many [in] our industry have seen in their lifetime,” he said, in terms of reduced demand and revenue.

The same day, Statistics Canada reported tourism spending in Canada fell for the fourth straight quarter in the three months ending in June. It fell by $128 million, or 0.8 per cent, to $16.4 billion.

Tourism was hit in that quarter by tougher passport requirements for people crossing the American border that took effect on June 1 and the cancellation of Canadian flights to Mexico after the outbreak of the H1N1 influenza virus (CBC, 2009).

Looking back at the predictions, the current conditions don’t look too far off from what experts in the field were envisioning:

As the NY Times reported, the new passport rules brought worry to tourism areas such as Niagara Falls where they say the new rules are discouraging millions of visitors from coming to one of the nation’s most majestic and romantic tourist attractions and result in billions of dollars a year in lost revenue (NY times, 2009).

Other affected regions of the country going whose tourism industries that have been decimated are Windsor, Ontario, and Sarnia, Ontario, Canada.  “I think there will be an impact,” John Winston, general manager of Tourism London, warned yesterday. “ It is just another barrier for people to go through if they want to go back to the U.S.” Especially hard hit could be bus tours, which rely on people on moderate incomes and seniors for business, Winston said. The London region relies on the U.S. and other countries for about 12% of its tourism business, he added (Cnews, 2009).

All signs are pointing to a total economic, political, and social collapse in the United States, but also in Canada once the full effects of the economic crisis spreads to its norther neighbor as the US economy slows to a halt. Since Canada depends mainly on the United States for its economic well being, any kind of economic collapse of the United States would immediately obliterate the Canadian economy. Indeed, during the Great Depression, Canada was affected more negatively than the United States. Canada was hit hard by the Great Depression. Between 1929 and 1939, the gross national product dropped 40% (compared to 37% in the US).

To add ammunition to these facts, Paul Krugman, a famous economist, recently pointed out that “the scale of the collapse of world trade has been so large that it has produced a degree of international linkage that surpasses what even the pessimists imagined” (WSJ, 2009).

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