This season, the view is better from the Canadian Side
BY MATT RICCHIAZZI;
Hamilton’s news broadcaster, CHCH, is reporting that Niagara Falls, ON enjoyed the best season it has had in nearly eight years. Niagara Falls Tourism chair Wyane Thomson says the city is on pace for a record tourism year measured by visitors and spending.
“We’ve stepped up the marketing in the United States which is very important, which we cut off for awhile because they just weren’t coming,” Thomson said to reporters.
The value of the Canadian dollar has dropped significantly since the 2015 season, which is now trading at a 30% discount for American tourists, who have been coming across the border in larger numbers. Canadians, accustomed to their dollar trading near par in recent years, have decided to slow their American side spending and shopping trips.
Statistics Canada says that Americans made two million trips to Canada in the first quarter of this year, spending over a billion dollars during their trips. Ontario’s Niagara Region has profited handsomely on that trend.
Thomson says the number of visitors to Niagara Falls has climbed 15%.
One of the biggest beneficiaries has been the Fallsview Casino and Casino Niagara. The two venues generated over $24 million last year for public services, about a fifth of the city’s total operating budget.
But it’s not just the powerhouse venues that experiencing a booming summer season. The motels along Lundy’s Lane – often mom and pop operations –are also reaping the benefits of a strong U.S. dollar and a weaker Canadian loonie.
“This year we’re seeing at least a 15% to 20% increase in business,” said Max Patel, general manager of the Westlodge Inn & Suites, told The Niagara Falls Review last month. “I think it’s the dollar. Canadians are staying on this side because of the price.”
Patel notes that many of his guests are coming from Ontario and Quebec; and also more Europeans, particularly from France.
Sumaira Sohail, owner of the A-1 Star Inn, told The Review that most of her guests are coming from the U.S. “I think this side (of Niagara Falls) is much better than the States. They enjoy coming here.”
“I was in a meeting with the Fallsview Group this morning and there’s a person who is in charge of an operation in Fallsview and they also have 16 other hotels in the Buffalo and surrounding area, and they are substantially down,” said Thomson. “She says the Canadians are not coming, so they are substantially down over there, and we’re the benefactors because of the dollar and of course the great weather and because of our destination.”
Thomson applauds Hornblower, the new operator of Maid of the Mist equivalent tours in Canada. He credits their marketing efforts, as well as an increase in activity from more frequent fireworks and night cruises.
“And the zipline — there’s 300 people waiting in line for three hours to get on the zipline, it’s just unbelievable,” he saysr.
A devalued Loonie is a double-edged sword for the Canadian economy. While the decline from rough parity with U.S. currency began at the end of 2012, the dollar was stricken by the plunge in energy prices toward the end of 2014. Since its steep drop to below 70 cents, the depressed dollar has recovered but is expected to remain low compared with U.S. currency for the foreseeable future. The dollar is worth around 77 cents now but capital markets analysts expect it to sink again.
Melissa Rey is the vice-president of sales operations for Maison Apothecare, a bath and essential-oil manufacturing and sales business located at Niagara-on-the-Lake. The company manufactures original products using imported plant-based raw materials.
“The lower dollar has increased the cost of our raw materials, which we import from the United States and other countries,” Ms. Rey told The Globe and Mail. “Because of this we have had to increase our prices. Our raw material costs have gone up approximately 20 per cent.”
That has resulted in price increases of at least 10% for most of the company’s products.
The Bank of Canada’s Monetary Policy Report published in July of this year noted that “the Canadian economy continues to adjust to low commodity prices,” with some jobs and investment in Canada shifting from the resource to the non-resource sector.
Export Development Canada published a Trade Confidence Index Survey this spring that said that 66% of respondents believe a devalued loonie has had a positive impact on exports by allowing firms to offer their products at lower prices abroad.
Next year, Canada’s exports are expected to exceed the peak reached before the 2008 recession.
“First, the resource economy is going through a painful and complex adjustment to low prices – an adjustment that will mean lower levels of income, investment and employment, as well as the migration of families within Canada. This process will take another couple of years to work itself out,” explains Stephen Poloz, Governor of the Bank of Canada.
For some companies, the devalued loonie has become something of a sweet spot.
“For a company like ours, the lower dollar has already worked in our favour,” says Rohit Sethi. She is the chief operating officer of a Toronto-based technology company that helps businesses beef up their software’s security. “We have largely a Canadian-based payroll and American clients. More than half of our revenue comes from the U.S.”
Despite weakening economies and increased fears of terrorism, global travel spending is still growing, though at a slower pace. The World Travel and Tourism Council said in an August report that global travel spending is expected to grow by 3.1% in 2016, down from 3.3% in a March forecast. Still, it is outpacing global economic growth, expected to be 2.3%.
