The world has changed dramatically over the past 10 years, but some of the issues that faced the tourism industry in the early 1990's are still here today. The environment in which the industry operates requires tourism stakeholders to fundamentally shift their strategic approach not only to resolve long-standing issues but more importantly to effectively address current challenges and capitalize on new opportunities.
Changing demographics, shifting travel patterns and volatile economic conditions are increasing the pressure on industry stakeholders to develop effective campaigns and business strategies. More recently, health and safety issues such as pandemics and global security concerns as manifested by WHTI have increased the urgency for industry action.
The challenges facing the tourism industry are complex and numerous. Addressing these challenges will require a high level of coordination and cooperation to marshal resources more effectively. Fiscal pressures and competing priorities among all F/P/T partners and tourism stakeholders will require new and innovative partnership arrangements to respond to growing competition and global opportunities.
Opportunities exist for governments and the private sector to seize the extraordinary opportunity afforded by ”mega events“ occurring in Canada and abroad. For example, Canada can learn from Australia's experience with the Sydney Games in 2000 as it prepares to host the 2010 Olympics in Vancouver. The Sydney Games demonstrated that strong public/private partnerships and cooperation result in widespread incremental benefits. The challenge confronting governments and tourism stakeholders will be to establish the necessary linkages to ensure the development of collaborative strategies in conjunction with major international or domestic events so that lasting benefits will be created across the country. The analysis of domestic and international arrivals and spending patterns indicates that if Canada is to continue to be a pre-eminent destination for leisure and business travel, investments will have to be made to enhance and tailor tourism products and services according to the needs of a highly competitive marketplace. Further analysis of niche markets and specific strategies to position the industry within those niches will have to be undertaken by both public and private sector tourism stakeholders. It is in this context that Building a National Tourism Strategy will be developed and refined.
The consultations with industry stakeholders confirmed many challenges that were identified in the November 2003 Consultation Framework and the key challenges listed below represent priority areas for collaboration. However, since then, changing circumstances may have altered stakeholder priorities. At the time of the consultations, the U.S. had yet to announce the WHTI. Following the announcement in April 2005, it became increasingly clear that this measure could be highly detrimental to the Canadian tourism industry.
WHTI is a national, industry-wide concern affecting every region and most sectors of the tourism industry. As such, it is an issue that could be effectively addressed in the context of a National Tourism Strategy.
Provincial/territorial governments will continue addressing particular issues and challenges in their jurisdictions but increased collaboration is required so that their strategies and action plans can help strengthen the tourism industry by enhancing its international competitiveness. Whether competing with new and emerging destinations or responding to world ”shocks,“ addressing the challenges facing the industry in a collaborative manner will be key to growing tourism in Canada.
Key challenges raised during industry consultations include:
Comprehensive research to better understand the expectations of travellers;
More cohesive marketing and promotional campaigns while reflecting provincial/territorial realities and diversity in Canada;
Further development of Aboriginal tourism;
Human resource strategies to attract and retain employees in the industry;
Investments in tourism infrastructure;
Efficient and integrated transportation systems; and.
Broadening and adopting sustainable tourism and best practices.
1. Understanding the Expectations of Travellers
Research has shown that as demographics shift so do travel patterns and demand for products and services. The advancement of technology has also had a significant impact on the tourism industry. Continuing to upgrade and modernize visitor information services will be important in providing visitors with quality, user-friendly and consistent year-round information. Being able to understand and adapt to these changes will be increasingly important.
a) An Aging Population
What was once a relatively homogeneous market for international tourism products is now fragmented into a number of highly specialized niches. As the baby-boom generation advances through middle age, industry stakeholders recognize that customer needs and expectations are changing. There will be rapid growth in the seniors market segment as the baby-boom generation begins to reach 65 years of age in 2011. It is estimated that seniors will represent 25 percent of Canada's overall population by 2026, compared to the current 12 percent. Similar aging trends are forecasted in most developed countries. Trips by foreign residents in the older segments of the population have been increasing more rapidly than trips taken by other age groups (see Figure 6). This slow but steady shift is forcing the industry to adapt its services and products in order to appeal to a growing, mature clientele.
Source: International Travel 2003, Statistics Canada
The Government of Ontario's report ”Impacts of Aging the Canadian Market on Tourism in Ontario,“ states that ”if the new generation of [mature] Ontario residents displays similar tourism activity preferences to their 2000 counterparts, the impact of an aging population will result in a shift away from outdoor activity such as canoeing and fishing, towards non-strenuous warm weather activities and indoor cultural events and attractions.“ This reinforces the importance of conducting research on travel patterns to be able to tailor tourism products, and be more responsive to present and future preferences.
b) Changing Travel Patterns
According to a survey conducted by the Western Australia Tourism Commission, an emerging market referred to as the ”children of the information age“ is developing. This segment is characterized by increasingly sophisticated travellers who are experienced, well-educated and discriminating consumers who are more aware of what the competition has to offer. They are becoming less destination-oriented and more experience-oriented (see Table 5). This transformation into an "experience market" is based on personalized services and customized holidays that allow visitors to play a more active role in their travelling experiences and search continually for new tourism products, such as the increasing variety of spa vacations. The CTC has identified a similar trend in Canada and research in this area will help better position the country.
Major Changes in Travel Patterns, Products, and Marketing 2
|Switch from||… toward|
|Plan well in advance …
||… holiday on short notice|
|Full packaged / fixed schedule holidays ...||… menu of experiences / flexible holidays|
|Established destinations …||… new destinations|
|City tourism …||… integration of city and provincial/territorial experiences|
|Undifferentiated markets …||… special markets|
|Theme parks and man-made attractions …||… experiential travel / nature based tourism|
|Mass marketing …||… niche marketing|
|Destinations taking who arrives…||… destinations chasing specific markets|
|Non-branded destinations …||… highly branded destinations|
c) Visitor Information Services: Increasing Use of Technology
Increasingly, the knowledge economy is having a significant impact on the tourism sector and the travel industry is one of the most connected in Canada.
According to the 2004 Conference Board Consumer Internet Barometer, two-thirds of consumers are now using the Internet to make travel arrangements and the level of satisfaction reported among users is very high.
In 2003, 26 percent of Canadian businesses made travel-related purchases online, up 18 percent from 2002. Combined private and public sector online travel sales reached $19.1 billion in 2003, an increase of almost 40 percent on top of a 27 percent jump the previous year. The Economist referred to online travel as being one of the most successful forms of e-commerce. Americans presently buy 20 percent of their total travel online, but many in the industry believe this proportion could reach 50-60 percent within a decade.1
The International Federation for Information Technology and Travel and Tourism reported in January 2005 that convergence of the Internet, wireless applications and inter-active objects are increasing the importance of smart business networks. Additionally, pervasive computing applications will provide new services and greater convenience for customers. The last decade has seen Internet business solutions transform consumer behaviour and business practices resulting in a rapid growth of new business models such as the low-cost airlines and their online reservations systems and 'smart businesses‘. Smart businesses are flexible, dynamic, collaborative, and able to move swiftly to leverage market opportunities.
Internet business solutions are not only affecting business models, they are also driving market changes. In 2004, online bookings in Europe increased by more than 50 percent and 10 percent of total revenues in travel and tourism came from online business. Three consumer trends are e-business driven: readiness to spend more on trips, more frequent vacations but shorter stays, and an increasing importance of the mature segment of the market. Internet business solutions are increasingly used to improve visitor information services but their application to reduce costs and increase operating effectiveness and efficiency can have a substantial impact on business viability.
The F/P/T partners will need to collaborate in working with their tourism industry to ensure that they fully capitalize on the advantages provided by IBS.
2. Cohesive Marketing Campaigns that Reflect Provincial/Territorial Realities
Canada's cultural, geographical and language landscape makes the country a highly appealing tourist destination. Diversity is one of Canada's major differentiating characteristics and capitalizing on it must become a tourism planning priority. The tourism industry's maturity or level of development varies among provinces and territories. Some areas of Canada are still emerging destinations, while others are better established with thriving tourism businesses.
Southern Canada is characterized by major cities, events and gateways, relative ease of access and a wide variety of well-established and emerging products. Maximizing the potential of festivals and events (ie., sport, culture, and heritage events) will require new horizontal approaches for the tourism sector. Northern Canada is characterized by emerging destinations based on nature tourism, niche products, Aboriginal attractions and wilderness. Access to these areas and their sustainable capacity are an on-going challenge facing tourism development.
Research requirements and product development and marketing opportunities vary across provinces and territories and among rural and urban areas. The CTC leads Canada's national marketing campaigns in collaboration with those of the provinces/territories. However, there is a need to keep developing collaborative approaches to increase the cohesion, effectiveness and efficiency of national initiatives, while at the same time, recognizing the different priorities and needs of all provinces and territories. Strengthening the collaboration of tourism marketing between the provinces/territories and the CTC will not only serve to better coordinate existing initiatives but it will improve their complementarity, potentially leading to innovative partnerships.
The F/P/T partners need to collaborate on research initiatives to identify growth opportunities for all provinces and territories of Canada. Improving overall coordination of research, product development and marketing strategies will better enable F/P/T partners to capitalize on new and emerging opportunities both domestically and internationally.
3. Developing Aboriginal Tourism
Aboriginal tourism is one of Canada's unique strengths, in both the domestic and international markets. However, the growth of this segment of the tourism industry faces significant challenges. Tourism represents about one quarter of the Aboriginal economy in Quebec, the North and the West.
According to the 2003 National Study on Aboriginal Tourism in Canada, demand for Aboriginal tourism is outpacing capacity. There are relatively few market-ready products in the Aboriginal tourism sector, particularly near gateway cities and major tourism routes. Many businesses do not have sufficient tourism market awareness, business skills, product development and marketing expertise to successfully compete. The Virtual Tour of Aboriginal Canada (vtca-gvtac.ca), a web portal, was developed in response to the perceived need to generate a higher level of public awareness regarding Canada's Aboriginal tourism industry.
There is great potential to increase Aboriginal tourism activities and at the same time contribute to the wealth creation, economic development and self-reliance of Aboriginal people and communities in all provinces/territories in Canada. The Quebec Declaration clearly recognizes Northern and Aboriginal tourism as an emerging and important sector. Improving partnerships between Aboriginal stakeholders, industry and government will require a better understanding of Aboriginal aspirations and Aboriginal culture in relation to market realities in an effort to evolve the Aboriginal owned product offering.
4. Developing Northern Tourism
Canada's northern tourism products offer a truly unique experience. While the North is renowned for its nature and wilderness adventures and aurora tourism, it also offers history, distinctive culture and festivals as well as some innovative emerging products such as 'diamond tourism‘ in the Northwest Territories. The number of tourists travelling to the North is slowly rising. In 2004, the Yukon had over 250,000 arrivals, an 8 percent increase over 1999. The Northwest Territories saw arrivals increase by almost 4 percent between 2002 and 2004 when the number surpassed 61,000. While Americans represent over three quarters of the Yukon's tourists, more than half of the arrivals in the Northwest Territories are Canadian.
Increasing the number of tourists that visit the North is challenging because it is a product with a narrow market segment. Other issues include access, both in terms of availability and cost, receptive capacity and sustainability. Transportation infrastructure is expensive. Long distances with low traffic result in high costs to individual travellers. These key considerations must be taken into account when endeavouring to develop northern tourism. The northern environment is remote and highly fragile; its natural beauty is part of Canada's heritage and wealth.
5. Attracting and Retaining a Workforce
The Conference Board of Canada estimates that there will be a shortfall of close to one million workers in the Canadian economy by 2020. According to the Canadian Tourism Human Resource Council, Canada's overall labour force is expected to decline from a growth rate of 1.4 percent in 2005 to 0.4 percent in 2016, due to an aging population and lower birth rates. To compound the problem, labour demand continues to increase across all sectors as a result of strong economic growth.
The tourism labour market is characterized as a seasonal, fragmented, multi-faceted service industry, with a large number of entry-level jobs. The seasonal nature of the tourism industry is contributing to the development of dual labour markets, comprised of core workers and
peripheral ones. In many cases, employees view tourism as a gateway into the labour market.
Approximately 60 percent of tourism employment is within the food and beverage, and accommodation sectors (see Figure 7 below). These are the areas most in need of a stable and skilled workforce.
Source: Statistics Canada National Tourism Indicators
In light of potential labour shortages, it has become increasingly important to enhance the quality of jobs in the tourism industry and to facilitate the entry of those who are under-represented in the labour force. Canada needs to study what other countries are doing to address similar challenges. For example, some Organisation for Economic Co-operation and Development (OECD) countries are currently undertaking efforts to enhance the employability of foreign workers. An opportunity exists to examine how Canada can adjust current immigration policies to better reflect the tourism industry's needs.
Although the tourism industry offers the first work experience for many people, the sector is sometimes ill-perceived as a career choice. At the same time, the ability to attract skilled employees is critical to the industry's growth. There is a need to promote the wide range of long-term career opportunities and prospects that tourism offers, particularly in the operation and management ranks, as well as general hospitality. Attractions, hotels, airlines, auto rentals, and entertainment are but a few areas that offer rewarding, long-term careers.
6. Investing in Tourism Infrastructure
Typically tourism infrastructure is viewed as consisting of museums, cultural institutions, heritage sites and parks, but the enjoyment and success of tourism experiences also requires quality public infrastructure. All governments are committed to work collaboratively to restore infrastructure in Canada. As such, they have invested more than $30 billion in infrastructure since 1993 in numerous projects across the country.
Despite the substantial investment that governments have made in infrastructure, Statistics Canada reports that the growth in value of public infrastructure assets in Canada has been significantly lagging behind the economy as a whole. In the mid-1970s, public infrastructure as a share of GDP was 23 percent, but declined to 16 percent by 2001. However all governments are making substantial investments in public infrastructure that benefits the tourism sector directly and indirectly.
The significance of tourism interests in infrastructure projects must continue to be communicated to the various jurisdictions responsible for infrastructure development. The strategy will be instrumental in championing coordination and cooperation between governments, particularly in providing policy direction on tourism and related infrastructure projects.
7. Ensuring an Efficient Transportation System
As the second largest country in the world, Canada's vast territory and diverse geography pose an ongoing transportation challenge for the tourism industry. During the stakeholder consultations, concerns regarding the impact of an inadequate transportation system were raised.
The high cost of air travel in Canada's remote areas and limited transportation options, especially by rail and ferry, affect the ability of tourism operators to promote their products. At the same time, recent shifts and growth in the low-cost carrier segment of the airline industry is helping the domestic tourism market. The cheaper, more flexible price structure of these airlines has enticed more people to travel. They provide affordable air access to many provinces and territories in Canada that were once considered too costly to serve.
In this context, there is a need to continue seeking opportunities to ensure that accessibility, affordability, and service quality are facilitated by a liberalized international air policy, and that tourists' entry into Canada is not impeded. Efforts to seek opportunities for new international bilateral agreements with other countries need to continue. In addition, the updating of existing agreements, such as the recently concluded liberalization of the Open Skies bilateral agreement with the U.S. should be encouraged. As changes to air liberalization are primarily related to federal transport policy, the CCTM will collaborate with key transportation departments and other stakeholders, as required, in achieving the key results and outcomes.
There is also a need to better integrate the national transportation system to allow passengers to connect easily between modes of transportation, whether they are traveling by bus, boat, plane, train or automobile to or from other points within and outside Canada. As part of this, particular attention should be paid to ensuring the efficiency and security of the Canada-U.S. land border, since the U.S. is our main source of international travelers. To this end, Canada and the U.S. signed the Smart Border Declaration in 2001, agreeing on a 32-point action plan to address border processes, invest in border infrastructure, and identify technological solutions to speed movement across the border while ensuring security. The Border Infrastructure Fund was established to support border infrastructure projects at Canada's busiest land border ports of entry. Furthermore, as part of the 2005 Security and Prosperity Partnership of North America, Canada, the U.S. and Mexico are committed to a number of initiatives that promote border efficiency and security.
The Government of Canada is committed to pursuing integration of the national transportation system and to investing further in new infrastructure at the border. Budget 2006 provided an unprecedented level of support for infrastructure of various types across Canada. This includes support for small and larger scale municipal infrastructure projects in communities across Canada, and improvements to land border crossings and highways.
The fluidity of our major international gateways and trade corridors is crucial not only for the tourism industry, but for the economy as a whole. Through the Asia-Pacific Gateway and Corridor Initiative, Canada seeks to boost commerce with the Asia-Pacific region to integrate investments in transportation infrastructure and improve the efficiency and reliability of the regional transportation system.
8. Adopting Sustainable Tourism Development and Quality Practices
Sustainable tourism enhances and preserves our natural and cultural heritage and improves Canadians‘ quality of life. Tourism development needs to balance economic viability, environmental conservation and social impacts. Sustainable tourism endeavours to minimize environmental and cultural impacts while contributing to economic development. The long-term success of the industry depends on business owners and operators being stewards of the environment and adopting quality practices.
In A Manual for Sustainable Tourism Destination Management by Walter Jamieson and Alex Noble, 2000, it states that increasing evidence shows that an integrated approach to tourism planning and management is now required to achieve sustainable tourism. The document goes on to identify some of the most important principles of sustainable tourism development which include:
Tourism should be initiated with the help of broad-based input that involves all stakeholders, including the community where the development is taking place, and the stakeholders should maintain control of tourism development.
Tourism should provide quality local employment and a linkage between the local businesses and tourism should be established.
A code of practice should be established for tourism at all levels—national, regional, and local—based on internationally accepted standards. Guidelines for tourism operations, impact assessment, monitoring of cumulative impacts and limits to acceptable change should be established.
Education and training programs to improve and manage heritage and natural resources should be established.
F/P/T governments and the industry must work together to develop a cohesive strategy for tourism sustainability in Canada. In spring 2004, the Tourism Industry Association of Canada (TIAC) undertook an update of the Code of Ethics and Guidelines for Sustainable Tourism developed in 1992. The update, prepared in consultation with industry, was released in February 2005. The Code provides a common basis and framework for the industry to move forward effectively in support of the shared responsibility for sustainable tourism. The aim is to enhance the quality and sustainability of natural and cultural heritage-based experiences. The Code could provide the basis for F/P/T partners to develop a collaborative approach to a sustainable tourism.