Canada’s Tourism Industry: Industrial Outlook, Summer 2005

Profits in the tourism sector are still recovering this year from the SARS-induced low they reached in 2003. Tourism spending continues to grow, although at a slower pace: weaker world economic growth is slowing foreign tourism spending growth, while the loonie’s strength makes it cheaper for Canadian residents to travel elsewhere and making it more expensive for non-residents to travel here.

High energy costs, rising labour costs in this labour-intensive sector, and increasing interest rates are all driving costs higher. But costs aren’t growing as quickly as revenue, especially since prices are improving this year, mainly in the transportation industry due to Jetsgo’s demise. Profits are expected to reach a record $832 million in 2005.

Prices will remain healthy in the medium term, as demand continues to grow. Increases in tourism spending from growing markets like China and India will also allow profits to keep growing steadily. By 2009, tourism industry profits will reach $1.2 billion.