Ontario Tourism Outlook - Ontario Ministry of Tourism ...2 Contents I. Ontario’s Economic Outlook...

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Ontario Tourism Outlook (Spring 2010)

Tourism Research Unit

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ContentsI. Ontario’s Economic OutlookII. Tourism Outlook SummaryIII. Inbound Travel to Ontario

• Non-Business• Business

IV. Outbound Travel from Ontario• Non-Business• Business

V. Q&A

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I. Ontario’s Economic Outlook

I. Key Drivers & Highlights 4

Economic Outlook• According to the most recent economic

outlook for 2010, U.S. real GDP will increase 2.3% and real GDP in the UK will increase only by 1.1% while Ontario’s will increase by 3.5%.

• The economic recovery in North America will be faster than in European countries.

• However, when the fiscal stimulus phases out, Ontario’s economy is expected to taper off:

“The persistent strength of the Canadian dollar, Canada's poor relative productivity performance, and the low absolute level of U.S. demand will continue to act as significant drags on economic activity in Canada. “

- From Bank of Canada Monetary report -6-5-4-3-2-1

012345

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Real GDP Growth Rates

OntarioU.S.

Source: Oxford Economics; the Conference Board of Canada

%

UK


Personal Disposable Income Supports Personal Consumption

• Ontario’s personal disposable income will rise steadily over the forecast period with the help of the new sales and property tax credits and 1% tax cut in the personal income bracket.

• Personal disposable income will increase 3.3% in 2010, and 4.3% in 2011, then increase over 4% for the rest of the forecast period.

• As a result, the increase in income will trigger stronger consumer spending. It is expected that personal consumption will increase 2.2% in 2010 and 2.5% in 2011.

• Personal disposable income affects significantly non-business travel.

Source: The Conference Board of Canada; Statistics Canada

0

1

2

3

4

5

6

7

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Personal DisposableIncome

Per Cent

Ontario Personal Disposable Income Growth Rates


Business Investment Resumes• Business investment in Ontario is

estimated to increase by 5% in 2010, after a decline of 13.5% last year in the midst of the financial downturn. It is expected that business investment will grow at a solid pace at 9.6% in 2011 and 8.2% in 2012.

• The rebound in business investment will encourage business trips and help boost business travel expenditures.

-30

-20

-10

0

10

20

30

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Per Cent

Source: The Conference Board of Canada; Statistics Canada

Business Investments


• The Canadian dollar will keep parity or close to parity with the U.S. dollar starting in 2010, after a drop in 2009.

• According to the Conference Board of Canada, it is expected that the Canadian dollar will rise from an average of 88 cents U.S. in 2009 to 98 cents U.S. in 2010 and then stay at the parity level from 2011 to 2014.

• The rising Canadian dollar will likely have further impacts on inbound travel, especially from the U.S. At the same time it will increase Ontarians’ outbound travel.

Canadian Dollar vs. U.S. Dollar

0.6

0.65

0.7

0.75

0.8

0.85

0.9

0.95

1

1.05

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Source: Bank of Canada; The Conference Board of Canada

Cents U.S.

The Canadian Dollar Hits Parity


• Economic recovery will lead to higher commodity prices.

• Oil prices are forecasted to be at $76.4/bbl this year, up 24% from 2009. Oil is expected to trade at $79.7/bbl in 2011, and gradually move up to $90.2/bbl at the end of forecast period in 2014.

• High oil prices have a negative impact on travel activities, especially on same day travellers.

Source: Oxford Economics

0

20

40

60

80

100

120

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Oil Prices$US/bbl (WTI)

Oil Prices keep their Upward Trend


• The following Ontario outlook is based on the expected performance of economic variables over the next 5 years, and the history of how changes in these variables affected travel in the past. The economic variables included in this model are: personal disposable income, travel prices, exchange rates, oil prices and GDP.

• The introduction of the HST in July 2010 is expected to have a positive impact in the short term with business passing cost savings to the consumers.

• In addition, there maybe other unforeseeable activities/events that may exert influence on consumer behaviour related to tourism decision making.

Methodology & Additional Variables

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II. Tourism Outlook Summary

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Tourism Outlook SummarySource Market share

in 2010 (%)2010 Growth Rates (%) over 2009

2011 Growth Rates (%) over 2010

2010/2014 Growth Rates (%)

Total Visits -0.8 0.5 4.2

Domestic Visits -0.2 0.5 3.7

Ontario 95.0 -0.1 0.4 3.5

Canada 5.0 -1.2 2.3 8.6

International Visits -5.1 0.4 7.5

U.S. Border States 67.0 -6.5 -0.8 4.9

U.S. Non-Border States 18.0 -5.5 1.7 11.8

UK 2.6 -0.1 3.0 10.1

France 1.0 0.9 2.6 14.5

Germany 0.9 0.7 2.2 10.0

Japan 0.8 -7.2 -1.3 13.7

Other Overseas 10.0 2.9 5.4 14.3

Source: Ontario Ministry of Tourism and Culture

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Total Tourism Visits Trend


90,000

95,000

100,000

105,000

110,000

115,000

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Total Tourism Visits(thousands)• Tourism visits will continue their

downward trend from 2009, decreasing 0.8% in 2010, and will rebound 0.5% in 2011. Visits will then increase at an average annual rate of 1.2% for the rest of the forecast period.

• Total tourism visits will reach pre-recession (2007) levels by 2014, reaching more than 104 million visits.

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III. Inbound Travel to Ontario

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Total Inbound Non-Business Visits

0

20,000

40,000

60,000

80,000

100,000

120,000

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Overseas

U.S.

Intraprovincial

Interprovincial

(thousands)

Inbound Non-Business Visits

Source: Statistics Canada; Ontario Ministry of Tourism and Culture

• Inbound non-business visits are estimated to decline by 0.8% in 2010, and are expected to increase only by 0.4% in 2011. Further increases are expected in 2012 (1.4%), 2013 (1.2%) and 2014 (0.9%).

• Ontario’s inbound non-business visits are estimated to increase from 94 million to 98 million at the end of forecast period in 2014.

15

Ontario Market - Major Player• Ontario’s domestic market is a

competitive jurisdiction for non- business visits, with its market share forecast to increase from 69% in 2001 to around 84%, over the forecast period.

• Since 2005, Ontario’s U.S. market share dropped below 20%. The trend will continue with the U.S. market share reaching around 10% over the forecast period.

• The share of visits from other provinces will keep steady above 4% in the next five years.

• Overseas markets will have their shares increase from 1.7% to 2.0% by the end of forecast period.


Shares of Inbound Non-Business Visits

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1982 1987 1992 1997 2002 2007 2012

Intraprovincial

Overseas

U.S.

Interprovincial

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Market Share Changes

3%26%

1%69%

2001

4% 10%2%

84%

2010

(Intra-provincial) (Intra-provincial)

(U.S.)(U.S.)

(Overseas)

(Overseas)

(Inter-provincial) (Inter-provincial)

II. Inbound Travel to Ontario i. Non-Business

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Non-Business Travel: Ontario-to-Ontario

• Intra-provincial non-business visits are the major contributors to the total inbound visits. For 2010, these visits are expected to decrease 0.2%, but then are expected to grow at an annual average of 0.8% over the forecast period.

• Same day travel from Ontario-to-Ontario will show some negative signs in 2010 as people tend to extend their trips when the economic situation gets better. Rising gasoline prices also help dampen same day travel.

• As a result, it is expected that overnight travel from Ontario-to-Ontario will increase by 0.6% in 2010 and then grow at average of 1.4% annually over the forecast period.

Non-Business Visits from Ontario-to-Ontario


-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2010 2011 2012 2013 2014

OvernightTotalSame Day

y/y %


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Non-Business Travel: U.S. Border States to Ontario

• Same day visits from the U.S. border states are expected to decline by 8% in 2010 and another 3.4% in 2011. Then, they are expected to rebound in 2012 by 3.8% and grow at healthy pace afterward. The three major reasons behind this market trend are: the high Canadian dollar, high gasoline prices and passport requirements. In addition, the economic recovery of U.S. border states is expected to be mild.

• Overnight non-business visits are expected to decline by 3.6% in 2010 but will increase 2.7% in 2011. The average growth of this market is around 1.8% from 2012 to 2014.

Non-Business Visits to Ontario

0

5000

10000

15000

20000

25000

30000

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012


(thousands)

Same Day

Total

Overnight


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Non-Business Travel: U.S. Non-Border States to Ontario

• U.S. non-border states account for 18% of Ontario’s international visits.

• Same day visits from the non-border states are expected to decline by 13.4% in 2010 and another 3.6% in 2011. This market will start to show recovery in 2012.

• Same visits from non-border states started to drop below overnight visits in 1999, and the trend will continue.

• Overnight non-business visits are expected to decline by 5.7% in 2010. The market will turn positive in 2011, growing at a rate of 1.2%. The average growth of this market is around 3.1% annually from 2012 to 2014.

Non-Business Visits to Ontario

0

500

1000

1500

2000

2500

3000

3500

4000

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012


(thousands)

Same Day

Total

Overnight


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Non-Business Travel: Other Canada-to-Ontario

• Overnight trips from other Canada account for 75% of total other Canada visits to Ontario. Overnight trips from other Canada are expected to increase 1.8% in 2010, and then steadily thereafter.

• Total visits to Ontario from the other Canada will keep above 3.5 million level in the next five years, and it is expected to decrease 1.4% in 2010 but increase 2.3% in 2011.

• The same-day visitors contribute negatively to the visits from other provinces with a decline of 0.3% in 2010. However, after 2010 they will grow at an average of 2% annually.

Other Canada Non-Business Visits to Ontario(thousands)

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Same-Day

Total

Overnight



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Non-Business Travel: Total Overseas-to-Ontario

• The growth rate of total non-business overseas visits to Ontario will turn positive, starting in 2010. These visits will reach pre-recession levels in 2012, at 2.2 million visits.

• Overnight trips will increase 1.6% this year and a further 4.3% in 2011. Then they will increase at around 3% annually for the rest of the forecast period.

• Same day trips* will increase 2% (2010) and 3.5% (2011), and average increase 4.7% for the rest of forecasting period.

Overseas Non-Business Visits to Ontario (thousands)


0%

2%

4%

6%

2010 2011 2012 2013 2014

Same Day Overnight

*Same day trips: Almost all same day visits by overseas visitors are from the U.S., i.e. they take a trip to the U.S. and then they cross the border to visit Canada for the day.


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Non-Business Travel: UK-to-Ontario

• UK overnight visits will show no increase in 2010 but are expected to grow by 3% in 2011 and 3.4% in 2012.

• Total non-business visits will not exceed 0.3 million over the forecast period, but UK will keep its status as Ontario’s top overseas market.

UK Non-Business Visits to Ontario

150

200

250

300

350

400

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

UK

(thousands)



23

Non-Business Travel: France-to-Ontario

• France to Ontario market is Ontario’s second largest overseas market. Overnight visitors are expected to increase 1.1% in 2010, and another 2.5% in 2011 before reaching a steady growth of 3.4% per year over the period of 2012 to 2014.

• The total number of non-business visitors from France will hold over 0.1 million over the forecast period from 2010 to 2014.

France Non-Business Visits to Ontario(thousands)

20

40

60

80

100

120

140

160

180

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

France



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Non-Business Travel: Germany-to-Ontario• The German market is another solid

overseas market for Ontario. Overnight visitors are expected to increase 1% in 2010, and have relatively steady growth of 2% each year from 2011 to 2014.

• Total non-business visits are forecast to reach 0.1 million in 2013.

Germany Non-Business Visits to Ontario(thousands)

20

40

60

80

100

120

140

160

180

200

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Germany



25

Non-Business Travel: Japan-to-Ontario

• Visits from Japan will continue to decline – by 8.3% in 2010 and another 2.7% in 2011. Then it will turn to positive growth until the end of the forecast period.

• Total non-business visits from Japan will stay below 0.1 million from 2010 to 2013, but above the lowest point of 70 thousands reached in 2003.

Japan Non-Business Visits to Ontario(thousands)

20

40

60

80

100

120

140

160

180

200

220

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Japan



26

Non-Business Travel: Other Overseas-to-Ontario

• Other overseas visits will pick up faster than Ontario’s main overseas markets, supported by the better than expected economic performance in the emerging markets.

• Real GDP in China is expected to increase 9.6% in 2010 and 9% in 2011, while Mexico’s GDP will increase 4.4% in 2010 and 5% in 2011. The Indian economy is forecast to grow 7% in 2010 and another increase 9% in 2011.

• Total visits are expected to increase 2.8% in 2010, another 5.8% in 2011 and another 5.9% in 2012.

Other Overseas Non-Business Visits to Ontario(thousands)


20

220

420

620

820

1,020

1,220

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Overseas

II. Inbound Travel to Ontario ii. Business

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Inbound Business Travel to Ontario

• In 2010, U.S. business trips to Ontario will decline by 4.3%, followed by a 1.7% increase next year. This market will then grow at an annual average rate of 2.7% between 2012 to 2014.

• The domestic markets will share a similar growth pattern.

• Other Canada to Ontario will increase 1% in 2010, and at a steady pace for the rest of period. The Ontario market will increase 1.3% this year, and 1.7% annually afterward.

• Business trips are expected to show a better performance than non-business trips during the period of economic recovery.

Business Visits to Ontario(thousands)

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

2010 2011 2012 2013 2014

U.S.ONOther CA


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IV. Outbound Travel

III. Outbound Travel from Ontario i. Non-Business

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Overnight Non-Business Outbound Travel

• Driven by the high Canadian dollar and Ontario’s strong economic recovery, the number of Ontarians travelling to the U.S. for one or more nights is expected to increase by 8.3% in 2010 and 5.2% in 2011. This number will grow at an average annual rate of 3.7%.

• In 2010, overnight visits to overseas countries will reach 3.7 million while to the rest of Canada will reach 3.3 million. By 2014, 4.6 million Ontarians are expected to travel to overseas countries and 3.6 million to other Canadian provinces.

Non-Business Overnight Ontario Outbound

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1990 1993 1996 1999 2002 2005 2008 2011 2014

U.S.

Canada

Overseas

(thousands)


III. Outbound Travel from Ontario i. Non-Business

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Same-day Non-Business Outbound Travel

• Same-day non-business travellers from Ontario to U.S. destinations will decrease 1.2% in 2010 due to the high gasoline prices and passport requirement.

• However, same-day visits to the U.S. will increase 3.6% in 2011 due to the high Canadian dollar and stronger Ontario economy. As well, the impact of passport requirements and high gasoline prices will gradually fade out.

• Visits to Canadian destinations outside Ontario are expected to increase by 1.4% in 2010 and 2.6% in 2011, and then back to 1.5% annual growth rates between 2012 and 2014.

Non-Business Same-day Ontario Outbound

700

800

900

1,000

1,100

1,200

1,300

1982 1987 1992 1997 2002 2007 20128,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

CanadaUS

(thousands)

To U

.S.

To C

anad

a


III. Outbound Travel from Ontario i. Business

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Business Outbound Travel• Ontarians’ business trips will increase in

2010 mainly due to the global recovery. – Business trips from Ontario to the

U.S. will increase by 1.4% in 2010 and up 4.1% in 2011, and grow at average of 3.2% per year between 2012 and 2014.

Business Ontario Outbound

2500

3000

3500

4000

4500

5000

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

(thousands)


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V. Q & A

We Know. Just Ask.

Ontario Tourism Outlook - Ontario Ministry of Tourism ...2 Contents I. Ontario’s Economic Outlook...

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