Tourism industry could struggle to meet expected increase in demand, economist says

Scotiabank's chief economist says it could be difficult for the Atlantic Canadian tourism industry to meet increased demand this year, but operators are optimistic they'll be ready to accommodate travellers.

As first reported by The Canadian Press, Jean-Franois Perrault, Scotiabank senior vice-president and chief economist, believes there will likely soon be many people looking to travel.

Perrault says government supports like the Canada emergency response benefit have helped many households remain in decent financial shape, and because travel has been limited by the pandemic, that could make for a quick increase in tourism.

"We know that there is pent-up demand for a lot of goods and services that they haven't been able to take advantage of over the last number of months. Of all the services where there has been, you can argue, the most pent-up demand, and so the least ability to do stuff, it's very much on the travel side," he told CBC News.

"It just stands to reason that if we reopen, given that people will be able to afford to go out and travel, that we should see a pretty significant pickup in travel-related activities there on the East Coast, to the extent that the bubble opens up."

There's too many people chasing too few accomodation opportunities, or tours or whatever it may be, depending on the region.-Jean-Franois Perrault

Since the pandemic began, Perrault said,there's been "supply destruction" in the tourism industry, as restaurants, hotels and other businesses have closed. He said that could make it difficult for the industry to keep up with increased demand.

"It's possible that as we re-engage on the travel side, that given the extent of what we think is this pent-up demand, that the surge in travel-related expenditures might potentially cause some problems on the supply side," he said.

"That is to say, that there's too many people chasing too few accommodation opportunities, or tours or whatever it may be, depending on the region."

Perrault's concerns with supply destruction are in line with the findings of the interim report from the premier's advisory council on tourism, released last week.

The report paints a dismal picture of the tourism industry in the past year, with 10 per cent of businesses leaving the industry and 45 per cent saying they don't see a future if they're not able to open this year.

COVID-19 still a risk

Perrault said while many businesses have closed, there have been relatively few bankruptcies, and that could help the industryrecover more quickly. But, he said, the possibility of another COVID-19 outbreak is always looming.

"We are still fighting a virus," Perrault said.

"If you're an operator in this industry, you're thinking, 'Well, we're now dealing with a third wave, hopefully the vaccinations go well, there could be variants, there could be mutations, it's difficult for me to be 100 per cent certain that I will be able to reopen at some point in summer.'"

During his appearance at the provincial briefing on March 17, Dr. Proton Rahman said many of the COVID-19 cases that arrive in the province comefrom Ontario, where experts are predicting a third wave.

He said that could cause the virus to spreadin Newfoundland and Labrador as well, with many of the cases the more transmissibleB117 variant.

"For every case that lands at our border from Ontario from now on, there's a 50 per cent chance that they will have the B117 variant," Rahman said.

"We really have to respect the new variant, because more transmission means more cases means more health consequences."

Increasing hope for operators

That hasn't hampered John Fisher's optimism.

Fisher, who runs Fishers' Loft Inn in Port Rexton, says with vaccines rolling out and rapid testing possible, he hopes he'll be able to welcome guests from central and western Canada this summer, which usually make up about 80 per cent of his business.

"It is possible that we will not only have the Atlantic bubble, but that we might have the rest of Canada before the season is out, and that may salvage it for this year," he said.

"I'm going into this with more optimism actually today than I have for the last year and a half."

Fisher said he's had enough bookings for May from locals that he'll be able to cover staff wages and other expenses, but he's still well below having a full house.

Despite his hope for the future, Fisher's preparing for anything.

"Things are so fluid. This is a difficulty in planning. So what we're doing is we are simply positioning ourselves to capture this on the assumption that all of this works out," he said.

"But I think there's a better than an even chance that it will work out. There will be a reduction in the isolation requirements."

Industry needs 'some good news'

An uptick in demand this summer, said Fisher, would come at a time when many tourism operators sorely need it, and in an industry that he said supports about 25,000 jobs inrural parts of the province.

"People do want to travel, and I think this industry right now is on its knees. I'm hearing stories of people who pay for their houses but are having to remortgage them to salvage their businesses," he said.

"It's reached a really critical point.I think last year was manageable, [but] this year, it's crisis. So we have to have some good news. And I'm not just sort of being wishful thinking;I really think that there will be good news. My goodness, within a year we developed vaccines, which was unheard of. Nobody had ever thought that could be done."

Given tourism's significance to the province's economy, Fisher said the focuse should be on getting people in the industry back to work.

"This is not about people who own businesses and how much money they can make. This is about giving people back their jobs, their sociability. It's also about generating the millions of dollars and billions of dollars of taxes that come out of tourism," he said.

"People bring new money into this province and they actually pay our taxes and we pay taxes as a consequence of that. So I think the entrepreneur and people like me, I think we're bottom of the heap in terms of what we should be worrying about. It's jobs and taxes we need to be caring about now."

I think Newfoundland and Labrador is very well positioned.- John Fisher

The pent-up demand for travel is there, Fisher said, and he says tourism operators in the province will rise to meet the demand.

"It's just in the way of life now that we travel, we expect to travel. We want to travel. And so to be without that, I think people have some pent up demand and they also have some pent up money," he said.

"I think that's a very good chance that people will take hold of this. And I think if it happens in Canada before people can fly out of Canada to international destinations, I think Newfoundland and Labrador is very well positioned to exploit that situation."

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