Tourism

The Toronto region is one of the major tourist destinations in North America. It is a strong contributor to the region’s economy, bringing in revenues of $4 billion annually and providing our residents with some 95,000 direct jobs.

Tourism is a growth industry in North America, but unfortunately, even before the SARS outbreak, our industry was slipping significantly. Despite the lower Canadian dollar, Toronto has been losing tourism market share to other major North American destinations. Growth in visitors to Toronto between 1996 and 2000 was only 1.5 per cent per year – versus 5 per cent or more per year in cities such as New York, Boston, Montreal and Chicago.

Our economy is paying the price: total employment in the tourism sector declined by about 8 per cent between 1998 and 2000 for a loss of 6800 jobs. During this same time period, international tourism receipts increased worldwide by 7 per cent and in North America by 15 per cent. If we had simply held the share of the large-city North American tourism market we had in 1996, we would have generated an additional $650 million of output in the Toronto region in 2000 – money that would have found its way into thousands of small businesses across the city region’s economy. In addition, the Ontario government would have reaped an incremental $160 million in sales and income taxes and the federal government an incremental $160 million in total tax revenues.

The SARS epidemic of spring 2003 certainly had a short term effect on the tourism industry but it was already struggling. There are two fundamental reasons for the decline in tourism in the Toronto region: inadequate marketing and under-investment in our attractions.

Toronto spends much less on marketing than other cities that we compete with for tourists and the jobs that tourism can provide. Other major cities in North America generate funds for tourism promotion by charging a small fee on hotel rooms. Montreal, one of our region’s primary urban competitors, charges a hotel levy that generates about $8 to $9 million a year for tourism marketing and advertising – a considerable portion of Tourism Montreal’s annual budget. Fortunately, beginning in January 2004, more than 100 Toronto area hotels began voluntarily charging a Destination Marketing Fee consisting of a 3% charge on guests’ hotel room bills. This levy is expected to generate between $15 and $19 million in annual revenue and is collected by the Greater Toronto Hotel Association and then passed on directly to Tourism Toronto, where it will be dedicated to a global destination marketing initiative.

Other cities leverage their marketing funds with provincial and federal funds. Cities in British Columbia and Quebec, for instance, can match local marketing funds raised by their cities with provincial funds, which are eligible for matching funds from the national tourism support program funded through the Canadian Tourism Commission. Our provincial legislation lacks a mechanism to leverage matching provincial and federal tourism marketing funds. Ontario, and therefore the Toronto region, loses its share of national tourism marketing funds to other provinces.

The year 2004 also saw the launch of the Toronto Branding Strategy, a partnership of the City of Toronto, Tourism Toronto, the Ontario Ministry of Tourism and Recreation and the Toront03 Alliance- a TCSA initiative. The project will examine how Toronto’s image locally, nationally and internationally can be revitalized and strengthened through a new brand identity. Implementation of the new brand is expected to begin in early 2005.

Stronger promotion of the Toronto region as a visitor destination will help attract more tourists, but if we want to grow tourism in the longer term, we must improve our “product” as well. The new investments in the Royal Ontario Museum, the Science Centre, the Art Gallery of Ontario, The Four Seasons Centre for the Performing Arts and other cultural facilities will help. However, our existing cultural attractions – attractions that reflect our diversity and uniqueness – must be given not just the capital, but also the operating funds necessary to compete on an international stage. Having secured the funding base for our existing attractions, Toronto should look ahead to consider establishing at least a few new world-class tourist destinations to ensure the long term health of our tourism industry.