Annual Fall Tourism Conference

Grey Bruce Annual Fall Tourism Conference Fall 2009 : 

Grey Bruce Annual Fall Tourism Conference Fall 2009 Norm Smith Professor; Coordinator: Laurentian@Georgian, Bachelor of Business Administration

Tourism: : 

Tourism: What we have come through Economic fundamentals Economics of the Tourism Sector Q & A

The roots of the problem: : 

The roots of the problem: The economic crisis of fall 2008 was rooted in systemic credit problems and confidence in the financial system What oxygen is to mammals, confidence is to business

Slide 4: 

How would you respond to the market mayhem from fall 2008?

Fall 2008 : 

Fall 2008 Commodity sell off $9.5 t. sell off an deleveraging of stocks worldwide ($600b. In Canada) U.S. and European nationalization of banks Failure of major investment banks (Lehman’s) Structural shift in the U.S. Housing market due to imprudent lending practices

Housing Market troubles : 

Housing Market troubles NINJNA: Among the issues that sparked the fall 2009 market decline was the phenomena of the NINJNA (No Income, No Job, No Assets) Housing bubble meltdown:

Fall 2008 Financial Crisis : 

Fall 2008 Financial Crisis Commodity Price collapse:

Adding to the problems: Derivatives: : 

Adding to the problems: Derivatives: Mortgages bundled through Structured Investment Vehicles with terrific sounding marketing names: High Grade Structured Credit Strategic Fund These SIVs were derived from underlying values based on US Mortgages Today we call these “toxic mortgages”

Freddie Mac and Fannie Mae : 

Freddie Mac and Fannie Mae The near collapse of the financial system meant that someone had to bail things out – Guess who’s coming to dinner? Ask not for whom the bell tolls – it tolls for thee

The response: : 

The response: An unprecedented global response in terms of Monetary and Fiscal Policy: Interest rates at historic lows Troubled Asset Relief Program (TARP) - $700b Auto Bailouts (ongoing) Additional stimulus packages

MONETARY and FISCAL STIMULUS: : 

MONETARY and FISCAL STIMULUS: Coordinated international efforts to reduce interest rates to stimulate Aggregate spending Significant deficit spending coordinated by the G20. The emergence of the G20 and decline of the G8 (or G7) John Maynard Keynes reborn

Stimulating the housing sector: : 

Stimulating the housing sector: Through a low interest rate policy and the buying of toxic assets the Treasury department attempts to resurrect the Housing Market

Quantitative easing : 

Quantitative easing Inflation Too much money chasing too few goods His happens when interest rates are virtually at 0% and the Bank of Canada has no further room to move.

Good news: : 

Good news: Canada: Budgets Canada enjoyed 13 consecutive budget surpluses beginning in 1990 Debt to GDP was at a 1960 level and falling (less than 40%) We were positioned to be able to rack up the debts again

More good news: : 

More good news: On many economic measures Canada was positioned including: Inflation: excluding energy CPI rose 1.3% between September 2008 and September 2009. Unemployment fell to 8.4% in September 2009 (from 8.7%); Employment increased by 31000 in September 2009.

Economic Fundamentals currently: : 

Economic Fundamentals currently: Investment - Savings Exports – Imports Government spending - Taxation

The bad news: : 

The bad news: USA Our major trading partner is not as well positioned US deficits are projected to increase significantly and is approaching 100% of GDP. Chronic Balance of Trade deficits have had to be financed by capital inflows Lack of confidence

More bad news: : 

More bad news: Protectionist sentiments (Buy American) associated with nationalism can evoke memories of the 1930s Great Depression – we are dependant on Trade with US.

Opportunity and threat: : 

Opportunity and threat: The reality of reaching peak oil necessitates changing behaviour We are reluctant, but nonetheless there are real green shoots and a recognition that business as usual is not sustainable

Canada’s Tourism Performance: : 

Canada’s Tourism Performance: First Quarter 2009: Total Tourism spending down by 3.1% (Compared to 2008) $13.6 billion Spending from Canadians fell 1.8% Spending from international visitors fell 9.0% First decline since post 9/11

Tourism 2007: Quick facts:(Source: Ministry of Tourism) : 

Tourism 2007: Quick facts:(Source: Ministry of Tourism) Total World Tourism Receipts: $4.845 b. (U.S.) Percentage of world GDP: 9.0% Tourism Employment: 79131000 jobs Percentage of world employment: 2.8% Consumer Spending on Tourism: $2.920 b Percentage of world spending: 9.2%

Ontario’s Tourism (2007):Source: Ministry of Tourism : 

Ontario’s Tourism (2007):Source: Ministry of Tourism Total Receipts: $22.1 b (CDN) Percent of provincial GDP: 3.8% Tourism Employment: 200900 Percent of provincial employment: 3.0% Provincial Tourism tax revenue: $2.6 b Percent of provincial tax revenues: 3.7% Municipal tax revenues: $571m Federal tax revenue: $3.2 b Ontarians’ spending on Tourism: $25.2 b Percent of total personal spending: 7.5%

Contraction in spending: : 

Contraction in spending: Transportation down by 7.5% Pre trip expenditure down by 2.1 % Convention fees down by 1.6% Accommodation down by 1.5%

Total Tourism Employment in Canada:First Quarter 2009 (RED) : 

Total Tourism Employment in Canada:First Quarter 2009 (RED) Down by 1.3% 623000 full and part time jobs Accommodation down by 4.9% Food and beverage up by 1.6% Recreation and entertainment up by 1.5%

World’s top international tourism (2008) – Ministry of Tourism: : 

World’s top international tourism (2008) – Ministry of Tourism: International Expenditures $B- US)s): Germany: $82.9 USA: $76.2 3. UK: $72.3 8. Canada: $24.8 N.A. Ontario: $9.2 International Receipts ($B – US) 1. USA: $96.7 2. Spain: $57.8 3. France: $54.2 12. Canada: 15.5 N.A. Ontario: $4.1 Generally we spend more in other countries than in our own.

International Arrivals (millions) : 

International Arrivals (millions) 1. France: 81.9 2. Spain: 59.2 3. USA: 56.0 11: Canada: 17.9 N.A.: Ontario: 8.5

Travellers’ Characteristics: (Source: Canadian Tourism Commission) : 

Travellers’ Characteristics: (Source: Canadian Tourism Commission) AGE (000s) 24 and under: 2379.8 25-34: 1831.9 35-44: 2464.2 45-54: 3047.1 55+: 6077.6 Gender: Male: 51.2% Female: 48.8%

Main Trip Purpose: Canada: (000’s) : 

Main Trip Purpose: Canada: (000’s) Business: 2630.2 VFR: 4036.5 Pleasure: 8767.3 Other: 1533.2

Seasonality (000s): : 

Seasonality (000s): 1st quarter: 2404.0 2nd quarter: 4527.4 3rd quarter: 6995.1 4th quarter: 3040.7

Provinces visited (000s): : 

Provinces visited (000s): Nfld: 69.1 PEI: 153.6 NS: 460.2 NB: 390.8 Quebec: 2970.1 Ontario: 8263.0 Sask: 193.7 Alberta: 1600.9 BC: 4544.2 Yukon: 211.7 NWT: 28.0 Nunavut: Not available

Thanks! Any Questions? : 

Thanks! Any Questions?