Key Insights from the US Market Survey

Ontario will head to the polls on February 27. As we navigate the next few weeks, stay tuned for TIAO’s election priorities as we launch our toolkit and materials to ensure you, our members, have access to messaging and know exactly how you can get involved.

During this time of political and economic uncertainty, particularly in the Canada-U.S. relationship, TIAO will remain in front and focused on protecting the industry. The U.S. market represents 22% of tourism spending in Ontario, making cross-border travel and trade essential to our industry’s health. Shifts in immigration policies, tariffs, and trade agreements will have significant effects on travel patterns and consumer behavior in the year ahead. Our collective responsiveness to those risks and opportunities is critical. Thank you to all of those who took the time to fill out our survey last week as we look to understand the impact of U.S. visitation and trade on the province’s tourism industry. With more than 200 member responses across all regions of the province, you have provided us with critical insights to help us bring recommendations to candidates right away!

KEY SURVEY FINDINGS

1. US Inbound Market – uneven recovery across Ontario

   Many respondents noted that the significant drop in US visitors during the COVID-19 pandemic have not fully recovered to historic levels and growth rates. Some respondents mentioned a 50% increase in visitors after vaccination requirements were dropped, however, 41% of respondents have seen a change in the number of visitors from the United States over the last season, with majority of respondents making up accommodators and outfitters.

    

   The recovery of US visitor numbers varies by region. For example, Niagara has seen a significant increase in US visitors, while other areas are still experiencing lower numbers. Some regions, like Northwestern Ontario, heavily rely on US visitors and this market is seen as vital for tourism, making the decline more noticeable.

    

   Economic downturns have also contributed to the decline in US visitors and increasingly we are seeing that political events, such recent elections, have caused fluctuations in visitor numbers. While some areas and businesses are seeing a rebound, others are still facing challenges in attracting US tourists.

    

2. Exchange Rates – indications of an opportunity

   Several respondents noted an increase in US visitors due to the favorable exchange rate, with the strength of the US dollar compared to the Canadian dollar making travel to Canada more attractive for Americans in some cases. Yet, seasonal businesses and those located near the border have seen varying impacts. Some have reported record numbers of guests, while others are still struggling to attract US visitors.

    

   With the current political environment in mind, investment in marketing of Ontario products to US travelers, especially cross border advertising campaigns, is critical. So too is diversifying markets to mitigate risk. TIAO is recommending that Destination Ontario’s annual marketing funding be increased by $15 million to ensure Ontario can compete with provinces to attract a leading share of domestic, U.S., and overseas visitors. This investment can also help to address real and perceived barriers at border crossings during this time.
    

3. US Goods and Services Sourcing - business cost inflation risk

   Almost 30% of respondent’s businesses regularly source goods and services from the United States, with dollar amounts ranging from $10,000 to over $1 million annually, reflecting the diverse needs and sizes of organizations.

    

   The most commonly reported spending range is $10,000 to $100,000. Many businesses rely on US suppliers for specialized goods and services that are either unavailable in Canada or required due to industry-specific standards (e.g., boats, equipment, software, and programming supplies).

    

   Some businesses minimize spending on US-sourced goods due to the strong US dollar, exchange rate volatility, and import/shipping fees. These factors influence businesses to prioritize Canadian suppliers whenever possible. But, only a small percentage (approximately 10-15%) stated they spend nothing on US goods, often because they prioritize local or Canadian suppliers, with many businesses often facing limited options when sourcing specific equipment or supplies, making US imports necessary despite additional costs. The looming tariff threat will have a significant impact on these businesses.
    

   1. Uncertainty – impacting optimism

      Overall, uncertainty about future political and economic conditions is a common theme. Businesses are concerned about how changes in administrations and policies will affect tourism. Political tensions and economic policies, such as tariffs, are a key concern.

       

      These findings emphasize the vital role that the US economy and visitors play in Ontario's tourism industry. Although the strong US dollar and favorable exchange rates provide an opportunity, uncertainty relating to challenges such as border regulations, political tensions, the threat of tariffs on goods and services and inflationary impacts on businesses still persist. Tackling these concerns will be essential for maintaining and increasing the flow of US visitors in the future.