The NRTT represents the full value chain of Canada's $82 billion travel and tourism sector

TRAVELERS

Outside Goods and Services Local Goods and ServicesEmployment + Sales + Taxes + Wages

Air Cruise Lines Train Auto

LeisureFood Retail Resorts

ConventionsLodging

Agriculture Pensions Education

TouringBusiness

Outdoor

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Canada’s Travel and Tourism Industry

Committed to Travel Economy Growth

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“Canada’s spectacular beauty attracts visitors from across the globe to every region of our country. These visitors create jobs and sustain local economies. Our Government will continue to work with industry partners to promote Canada as a top destination for tourism.”

Speech from the Throne, 2nd Session 41st Parliament, October 17 , 2013

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Shared Objectives

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• Grow export revenues and diversity the Canadian economy• Drive the broader prosperity agenda creating private sector investment

opportunities in Canada & jobs in every region of the country

Canada Europe Free Trade Agreement

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• Travel between countries is a precursor to trade and investment.

• Canada is engaged in Free trade agreements with over 60 countries, and Air Transport Agreements with 65 countries.

• Canada will not enjoy the full economic benefits of these agreements until public policy impediments concerning aviation cost structure are addressed.

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An Unparalleled Economic Opportunity

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• Tourism is the world’s 4th fastest growing industry• 1 billion international travellers $1 trillion

in revenues• 4% growth globally per year

• Tourism’s footprint in Canada alone:• $84.8 B in economic activity• $17.3 B in export revenue (#1 service export

sector)• $9.6 B in federal government revenue• 614,600 jobs

Canada is performing well domestically – but falling behind internationallycontinued barrier deductions will improve Canada’s competitive advantage

Visitor Mix Key To Growth

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IncrementalGrowth

AdditionalVisitors

Average Room Rate

Average Room Nights Generated

p.p.

Total Add’l Room Nights Generated

Additional Hotel Revenue (Canada)

4% 652,000 $129.00* 3.5** 2,282,000 $294M

*2011 Average (rounded). Source: Hotels Association of Canada. **Source: Estimates from TIAC and HLT Advisory

4% incremental growth would drive over $3B in valuations for the accommodation sector alone.

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International Visitation - A Long Climb Back

• In 2012, Canada improved to 16thin international arrivals (from 18th)

• Despite this modest improvement, we’re still short of 2002 levels by about 3.8 million visitors

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Source: UN World Tourism Organization

International Tourist Arrivals ‐ (Top 20 Countries – in millions)

Rank 2002 2011 2012

1 France  77.0 France (2010) 77.1 France 83.02 Spain  52.3 U.S.  62.3 U.S. (2011) 62.33 U.S.  43.6 China 57.6 China 57.74 Italy  39.8 Spain 56.7 Spain 57.75 China  36.8 Italy 46.1 Italy 46.46 U.K.  24.2 Turkey 29.3 Turkey 35.77 Canada  20.1 U.K. (2010) 28.3 Germany 30.48 Mexico  19.7 Germany 28.4 U.K. 29.39 Austria  18.6 Malaysia 24.7 Russian Fed. 25.710 Germany  18.0 Austria 23.0 Malaysia 25.011 Hong Kong  16.6 Russian Fed. 22.7 Austria 24.212 Hungary  15.9 Mexico 22.7 Hong Kong 23.813 Greece  14.2 Hong Kong  22.3 Mexico 23.114 Poland  14.0 Ukraine 21.4 Ukraine 23.015 Malaysia  13.3 Thailand 19.1 Thailand 22.416 Turkey 12.8 Saudi Arabia 17.3 Canada 16.317 Portugal 11.6 Greece 16.4 Greece 15.518 Thailand 10.9 Canada 16.0 Poland 14.819 Ukraine 10.5 Poland 13.4 Saudi Arabia 13.720 Netherlands 9.6 Macau 12.9 Macao (China) 13.6

Competitiveness Challenges : Policy Measures

MARKETING

ACCESS

PRODUCT & PEOPLE

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A competitively funded marketing effort that drives alignment and can balance key and emerging markets – including US.

A modern aviation and visitor facilitation structure enabling the “mobility economy”.

Addressing infrastructure, programming and labour market issues.

Competitive Challenge Marketing : Investment & Alignment

• Major competitors have increased international tourism marketing investments – i.e. Brand USA into Canada

• Timing is right to re-evaluate approach to the US market

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Connecting America: A Partnership For Prosperity

• Connecting America is an industry sponsored proposal for a new three-year coordinated, targeted and measurable tourism marketing co-investment initiative to re-energize the US consumer, utilizing existing air and ground access:

• Proposed 3 year federal marketing investment of $35M/yr matched 1:1 by Provincial, Local and Private sector investment

• Generating $210M in federal tax revenue alone• Providing or sustaining over 6,000 direct jobs

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Connecting America – Visitor Impact

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110

$70

280

$150

Converted Travellers(,000s)

Tourism Receipts ($M)

Quebec

140

$105

70

$35

Converted Travellers (,000s)

Tourism Receipts ($M)

Alberta

10

$5

60

$35

Converted Travellers (,000s)

Tourism Receipts ($M)

Atlantic

370

$230

940

$520

Converted Travellers (,000s)

Tourism Receipts ($M)

Ontario

15

$10

50

$30

Converted Travellers (,000s)

Tourism Receipts ($M)

Saskatchewan - Manitoba

180

$130

380

$210

Converted Travellers (,000s)

Tourism Receipts ($M)

British Columbia

Connecting America - Economic Impact

CANADA’S TOURISM POTENTIAL YEAR 1 YEAR 2 YEAR 3 TOTAL

Converted Travellers (,000s) 440 850 1,360 2,650

Tourism Receipts ($M) 250 500 810 1,560

Federal Government Revenue ($M) 30 70 110 210

Jobs Supported 1,900 3,700 6,000 ---

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Conservatives Agree

“iii) We support the reduction or elimination of federal government fees, levies, taxes and rents, hidden and otherwise, associated with Canada’s national transportation system”

Transportation Principles, Policy Declaration of Conservative Party of Canada 2011

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Competitiveness Challenge: Aviation

• Canada is a “fly-to” destination, but our cost structure is a barrier to success

• Canada is ranked 5th with regards to access, but 136th based on aviation cost structure*

• Increasing competition requires:

• Aviation cost structure (Transport & Finance)• Passenger Facilitation (CIC & CBSA)• Air Access Agreements (Transport & Trade)

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*Source: World Economic Forum Travel and Tourism Competitiveness Report

Competitive Challenge Facilitation: Visa and Border Issues

Significant progress made - more to do!

Current Recommendations:

• Reducing red tape using technology (ETA) – leading to Visa Waiver for markets like Mexico & Brazil

• Optimizing Existing Security Infrastructure (Beyond the Borders)

• Reinvest in Visa Processing

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Conservatives Agree

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“vii) refrain from using the term ‘resident’ or ‘residence’ in temporary, student and visitor visas to ensure greater certainty for those temporarily visiting Canada.``

Entry Applications, Permits and Landing fees. Policy Declaration of Conservative Party of Canada 2011

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Recommendations to Achieve 4% Annual Growth

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1. Partner with the travel and tourism industry in Connecting America, an unprecedented strategically-aligned marketing initiative to drive US leisure demand for tourism vacation product across Canada

2. Reduce the government-imposed aviation cost burden in order to maximize economic benefits for Canadians of international Open Skies and Free Trade agreements.

3. Modernize our visitor visa system by differentiating between travellers and residents• Increase on line processing of traveller visa applications from key source markets; • Build on our information-sharing and security partnership with the US to establish a

reciprocal trusted-traveller visa waiver system for travellers from key markets;• Grant visa waiver status for Brazil and Mexico leisure and business travellers.

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