Toursim and Travel in Ontario: A Target for Northern Ontario Tourism

My last post was on border crossings into northwestern Ontario at Pigeon River and Rainy River.  This type of data has always interested me because my academic career began approximately when the Canadian cross-border shopping frenzy of the late 1980s and early 1990s took place. In 1980, Canadians made 22.1 million same day auto trips to the United States and this rose to 25.2 million in 1985 and hit 53.2 million in 1990.  As the graph below shows, the peak was in 1991 at close to 59 million trips before a decline set in and today the numbers are not even half that peak at 21.5 million for 2017. These trips by Canadians to the United States were a tourism flow into the US and a function of exchange rates, income, and relative prices of goods.  

What is also interesting when examining travel flows is province level numbers for the number of tourism visits, their origin, as well as the spending amounts.  The figure below plots total visits to Ontario from1998 to 2015 based on data from Ontario’s Ministry of Culture, Tourism and Sport which in turn is based on Statistics Canada travel survey data.  Total tourism visits in Ontario in 1998 were 129,646,000 and in 2015 they were 141,902,000.  The average annual growth rate of total trips was 0.6 percent - which does not seem that high. The average annual growth rate of trips in Ontario originating from Ontario was 1.7 percent, compared to 1.1 percent from the rest of Canada, 1.6 percent for overseas trips and -5.3 percent for the United States.  Ontario has been its own best growing tourism market accounting for 71 percent of visits in 1998 and 85 percent in 2015. The biggest decline has been in American visitors which over the period fell from 23 percent to 8 percent.

When total spending by these visitors is examined in the chart below, it suggests that spending has grown faster than the number of visitors particularly for overseas visitors to Ontario.  Indeed, spending by Ontarians visiting within Ontario grew at an annual average of 3.7 percent, that by other Canadians 3.7 percent, Americans -1.2 percent and overseas visitors by 6.9 percent.  Indeed, overseas visitors have definitely been punching above their weight when it comes to their spending on tourism visits to Ontario indicating that this is definitely an area where Ontario might wish to direct its marketing activities.  Spending by overseas visitors to Ontario surpassed that of Americans in 2013 and in 2015 was 50 percent higher. 

 

How important is this tourism visitor spending to Ontario’s economy-approximately 2 percent of Ontario’s GDP – but is has not changed much over the period 1998 to 2015.  It has not been growing as a share of GDP given that during this period there has been a decline in American spending that has counteracted the rise in spending by overseas and Canadian travelers.  

When it comes to marketing tourism in northern Ontario, the above data suggests two main targets for our energy: the rest of Ontario and the overseas market.  For the time being, the American market appears to have sunk into decline.

Cross Border Travel in Northwestern Ontario: An Update

From time to time, it is useful to review cross-border travel statistics in northwestern Ontario at the two main border crossings with the United States – Rainy River and Pigeon River.  These travel statistics are a nice indicator of the local state of tourism as well as economic activity.  Figure 1 presents monthly vehicles entering Canada at Pigeon River from 1990 to 2017 while Figure 2 does the same for Rainy River (Data Source: Statistics Canada).  Canadian and American vehicles are separated and a polynomial smooth is fitted to each series in an effort to summarize trends over time.

At Rainy River, Canadian vehicles entering have been in long-term decline while the US numbers have remained approximately the same despite some ebbs and flows.  Of note is the bit of a dip the Canadian vehicles at Rainy River numbers have taken since 2014 coupled with the uptick in the US numbers over the same period – no doubt a reflection of the depreciation of the Canadian dollar in recent years.  The downturn in Canadian vehicles coming back is even more pronounced at Pigeon River where there is a sharper drop since 2014 while the US numbers have nevertheless registered a small upswing.  However, the overall period from 1990 to 2014 was one of general increase in Canadian vehicles coming back.

 

 

In 2014, total Canadian vehicles entering Canada at Rainy River was 147,137 while at Pigeon River it was 230,179 compared to 135,149 and 170,904 respectively in 2017.  From 2014 to 2017, total Canadian vehicles entering Canada at Rainy River fell 8.1 percent while at Pigeon River the drop was 25.8 percent. Over the same period, US vehicles entering at Rainy River went from 28,686 to 35,272 – an increase of 23 percent – while at Pigeon River they went from 41,376 to 45,510 – an increase of 10 percent. 

When Will the Ring of Fire Heat Up?

On Friday afternoon, I did a brief presentation at the Impact of Development Conference/Workshop held at the historic Trinity United Church on Algoma Street in Thunder Bay.  My talk (which you can access here under "Looking Back and Looking Forward") was titled "Resources and the Northern and Northwestern Ontario Economies: Past, Present and Future."  Along with a quick survey of the economic history of northern Ontario and an overview of current economic indicators, I also opined on the current state of developments in the Ring of Fire.

For the benefit of those not fully acquainted with the Ring of Fire, it is of course the massive planned chromite mining and smelting development project in the mineral-rich James Bay Lowland region.  The area covers about 5,000 square kilometers but development has been slow.  Major players include Noront Resources, the Ontario government and nine first nations.  There have been a number of challenges including the cost of capital and transportation infrastructure to access the chromite, energy costs,  the lengthy environmental assessment process as well as the process of consultation and negotiation with the nine members of the Matawa Tribal council. You can get a very good detailed analysis of the issues in the Skogstad-Alahmar report here.

However, all of these challenges can be resolved once the real challenge is resolved: commodity prices.  Much of the hype in the Ring of Fire springs from the spike in ferro-chrome prices in the 2008-09 period which was followed by a collapse from which there has yet to be a recovery.  As the accompanying figure illustrates, there was a 60 percent drop in the price of ferro-chrome and the price has not gone anywhere since.



In the end, its all about commodity prices and until the market price goes up and makes the project profitable, not much else is going to happen.

The Impact of Development

There is going to be a conference on economic development ithis week.  The Impact of Development workshop will be held this Thursday and Friday at Trinity United Hall, 310 Park Street Thunder Bay and has been made possible through the support of the Resources, Economy, and Society Research Group (RESRG) at Lakehead University, ReSDA: Resources and Sustainable Development in the Arctic, Lakehead University Department of History, Canadian International Council – Thunder Bay Branch, and Lakehead University Faculty of Social Sciences and Humanities.


The focus of the conference is single industry communities and features presentations on northern Ontario, Atlantic Canada as well as the Arctic and even Latin America.  Among the resource sectors covered are forestry and mining.  Moreover, a glance at the program will illustrate that there will be a diverse set of perspectives available with respect to development.  I will be doing an overview on the resource sector experience in northwestern Ontario with a foray into mining and the Ring of Fire on the Friday afternoon.  See the program below.

Day 1



Day 2: Morning



Day 2: Afternoon
 
Everyone is welcome!

Recent Labour Force Numbers for Northern Ontario Are Not Pretty

Last week’s labour force numbers for Canada from Statistics Canada were seen as a bit of a shock given that employment fell by 88,000 in January. Part-time employment declined (-137,000), while full-time employment was up (+49,000). At the same time, the unemployment rate increased by 0.1 percentage points to 5.9%.  Ontario also declined by about 51,000 jobs and much of the loss was due to part-time work.  So how does northern Ontario compare when recent labour force estimates are looked at?

 

The accompanying figure looks at employment growth for northeast and northwest Ontario compared to Ontario and Canada between December 2017 and January 2018.  Whereas Ontario and Canada saw employment drop by just over one half of one percent, total employment in the northeast declined 2.4 percent while in the northwest it fell by 1.8 percent.  As well, the losses were more driven by full-time employment as it dropped 2.5 percent in the northeast and 2.3 percent in the northwest.  All one can hope is that the January numbers are a short-term aberration because northern Ontario saw its employment drop more than either Ontario or Canada and the northeast seems to have been hit harder.