Submitted by the Tourism Industry Association of Canada (edited for length)
This morning, Beth Potter, president and CEO of the Tourism Industry Association of Canada (TIAC), gave a state of the tourism industry report in the context of the pending federal election.
Potter outlined that the tourism industry was the first hit, hardest hit, and will be the last to recover from the pandemic crisis. The impact on the visitor economy has been greater than SARS, the 2008 economic crisis, and 9/11 combined.
In a report prepared by TIAC researchers, Potter made clear that, “Prior to COVID-19, tourism was Canada’s fifth largest sector sustaining more than 1.8 million jobs. But since the pandemic, the industry has lost two summer seasons, drained financial reserves, taken on massive debt and now has difficulty attracting enough employees as it strives to relaunch.”
Potter then added, “without the economic jargon, tourism is on the brink of disaster without continued federal support.”
An industry-wide survey of tourism businesses in every province and territory indicated:
- Almost 40 per cent of respondents say they would have to shut down their businesses today if they no longer received support from government programs.
- One-third of respondents expect more than a 50 per cent decline in revenue in 2021 compared to 2020.
- One-third of respondents lost between 75 per cent and 100 per cent of revenue compared to the same time in 2019.
- Sixty-four per cent of respondents indicated low cash flow as a challenge facing their business, with a majority citing financial shortfall and burden as the biggest risk currently impacting them.
- Almost half of respondents have taken on over $50,000 in debt to keep their business afloat.
- Majority of respondents predict it will take between one to three years for sufficient tourism demand to return to the pre-pandemic level of profitability.
- Sixty-five per cent of respondents accessed the Canada Emergency Wage Subsidy (CEWS), and 35 per cent accessed the Canada Emergency Rent Subsidy (CERS).
Potter highlighted the report’s conclusions that “even with extensive vaccinations and the gradual lifting of restrictions, a bleak fall and winter is certain. There will be no conventions, limited business and government travel, and the wind-down of support programs (CEWS and CERS) could not come at a worse time.”
On the eve of the federal leaders’ debate, Potter urged “all parties to support a qualified and limited financial.support program from September 2021 to May 2022 to the hardest-hit businesses.”
- Survival support for the hardest-hit tourism, hotel and event businesses of any size that have experienced a 40 per cent loss in revenue in any 12-month period after March 31, 2020.
- Government support would cover negative cash flow from normal financial operations (i.e., excluding capital expenditures and non-cash items such as depreciation or accruals). Support not to exceed 75 per cent of normal cash expenditures.
- Program to run from September 1, 2021 to May 31, 2022. Cash flow calculated on a cumulative basis inclusive of CEWS and CERS.
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