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Canada Market Profile

California’s North American neighbor remains a formative force in California’s tourism economy. With steady growth and a 5.4 % increase in airlift to many California gateways which continues to showcase California as a year round destination. Visit California’s marketing strategy includes an East/West approach to target the differences of the travelers from the various provinces.

 


MAJOR TAKEAWAYS

  • 42.5 percent of Canadians cited the strength of the Canadian dollar as a major factor in their trip activity.
  • California is seen as a sunny escape during the chilly Canadian winters, especially to those out East.
  • The foreign-born population of Canada is increasing, and heavily skewed towards Asian-born persons.
  • Beaches, historical sites, outdoor recreational activities, shopping, and culinary/wine are key motivators.

Canada Profile

1.722 Million
In-Person Trips, 2018
$2.394 Billion
Visitor Spending, 2018

Market Conditions

GDP Annual Growth Rate

Third quarter GDP growth was moderate as expected to 2.0% from the 2.9% gain recorded in Q2 but has remained within economist estimates. On another positive note, a healthy job market has resulted in strong consumer confidence rates. The national consumer confidence rating was 119.6 points in October 2018, a 3.0-point increase compared to last year. While economic performance will undoubtedly be challenged by trade uncertainty, the top four performing provinces — Alberta, British Columbia, Ontario and Quebec — also produce the highest volume of travelers so healthy economic growth in these regions will positively impact outbound travel activity.

Exchange Rate

  • 1 Canadian Dollar equals 0.7538 U.S. Dollar
  • After quickly losing 25% of its value and dropping to its lowest level in over a decade, the loonie has now stabilized against the U.S. currency. The dollar saw some gains last year and is forecasted to stay in the high-seventy-cent range throughout 2018 and 2019 before creeping up again to average eighty cents U.S. by 2022.


Travel & Planning Methodologies

Airlift

  • 422 weekly non stop flights
  • 60,000 weekly non stop seats (+4.5%)

Since 2012, direct air capacity to the U.S. has increased at an average of 2.1 percent through 2017. California, Florida, New York, Illinois and Texas accounted for just over one-half (52%) of direct capacity in 2017. However, Florida and New York saw fewer direct seats during that period while California saw new and expanded service.

Booking

The time a Canadian will begin the planning phase differs depending on how the destination is being reached (i.e. car, short-haul air, long-haul air).

  • Trips involving air travel are researched further in advance. Long-haul trips have the longest planning time with more than 43% beginning research at least six months in advance.
  • Planning for short-haul trips typically takes place closer to departure, with 71% planning up to six months in advance.
  • Destinations reached by car have the shortest planning phase, with 57% of Canadians planning their trip less than three months away from departure.
  • Airfare is booked closer to departure date (six months ahead or less).

Market Barriers & Risk Factors

 


Competitive Landscape

The United States remains the top international destination for Canada by a large margin with over 16M trips to the U.S. reported between January and September, 2018. This represents an increase of 6.4% YOY. The United Kingdom, China and France are the next most popular destinations for Canadian outbound travelers.

Top states visited continue to be Florida, New York, California, Illinois and Texas.

While California saw year-over-year growth in air service in both 2017 and 2018, some of the increase introduced for Texas in 2017 is now being scaled back this year. Meanwhile Florida, New York, and Nevada are regaining the capacity lost in 2017.

For travelers seeking certain amenities or attractions, select cities continue to be of most interest:


Other Market Insights

MARKET

Over the next several years, the Canadian consumer could look quite different. One notable trend is the increase in the foreign born population in Canada. By 2031, it’s estimated that Canada’s minority population could rise by 14% and will be heavily skewed towards Asian-born persons. Eastern Canadians and Asian-born Western Canadians will continue to look to luxury-themed travel. According the Credit Suisse Global Wealth Report 2018, Canada is home to 3 percent of the world’s millionaires and is ranked 9th in the world in number of ultra-high net worth individuals.

Baby boomers continue to be the primary driver of out-bound travel performance. Looking ahead, the overall population of Canada is expected to increase to 39 million by 2025, with the largest changes reflected in the 55 and older cohorts which is a positive indicator for the travel and tourism industry because:

  • Older Canadians are healthier than they have been, wealthier and more mobile. This population is able to vacation for longer periods of time.
  • They are also wealthier then previous generations and have the resources to take their grown children on vacation.

PRODUCT EXPERIENCE

Outdoor recreation is a top experience for Canadians while on vacation. Canadian leisure travelers are looking for beaches, historical sites, outdoor recreational activities, shopping, culinary/wine and museums. California and its sunny Winter product continues to be a draw for Canadians, especially those from the East.

 


Sources

  • Royal Bank of Canada
  • The Conference Board of Canada
  • Tradingeconomics.com
  • Statistics Canada
  • Statistics Board of Canada
  • Bloomberg.com
  • Average weekly flights and seats, DIIO: January –December 2018
  • Development Counsellors International
  • U.S. Department of Commerce
  • Tourism Economics
  • U.S. National Travel & Tourism Office
  • Carat CCS
  • StatsCan