[Recorded by Electronic Apparatus]
Thursday, February 20, 1997
.0941 
[English]
The Chairman: Pursuant to Standing Order 32(5), a review of the 1995-96 annual report of the Canadian Tourism Commission, I'd like to call the meeting to order and introduce the witnesses.
Doug Fyfe is the president of the Canadian Tourism Commission and Francine C. Boivin is the commission's vice-president of industry competitiveness. Welcome.
I assume, Mr. Fyfe, that you're going to lead. Perhaps you can make an opening statement. The committee has been looking forward to your presentation and several members have questions for you. We'd very much like the opening statements to be brief so we can get right into the questions from the members.
Mr. Doug Fyfe (President, Canadian Tourism Commission): Mr. Chairman, it's a pleasure to be here. I will be particularly brief. I don't have an opening statement. Actually, I have an opening apology.
I understand that it has been a difficult process to try to get the schedule of our chairman, who's based in Victoria and is a volunteer as a dollar-a-year man, to coincide with the committee's schedule. We were in Victoria yesterday and the day before for our board meeting. And obviously, he didn't come back, but I did. We understand that you do have a number of questions, and I suggest to the chair that my colleague and I would be quite prepared to take those questions and try to respond rather than make a formal statement, if that's satisfactory.
The Chairman: Now that you're here, everything is satisfactory.
Mr. Fyfe: Thank you, sir.
I'm very much in your hands. I believe you have the annual report. We've had more recent developments that we can speak to. Perhaps I could just simply turn it back to the chair and we'll try our best to answer the questions for you.
[Translation]
The Chairman: Mr. Brien, Mr. Mayfield worked on this commission. Would you be willing to allow him to begin?
[English]
Mr. Mayfield, would you like to begin?
Mr. Mayfield (Cariboo - Chilcotin): Thank you very much, I appreciate that.
And I very much appreciate you being here this morning. Thank you very much. I look forward to a useful exchange of information.
If I may, I want to begin by perhaps looking at some of the progress and some of the difficulties that it seems you're facing, based on the information I have. It seems like we had a couple of good years, with rising numbers of people coming to the country and decreasing numbers of Canadians going to foreign destinations.
The difficulty, though, is that last year that trend seemed to reverse. I believe the Conference Board put out an article projecting that the difficulty will be a continuing one. I have details in my hand that sort of back that up, but I don't suppose you need to be told that story, do you? Could you fill the committee in on the numbers, on the progress, and perhaps on what you see as some of the reasons for the difficulties that we're having in Canada in maintaining that progress?
.0945
Mr. Fyfe: You've accurately described the situation, Mr. Mayfield. We had three successive years of decline in the deficit, but that ended last year. Our deficit went back up by close to $400 million. It's largely a function of Canadians now going back to the U.S., a market that had shown a decline, in increasing numbers.
We believe there are a couple of reasons for this. One is adjustment to the sticker shock. When the exchange rate changed fairly dramatically, the price changed fairly dramatically, and therefore the consumers responded as they normally do: they ceased to buy that particular product. But over a period of time, the consumer adjusted to the re-established price level.
In tourism you can adjust by buying down from a four-star to a three-star hotel, by going to a mid-level restaurant rather than a luxury restaurant, or by shortening your stay from seven days to five days. There are ways in which you can adjust the price and then re-buy, and we see some of that occurring.
A second and equally important activity was open skies. While that created a significant increase in the number of Americans flying to Canada, a greater increase in Canadians flying to the U.S. also occurred. That contributed to the deficit, of course, and the difference between the two is roughly $400 million. The reason that happened just in the past year is that while American airports were open to all Canadians outbound, Vancouver, Montreal and Toronto are only coming open to inbound Americans now and in February of next year, beyond what was there before. So it was not a level playing field, and that's what the agreement was aimed at: protecting the airports. But the consequence is that more Canadians went out by air than had previously, and it exceeded the number of Americans coming in by air.
Those two components are essentially where the deficit issue is. Overseas traffic continues to grow quite strongly, and business travel from the U.S. is also up.
So to come to the conclusion of the answer, then, we would hope that the rebalancing of the airport structure this year - Montreal and Vancouver have been open to unlimited American flights since February 1 - will help to rebalance the air issue. We would also hope that increased promotion in Canada will attempt to keep at home some of the Canadians who would otherwise leave the country, particularly in the summertime.
Mr. Mayfield: We have projected rates of anticipated visitors. Has there been a decline in that rate, or is it still increasing, Mr. Fyfe?
Mr. Fyfe: The increase has slowly declined, but the whole growth internationally has declined. We're holding our share, however; in fact, we're marginally increasing our share of a slower growth market. In terms of international positioning, we have moved from twelfth to eleventh as a country in terms of visitors, and from eleventh to tenth in terms of international revenue. So specifically, yes, while the share has increased, the rate has slowed down, but it has slowed down globally.
Mr. Mayfield: Within the commission, do you have a strategy of activities that perhaps might counteract this trend that we see projected over the next two to four years?
Mr. Fyfe: I think there is a multiple set of strategies, Mr. Mayfield. We have to more aggressively go after developing markets. They won't pay immediate dividends, but they will pay dividends in the next four to six years. By way of example, I cite Taiwan. Four or five years ago, Taiwan sent virtually no tourists to Canada. Once this year is finished, they will have sent roughly 150,000, and they are among the highest spending of tourists, at a little over $2,000 per person. We have to identify some additional markets with that kind of opportunity. One suggests that they are in South America to some degree, and some parts of southeast Asia.
That is not to say that in major developed markets, like the United States, there aren't also markets of opportunity. In the U.S. market, the U.S. leisure strategy is to move to those new cities that now have point-to-point connections to 23 Canadian cities; to move to those cities in which we find there is virtually no awareness of Canada because there has been no direct contact with Canada; to first build an awareness in those markets, and then to capture the economic rent by having specific programs put in place.
So I think there are a number of strategies, specific to the markets, to address the concerns you've raised.
Mr. Mayfield: Perhaps you could elaborate on those strategies just a bit. I would like to know more specifically how you see members of this committee, of the government, or others beyond the commission itself - but also including the commission - might cooperate and assist the tourism industry both to keep Canadians at home as much as we can and to expand the number of international tourists coming to Canada. What can be done, not only within the commission but by the committee, to assist this in happening?
.0950
Mr. Fyfe: We are facing two major issues, and it would be helpful if the committee could address them along with the commission members.
The first is very fundamental. It's to ensure that those responsible for economic development, whether it be in a city, a province, or a region of the country, understand the economic contribution of the tourism industry, its magnitude, and its ability to create jobs at various levels.
The very pervasiveness of the industry means it's so large that it's almost invisible to some people, so those responsible for economic development don't think about it. As a consequence they sometimes inadvertently put in place policies or regulations that negatively impact on the industry - not that the industry would expect every decision to be in its favour, but perhaps it would expect that each decision would at least take into account its impact on the tourism industry.
So anyone, including members of this committee, who has the ability to reach out to mayors, municipalities, other orders of government, or other economic developers with the message of the importance of the industry... That would be the first step in creating broad support.
More specifically, we are struggling with the problem of reaching out to the tourism community. It's such a large industry that in spite of significant efforts on everyone's part we're having difficulty reaching out to the people involved in the industry.
Again I make the same point. Those who have the opportunity to speak to the tourism industry in the various parts of the country specifically about the CTC and its programs could start at least the connection between someone who is in the industry and not sure of what they should or shouldn't do and the CTC and its operatives.
So it is a communication issue. Exhortation, suasion, and all the support or help the CTC and others can get would be welcome and effective.
Mr. Mayfield: I just need to check with you, Mr. Chairman. I'm not quite sure of the procedure this morning. I don't usually start. Am I going for 10 minutes?
The Chairman: Yes. You have a 10-minute slot and you'll have a second opportunity too if you wish. You have a chance for one more question.
Mr. Mayfield: I want to get into the Chinook report a little bit, but I'd like to save 10 minutes for that, if I could, because there's something to talk about there.
It seems to me the CTC is not the only player in this. A couple of other organizations are involved in this: Western Economic Diversification and the Atlantic as well. Is there a degree of cooperation or coordination, or are these independent players competing for the same result?
Mr. Fyfe: I don't think there's an intent to be in conflict, but it is sometimes resulting. Because we aren't exchanging information early enough or often enough, we can step into each other.
It is much less the case in Atlantic Canada, where ACOA and the four Atlantic provinces, both at the political level and at the industry level, along with the CTC and its predecessor, Tourism Canada, have been working together for quite a long time and have established a relationship and a lot of personal acquaintances. So that one works fairly effectively.
With FORD-Q in Quebec, because the marketing side of that moved into Industry Canada, there was been a pretty close relationship between the two organizations.
Ontario, as you know, does not have a particular program and the provincial government has not put a great deal of focus on this, so there's some disjointedness in Ontario.
In the west there's the Tourism Alliance rather than Western Diversification. We're only developing that relationship, appointing people to their board just now, so it has been less than the smoothest of beginnings. I do think their Tourism Alliance program is integrated, connected, or sympathetic to the Canadian Tourism Commission programs.
.0955
The Chairman: Thank you, Mr. Fyfe and Mr. Mayfield.
Mr. Brien.
[Translation]
Mr. Brien (Témiscamingue): I must say that I'm not familiar with your organization. I looked at your annual report and I'd like you to give me some information about your mandate. Is it your main function to do promotion outside Canada?
I see that you spend $5 million in doing promotion work inside the country whereas your partners seem to spend a lot less on domestic promotion than they do for promotion in Europe and the United States, for example.
[English]
Mr. Fyfe: The mandate is to position Canada as an attractive tourism destination. It isn't specific to an attractive tourism destination to those outside the country or inside. So the mandate can be against Canadians or against the international visitors.
The domestic program is quite specifically to keep in Canada Canadians who we believe would otherwise leave the country. Most particularly it's against Canadians who travel to the United States, largely in the summertime. There's a very large outflow of Canadians during that period, what we call ``rubber tire traffic''. They travel less than 500 miles from the Canadian border into the United States for leisure travel.
Contrary to popular opinion, it is in the summertime that most Canadians leave, not the winter. It's a target for us to try to keep them in Canada. So it's an import substitution program.
Quite correctly you identified that the Canadian industry we are dealing with was less supportive of the domestic program in its first year. I believe most of the big players - the airlines and the major hotel chains - see their greatest revenue from foreign visitors, because they spend more. It's only in the second year of the program, the one we are just now finishing, and going into the third year that we've been able to expand the program so it is becoming more attractive to the smaller Canadian players - the franchise hotels and the medium-sized operators - rather than simply the big players.
We also have one other advantage in the domestic program. It is attracting non-traditional partners, people who don't usually work with the tourism industry. I would specifically note VIA Rail as a traditional partner; they're in the program. Ford Canada has joined the program as part of their marketing program, because they see it as a way to position their product as a Canadian product and to encourage Canadians to see Canada.
In sum, our program is not restricted to outside; it is for anybody who purchases Canada as a product. You are quite right that it was slow to be picked up by the smaller players in the first year, the annual report year, but in the year we've just finished there has been a greater acceptance by the Canadian industry.
[Translation]
Mr. Brien: I still have some questions about the part of your mandate relating to promotion inside Canada. Would it not be better to allow the different regional components in Canada to compete among themselves and promote tourism in their own area?
I don't know what your criteria are but this idea strikes me just as valid for promotion inside and outside the country. I imagine that when you attempt to promote particular sectors in different regions, this is what you put the emphasis on. When you are doing promotion work abroad, you have to choose the most attractive features. But when you are promoting destinations in Canada to encourage Canadians to travel within their country, I imagine it can cause a certain tension among the different regions and perhaps a certain rivalry, some regions feeling that others receive more attention and that they may have a stronger partnership with you. How exactly do you see your mandate for promotion work within Canada?
[English]
Mr. Fyfe: It's quite a legitimate observation that there are tensions between various players, in some instances because they are competitors.
.1000
A couple of facts might be a bit helpful. In most developed countries, Canada or the United States or others, most of the domestic travel is inside its own country. In Canada, about 75% of the tourism business is from Canadians travelling in Canada. There are similar numbers in the United States and abroad. In fact, the United States is a little bit higher: close to 90% of its business comes from inside it.
Say you step it down to a provincial level. Take a large province like Ontario, Quebec or B.C. It's roughly the same proportion. So 75% or 80% of its tourism business comes from its own residents, meaning that 75% or 80% of the business in Ontario comes from Ontario people travelling around Ontario.
That's a fairly constant number for all provinces in Canada except one: Prince Edward Island. This is somewhat understandable because there isn't too much of a place to travel in Prince Edward Island. So 50% of those people leave the province for their vacations.
But the difficulty is when you step back and look at what's happened to that market over the last decade: it has declined. Travel between provinces has declined by 1%. The amount of travel within provinces has stayed roughly the same. So it is a flat market; it hasn't changed very much.
Our research - it was fairly extensive - indicated that there isn't much opportunity for the Canadian Tourism Commission to simply tell Canadians to travel more in Canada. It identified a number of Canadians who leave the country by their habits and attributes: their ages, when they travel, and what kinds of products they buy.
It's this group we're trying to target. We want to say to them: Stay in Canada. If you're leaving from Halifax and you're going down to Cape Cod, why don't you look at Atlantic Canada? If you're leaving Montreal, why don't you think about Quebec City? If you're leaving Toronto, why don't you think of Ottawa? It doesn't have to be out from one province to another province, but just some place in this country so the money stays here.
The tension is how effective we are in targeting that group of people. That's a debate the marketers have.
To your point, there are those who think that it is not tightly targeted enough, while there are others who think it is. I think that debate will always go on, because it's a subjective view from the people in the marketing committees.
[Translation]
Mr. Brien: You said that most Canadians travelled outside the country in the summer, with far fewer leaving in the winter. I was quite surprised at that. Do you have any figures on this?
[English]
Mr. Fyfe: Off the top of my head, I would hesitate to be too precise, but roughly half of all travel from Canada occurs during the summer period. The fall, spring, and winter periods make up roughly the other half, with the winter being the bulk. There's not too much spring or fall travel in or out. The summer represents roughly half the total outbound travel.
I could give you a follow-up through the committee on the precise figures for that.
[Translation]
Mr. Brien: Thank you.
[English]
The Chairman: Mr. Lastewka.
Mr. Lastewka (St. Catharines): Thank you, Mr. Chairman.
It's a pleasure to have you here today to talk about our tourism. I know that the group has been working with some of the Niagara partners.
What we have here today is the 1995-96 annual report and the 1995 business plan. When will be the summary of 1996 be issued so we have the current data?
Mr. Fyfe: We have the volumes virtually six weeks after they happen. That has the number of people who travel.
The difficulty is that the actual expenditures, which are part of the national accounts, lag that by about six months. So we really do not have the final figures for the year's end until about six months after January. So we're looking at early fall. But we do have a pretty fair handle on what's happening. We can make solid guesstimates at this point as to what 1996-97 is like.
Mr. Lastewka: My question is this. The past data is okay. You've got interim data and so forth. I guess I'm looking for the strategies for going forward. What do we need to share with Canadians? What can members of Parliament and other people do to improve in this area?
.1005
I take a little bit of an opposite attitude from that of Mr. Brien. I've seen this in communities and regions. Rather than the regions among themselves helping to promote tourism while they've got tourists in their area, they want to ask people to come to their own areas and forget about the other regions. I heard that already about the provinces. A province will say that you should just go to their province.
For me, the competitors need to be partners at the same time so as to keep tourism in Canada. Could you give us a little bit of the strategies or the business outlook going forward for what you're trying to make happen in the next twelve months?
Mr. Fyfe: Yes, we could. In fact, yesterday's discussion at our board meeting was very much along the line of longer-term forward strategies. There's a very substantive change from 1995-96, and even 1996-97, that went to the board. They thought about it and said this might be right, but they wanted to think about it some more and come back in May.
Essentially, what we were proposing for their consideration was this. The marketing programs that are now in place have been there for a couple of years. They're now going into the third year. They are attracting significant support and seem to be working, frankly.
The board can now start to turn its attention to more fundamental issues that are facing this industry rather than purely the promotion of the industry, although that's never over and we certainly don't reach far enough out into the community to get them involved in the programs.
We can now look at what would happen if we are successful, which we believe will be so. We won't be able to accommodate and entertain the volumes of potential customers who are there internationally, whether Canadians are included in that mix or not, because the growth of this industry is so enormous and rapid.
It's a high-yield industry. We have an opportunity that we can't satisfy because the infrastructure isn't adequate. There are insufficient hotel rooms and resort areas. There are inadequate intermodal connections between the various kinds of transportation: bus, train and air. If we don't do something about it, the market will react in its own way, but we will be lagging in the opportunity.
The discussion was about what we had to do collectively to seize that opportunity. What are the air access issues? What are the accommodation issues? What are the animation issues? What do people do when they get here? What makes this place more entertaining than some place in Southeast Asia or in South America?
The question is on the table; I don't think the answer is there. The involvement now is to make sure that we all get involved in finding the answer to this, because this is a longer-term strategy.
I would suggest that we have to find a way to ensure that the community gets involved in the process of establishing what we as an industry in Canada, in the public and private sector, are going to be doing over the next decade.
Mr. Lastewka: Thank you.
One of the things that concerned me was the cost of travel in Canada. You mentioned earlier that a lot of our travel from Canada is close to the U.S. or a quick flight from wherever to the U.S. Our cost of travel in Canada is so high that it's easier for me to grab a flight and go south rather than to go east or west. Is there any message there that should be happening?
Mr. Fyfe: Yes.
Mr. Lastewka: Maybe there should be some partnering with our airlines and major carriers.
Mr. Fyfe: The cost of the trip, not just the travel portion, in Canada, the travel price index if you want, has actually increased less than the price of inflation, and that has been quite low. So although you're quite right that the price for Canadians travelling in the country seems high, at least it has been capped. That's step one. It's not escalating quite rapidly.
The accommodation charges in this country are significantly less than those in most of our competitive countries, including the U.S. So we're not mispriced in terms of the accommodation side.
.1010
We do have a difficulty in the stretch of this country and the cost of moving long distances by air. That's a function of the geography in part. Also, the market has been slower to react to opportunities, although that is happening. We've seen Greyhound. We've seen the WestJets. So the competition is coming into the marketplace.
There's a bit of a misperception that it is always cheaper to go to some other destination, because we tend to see the discount fares, such as the charter to Florida, the charter from New York to Los Angeles, or the discount prices. There are fares of that sort in Canada, but there are very few. The ones you see in the U.S. are more prevalent, but you can also pay $2,000 to fly from New York to Los Angeles. So they have somewhat comparable price structures.
I don't know how anyone would intervene in the marketplace to have airlines offering seats at lower prices when until recently they lost more money in a couple of years than they ever made in profits from the Wright brothers on. They're caught with their own set of constraints and staying in business.
I guess that's the conflict facing the industry in trying to resolve the prices and bring them down. Progress has been modest, but at least it's an indication that there is some ability to bring prices down. That creates a new market, which is what is happening with Greyhound Air, I believe.
Mr. Lastewka: We see very often the discount or the travel packages in Canadian newspapers. What I was looking at is that we need to see more packages of travel in Canada. That takes more than the travel people; it takes the accommodation people and those in local tourism to be partners in those travel packages.
Mr. Fyfe: That's an absolutely valid, but a little different, point. Packages in Canada are a problem. As for Canadian tour operators who put the package together and offer it to you, many of them have made their money by putting the package together and selling it to the Germans, Japanese, Italians, Brits, French or something, because that's where the profit was.
There was not a significant effort in packaging in Canada because it's a lower-yield market. It's only now that we're beginning to see packagers in Canada putting them together and offering them on the market.
This calls upon your very first point: to build a package, you have to find a number of people to cooperate. If you can't get them to cooperate because they are only competitors, then you can't build a sufficient number of packages.
It is an issue the industry has recognized. I guess it's trying to address that. However quickly or slowly that may be is a question of perspective.
Mr. Lastewka: But isn't part of your mandate to help people understand that although you may be competitors on some things, you need to partner to make things happen?
Mr. Fyfe: Yes, it is an effort that is constantly there. Obviously the fact that it still exists means that we're somewhat less than 100% successful in our efforts, but it is an objective. You identified it as one that we have.
Mr. Lastewka: Okay, thank you.
The Chairman: Mr. Schmidt.
Mr. Schmidt (Okanagan Centre): Thank you, Mr. Chairman.
I have two kinds of questions. The first one has to do with money. I'm sure it was no coincidence that your board meeting was yesterday and the day before. You just got another $15 million in the budget, and the BDC was given another $50 million for capital that's to be invested into the tourist industry.
I find it rather interesting from a philosophical point of view that the government should say to the BDC that it should put this money there. It is intervening directly into the operation of a crown corporation. Then there's the other $15 million, which goes directly to your commission.
It was my understanding earlier that the commission was not supposed to get involved in any capital projects at all. So I guess the way of getting around it is to go to the BDC and give them the money.
So there's now a total of some $15 million that you have and another $50 million the BDC has. What do you do with all this money?
Mr. Fyfe: Maybe I could separate all the money out a little bit and try to address what we're going to do with the part we're responsible for. I presume the BDC will speak for itself as to what it will do with the money. I can only talk very briefly about how we got there.
.1015
Mr. Schmidt: The point is, do you get involved in that? Obviously they need information from somewhere as to why they should... We're addressing that question in part to Mr. Lastewka's question earlier, but I want to push it just a little further.
Mr. Fyfe: Well, it's a legitimate question.
We were asked early on, as a commission, for our view in terms of the market, particularly for the product in Canada. We identified what we believe to be a gap in the product offering that we have seen significant demand for and can't satisfy, and it is a non-urban resort product of four-season international calibre, located, as I say, some distance away from major centres. We've seen Asian and European demand for this, and they are being turned away by operators, because they can't buy that product in Canada because it doesn't exist in sufficient quantities to supply the demand.
The assessment that was then undertaken, I presume, is it was identified that it is not a cost of capital issue for the potential builders; it is an access to capital issue. Capital just simply wasn't available for these kinds of properties, I presume because they are single-purpose, they're far away from centres and therefore difficult to manage, and they're often seasonally based. They couldn't get any money.
So the decision was taken that the BDC would intervene in a market that it believed to be failing, with a segregated fund of $50 million - an equity purchase from the federal government - that they could then lever in the private marketplace to some $350 million or $400 million. I think their traditional ratio is about 6:1 for real estate. They would also find private banking partners, such as the Royal Bank or the Bank of Montreal, to take it up to about $500 million and make that capital available for very tightly constrained applicants who would be prepared to build rural, four-season, etc.
My understanding is that when such proposals come forward, we will be involved to comment on their marketability, whether there is a demand for that sort of product in our research, and at what price point we see that being taken to market. They will then factor that into their decision as to whether to lend or not lend. It's not a subsidized program, so therefore they would very much want to avoid losses, and they want to make money so they can return equity to the shareholders, including the federal government. So our role is to contribute a certain amount of information to the decision process.
We also meet a couple of times a year with BDC to talk about their overall lending to the industry, because it was equally clear it would be of little value, in our view, to create a segregated lending facility by drawing the money out of their traditional support, which has been fairly significant, to the tourism industry. That is not supposed to occur, and when we meet with them, we look at both sides of their lending program.
If no one comes forward and applies for a loan under those conditions of the segregated fund, the money will simply not be spent. It can't be transferred, as I understand it, to some other part of the portfolio. It is quite specific to this activity.
So that's the $50 million and the involvement of the CTC with the bank.
The Chairman: Thank you very much, Mr. Schmidt.
Mr. Schmidt: I had two questions.
The Chairman: We'll have time to get back to you.
Mr. Schmidt: The second question involves $100 million.
The Chairman: Mr. Mitchell.
Mr. Mitchell (Parry Sound - Muskoka): Thank you very much, Mr. Chairman.
My apologies to Philip. If I ask the same question that he did, please let me know, because I was late here.
The Chairman: Mr. Mitchell is from a great tourism area.
Mr. Mitchell: Absolutely, one that needs that tourism infrastructure in a rural area.
Let me ask you a couple of quick questions.
During your operation, what has been the smallest dollar partnership you've entered into?
Mr. Fyfe: Free.
Mr. Mitchell: Pardon?
Mr. Fyfe: Free. You can be a partner for free.
Mr. Mitchell: No, but what - ?
Mr. Fyfe: The smallest amount? About $500.
Mr. Mitchell: You've actually entered into a partnership where you put in $500 and the private sector put in $500?
Mr. Fyfe: No. A private sector partner can enter a consortium for $500. Our contribution would be significantly greater.
Mr. Mitchell: Okay, but you know where I'm going with this.
Mr. Fyfe: Sure.
Mr. Mitchell: I want to know whether or not you're dealing with the small operator out in the marketplace, as opposed to the larger operator. What I'm asking you is if you have some statistical information to show us how small down in the marketplace you're getting.
Mr. Fyfe: Yes. The number of partners, if you just simply list the names of them, is roughly 2,000. That's the number of people who deal with us. One of those partners is the City of Toronto, which has 750 members. Another partner would be the Greek town community in the Danforth area, with 400 small enterprises. The total amount we have contributed is $110,000. That's roughly what they're putting in.
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We have a guesstimate that the total number of partners, if you add up the members of the groups we partner with, is somewhere in the neighbourhood of 8,000 or 9,000. But we do not have an accurate count for that number.
Mr. Mitchell: Is it a public list?
Mr. Fyfe: I can give you as many of the memberships as possible. I probably couldn't give you the names of each member of the Danforth Greek Town Society, but I could -
Mr. Mitchell: Could we ask for that to be tabled, Mr. Chairman?
The Chairman: Consider it asked.
The members are very concerned - and I'll just add my own two cents' worth on the small tourism business and your assistance there, particularly in smaller provinces and regions. This is something we'd like to see.
Mr. Mitchell.
Mr. Mitchell: You do a lot of research as a Canadian tourism commission that is basically out there. I assume, since it's paid for by the federal government, it's public information. Is there a web site where the operators in my area, for instance, can get immediate access to that?
Mr. Fyfe: It's better than that. You can get immediate access to the Tourism Reference and Documentation Centre online. You don't have to go through the web site to do that. We promote that fairly heavily. They can go in and deal directly with the documents, the research, and the information there. There is also a web site you can go through.
Mr. Mitchell: Excellent. Do you have any partnerships with the four regional development agencies?
Mr. Fyfe: We spoke very briefly to that. We are members of the board of three of them. By the fourth one, do you mean FedNor?
Mr. Mitchell: Yes.
Mr. Fyfe: No. We don't have -
Mr. Mitchell: We like to consider that a regional development agency in northern Ontario.
Mr. Fyfe: I thought that might be... We do not sit on their board. We deal with them from time to time on a project-by-project basis.
Mr. Mitchell: So you don't have a formal relationship with FedNor.
Mr. Fyfe: No.
Mr. Mitchell: Do you know the percentage of the $50 million, now to be $65 million, that goes to administration costs?
Mr. Fyfe: About 4%.
Mr. Mitchell: Thank you.
The Chairman: Andy, the repositioning of your constituency in FedNor is very interesting.
Mr. Lastewka: It's part of Niagara too.
The Chairman: Exactly.
Mr. Mayfield, please.
Mr. Mayfield: While it's fresh and we're on this line, the Chinook report, as you know, said there is some criticism by the SMEs that you deal with, those who put up the big numbers, that the smaller players tend to be left out. What you're saying to Mr. Mitchell contradicts that to some extent. You might want to respond to that.
I'm aware, for example, in my own constituency, amongst the tourism operators in that part of the country, that you are likely swimming upstream to some extent, because they have in their minds a history, a real difficulty in dealing with people like yourself, and they have given up on it. They have sort of whittled off their own little niche. In fact, they may not even be very efficient. They could probably do much better. They could make a much better living.
I'm wondering if there is some way that you, or members of Parliament like myself, might carry information to them. Part of the difficulty is that I not only have difficulty getting information from you, but I have difficulty getting the phone company to get lines into these places where they can actually get on the net. How can we counteract this perception that the events have flowed against them and we'll just do it independently?
The other thing is, how could an organization like yours assist small and medium-sized operators to better run their business? For example, I'm aware of some resorts where they're not really that careful about how far the barn is from the residential facilities. Things like that would be helpful for them to understand. Maybe that's not your business. How can there be a cooperative effort so that the country is the big winner in this?
Mr. Fyfe: I think you've touched on a number of points.
It is our business if the barn is too close to the residential facilities in the sense that that's the product we're offering to the international consumer. We're in competition with other offerings from other countries, so if the product isn't of sufficient quality to satisfy the consumer or frankly to exceed the consumer's expectations, then we will lose.
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So we do attempt to convey through the industry associations, directly within the seminars and town halls we hold, or through our communiqués and so on, that product quality is the issue.
I talked earlier about seizing the opportunity that exists of this tremendous demand out there. It doesn't all have to be new infrastructure. It could be upgrading of the current product to a new calibre. The difficulty for a firm, of course, is that if you are cash starved, once you get into that downward cycle you don't have the resources to upgrade, and because you can't upgrade, you're not going to get the business. Then it spirals down until you're no longer in business.
Mr. Mayfield: Is there a way of tying that in to the money made available through, say, BDC?
Mr. Fyfe: The BDC funds are quite segregated. I don't believe $50 million would have much impact in the area you're talking about, but BDC has traditionally had a lending facility for much smaller loans of say $80,000 or $90,000. That continues to exist. It might be a better opportunity. I don't know if regional agencies are still in that business or not. They were at one time. We only deal with them on the marketing program, really. I'm not sure what they do on the product side.
Mr. Mayfield: How can we encourage operators to understand the resources you provide and perhaps realize that this area of business has changed in the last two to four years significantly and they might benefit by understanding those changes? How can that initiative be made by you or me - or whoever it takes to do it?
Mr. Fyfe: I suspect where it can be done and is being done it's because it's easy. The visitors and convention bureaus have an association. We meet with them and they pass it on to their members.
Where it is difficult is when we get into the non-urban or more distant areas where they are less organized and more difficult to reach. I'm not sure how we do that. With the assistance of one of your members, Mr. Mitchell, we're going to try to explore that possibility with essentially a focus group to see how we can work better with the people.
The focus for the first part has been in marketing. That's really all we did. That's where we ran into the constraints. The misperception among these people, I think, is that they're not being helped. I would look it in another way: a lot of them are free riders. They're not contributing to the program.
If you do not put any money into our program it doesn't mean you don't benefit from the program. If we change the awareness of Canada as a destination in the United States from 7% unaided awareness to 15% unaided awareness, the people who paid will benefit, but so will those who didn't pay, and our Canadian destinations.
So I would be a little hesitant to agree that it is a one-way street in terms of not reaching out far enough to the community and getting them involved, although I recognize we haven't done a sufficient job on that. I don't know how we would get at the product issue very well, because I don't know where the organizations are out there. I simply note that it is a problem we are trying to work with. Maybe we can bring back whatever we find.
If you have some ideas, we'd certainly like to talk to you about them.
Mr. Mayfield: Thank you.
The Chairman: Thank you, Mr. Mayfield. Ms Brown.
Ms Brown (Oakville - Milton): Thank you, Mr. Chairman.
I'm interested in the partners' contributions, $40.9 million cash and in-kind support. Do you have records to show how much of that is cash or traceable amounts as opposed to somebody's estimate as to their in-kind support?
Mr. Fyfe: Yes, we do. In the year just finished it's closer to $70 million, of which $52 million or so - the books aren't completely closed - is cash. Rough $20 million is in-kind support. The cash is quite easily identifiable, because if somebody pays a bill with it, there's an invoice. It's not always processed through our bank account, but it is clearly processed through a common program that can be identified. We have an audit committee of the board that watches this very carefully. The Auditor General also watches this very carefully.
The in-kind process is one we're still arguing a bit about, how to put the value on it. We do have a common process. We do measure it, and we do discount offers not just at the word of the supplier. I think we're comfortable with it, but we probably feel that in-kind measurement, as we get a little more experienced, could be more tightly described.
But it's really accommodation and air and the hospitality associated with familiarization trips, or putting on a bus to take journalists around. It's not so soft as to be unmeasurable. We do have that money.
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Ms Brown: Thank you.
I'm interested in the tourism deficit we're now facing. What percentage of that would you attribute to Canadians taking their summer vacations in the United States? You said that was a significant portion.
Mr. Fyfe: I'm not sure we could specifically say that component contributed this much to the deficit itself, because the deficit of course is a lot of different incomes and a lot of different outflows.
To the question of what to do about a deficit, if we continue over the next decade the growth we have had from the international markets...
Maybe I'll take a step back. The international market grew about 12% a year over the last decade. Canada's international revenues grew about 9%, so we were losing 25%. That's the$3 billion that was referred to earlier. The World Tourism Organization projects growth at about 7% over the next decade. If we hold our share, 75% of that 7% - and there's no reason to expect we can't - that's the increase in the revenue side.
The deficit side - that is, the Canadians spending out of the country - has been growing at about 2% a year over the past decade. So if we even suggest that we make it grow at 2.5% - we'll be generous in the assumption of how it much will increase - if those figures run out by the year 2002, the deficit will disappear. If they continued out to the year 2005, roughly a decade out, we would be looking at a $3 billion surplus on the travel account.
To deal specifically with U.S. leisure or U.S. business or Italian inbound, I don't think we could tie it that tightly.
Ms Brown: I'm thinking of your mandate, which I know is a tricky one when you're trying to take people who are natural competitors and make them work together. You have to change their culture and teach them. They have to learn by doing.
I'm thinking of the potential for the Tourism Commission with regard to the achievement of other national objectives, such as our concern, for example, with the economy of Newfoundland and the opportunity that the John Cabot 500th anniversary presents. I realize there could be a shortage of infrastructure there, but is the commission doing anything to try to make that a tremendous success?
Tied to that is another question that has to do with the national interest. I'm wondering how many Canadians who do take their families to the United States for a summer vacation are really aware they are contributing to this deficit. Do you do any advertising to point that out? I'm thinking of a family who opens up the travel section of the newspaper and there are ads beckoning them to all these wonderful places. Do we ever think of putting an ad in to make them feel guilty?
Some hon. members: Oh, oh!
Ms Brown: No, I really think they lack awareness of the issue.
Mr. Fyfe: I understand the question.
Ms Brown: They think their particular spending is meaningless. They don't connect it to the economy. They don't connect it to the wealth of the country. They just see it as a personal choice. A number of people are sufficiently nationalistic that if they were really aware they were contributing to a downturn in our balance or to a deficit of any kind, they might think twice.
Mr. Fyfe: To the Cabot question, or Caboto, yes, we have worked closely with them, and you did put your finger on part of the problem in Newfoundland. They have 5,600 rooms. That's the total available room-nights. Toronto has 45,000, so you get a sense of the magnitude of the ability to generate significant revenue.
Having said that, for Newfoundland this is an enormous opportunity. There is no other place in the world that offers that product, and they have come to realize it. Their deputy minister sits on our board. We are to go down and see the premier, along with the premiers of the other Atlantic provinces separately, to talk about tourism as a strategic industry for Newfoundland and others. There will also be a residual effect post this particular anniversary, and we are involved in the marketing program with them. We do that with partners all across the country.
I would touch very quickly on the revenue and the deficit issue and suggest that each time you drink a cup of coffee, you're contributing to the deficit, and each time you drink orange juice, you're contributing to the deficit, because Canada doesn't grow oranges or make coffee. So we have to be careful about where we assign guilt. We would prefer to say it's a better product for a better price in this country than what you're currently buying.
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You're absolutely right on the awareness, but it's not the awareness of their contribution to the deficit; it's their unawareness of the travel product available in this country. Many of our Canadian travellers are thinking ten years ago when we didn't have a very good product. That product has been refreshed. The international community is buying it in enormous quantities, and Canadians aren't quite aware of it yet.
The Chairman: Mr. Mayfield is the last person on the list. If anybody else has a final question, please indicate to me.
Mr. Mayfield.
Mr. Mayfield: I don't want to push on too far, but in your communiqué you say:
- The impacts of the individual CTC programs are not evaluated or assessed in a regular fashion,
making it difficult to monitor performance.
Mr. Fyfe: Yes. We had Price Waterhouse come in and do an independent evaluation of how we should go about this. They've given us their interim report. That was with our board yesterday. Our board seems reasonably satisfied that with a couple of other modifications we will be able to specifically and regularly monitor all of the individual components.
It was at a subset level that they were worried about performance measurement, and I believe we have addressed that and will so report in the next annual report, showing how we've fixed that.
Mr. Mayfield: Would you be able to talk about that a little bit this morning?
Mr. Fyfe: Very quickly, the first step was to put in place benchmarks. Because we were brand new, we didn't have enough benchmarking. We have done that now. We have starting-point measurements. We have put in place systems to track and measure each of the major programs, those that are substantial enough to measure. We are doing that on a regular basis.
We are adjusting the programs, I believe, when the measurements show we're going off course. I think we've put in place the systems to address that particular problem.
Mr. Mayfield: Do you have some evaluation of the product clubs that you set up in response to the Chinook report? How is that working?
Mr. Fyfe: We thought there might be more on this, so Francine joined me, because product clubs are her area. I think the quick answer to your question is that the first six are just now signed off, so we're not sure how they're going to work. We know there were 33 applications for the second round when there were far fewer the first time.
So they're attractive to the marketplace. The concept is an attractive one. They look like they have the idea of bringing smaller partners together and working as a consortium so that they can move into the program, but it's too early to tell if this thing is actually going to work or not.
Mr. Mayfield: Thank you very much.
The Chairman: I would like to thank the committee members for their questions, and, Mr. Fyfe, I would like to thank you and Ms Boivin for coming in.
As you can see, there's a great deal of interest in the committee on tourism, and it's sort of an odd relationship. It's a small organization reporting to a committee that has a great deal of organizations and is in some ways bigger, but I think it's fair to say not more important. I think Mr. Mitchell and Mr. Mayfield are two people in particular on this committee who have been interested. I appreciate Mr. Mayfield's patience, as we've found the time appropriate for you to come in.
I think I would like to see us develop a more regular contact with you so that members can express their concerns about tourism directly to you. I can just say to you, without going on - the chair doesn't usually take the freedom to go on about his own concerns - that certainly in Manitoba, to have a greater presence of the commission, working with small businesses there, would be appreciated. That's been raised with your board member, who I think has passed it on to you, but I'd just like to reiterate that for the public record.
Thank you again for coming and for your testimony today.
The committee is now adjourned to the call of the chair.