Foreign tourism demand rises as domestic spending falls in Q3

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Canada’s tourism sector grew in the third quarter thanks to spending from foreign tourists that more than offset a decline in spending by Canadian travellers, data from Statistics Canada shows.

The agency’s latest National Tourism Indicator report found spending rose a modest 0.5 per cent for the quarter, a slowdown from 1.1 per cent expansion observed in the second quarter. The third quarter’s gains were primarily fuelled by a 2.3 per cent rise in foreign tourism demand, while domestic demand slipped by 0.2 per cent.

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Passenger air transport expenditures rose by 0.8 per cent, closely matched by a similar increase in non-tourism related spending on items such as groceries and clothing. Pre-trip expenses, including purchases of recreational vehicles and camping gear, jumped by 2.1 per cent. However, this growth was tempered by declines in food and beverage services (0.6 per cent), recreation and entertainment, vehicle fuel and passenger rail transport.

The tourism sector’s impact on Canada’s gross domestic product was relatively subdued. Tourism GDP edged down by 0.1 per cent, following a 0.5 per cent increase in the previous quarter. This decrease was mainly due to a one per cent drop in accommodation services. Overall, Canada’s economy-wide GDP fell by 0.3 per cent, while tourism’s share of total GDP remained constant at 1.67 per cent.

Employment in tourism marginally increased by 0.1 per cent, compared to a 1.1 per cent rise in the second quarter. Job gains in non-tourism industries, air transportation and other transportation sectors were offset by job losses in food and beverage services and accommodation, keeping tourism’s employment share steady at 3.33 per cent. The total job market in Canada grew by 0.3 per cent.

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The growth in international visitor spending in Canada was below the 3.2 per cent rise in the previous quarter. Major growth areas included non-tourism product purchases and accommodation services, while spending on passenger air transport decreased.

In contrast, domestic tourism spending fell by 0.2 per cent, primarily due to decreased outlays on food, beverage and accommodation services. This decline coincided with a 2.3 per cent increase in Canadian overnight travellers returning from abroad by air, which contributed to a 1.4 per cent rise in spending on passenger air transport.

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