Attending the Discover America event are (from left) Mark Brown, Economist at the U.S. Department of Commerce, National Travel and Tourism Office; Sana Keller, Director Canada of Brand USA; John Kirk, Director of Porter Escapes; Chris Robinson, Host of The Chris Robinson Travel Show; Stephen Fine, President of CrossBorderShopping.ca.

Travel to U.S. growing, but figures buoyed by the one-night only auto market

By Devin Kinasz

TORONTO — Discover America, Canada held a Market Research Update presentation delivered by Mark Brown, an economist of the US Department of Commerce, National Travel and Tourism Office.

Canada continues to be the largest inbound market for the U.S. but numbers have been buoyed by the one-night only auto market since the government quadrupled the duty free limit to $200 for those outside of the country for more than 24 hours in 2012.

The volume of inbound travel to the U.S. grew by 3% in 2013 to nearly 24 million passengers and is expected to grow at approximately 2-3% in 2014 as per the U.S. Department of Commerce. However, if you strip out the increased volume of overnight auto trips, you would be left with a growth rate of only 0.9% in 2013 which is significantly less impressive.

“For 12 months after the duty free limit was increased we had an ‘artificial’ bump in the figures to the U.S.”, suggests Brown. “We expect relatively small 2-3% growth rates per year to 2018 – but on the largest base of travel, representing about a fourth of total growth in U.S. arrivals.”

A moderate 3% growth rate in Canadian inbound travel arrivals will still have bigger impact on U.S. tourism figures than faster growing China and Brazil combined. The Canadian market will be a big factor in helping the U.S. reach its goal of 100 million visitors by 2021 considering it makes up a third of visitor volume. Plus spending was up 5.8% in 2013 despite the fact that arrivals only grew by 3%.

“Canada remains the Top Dog in regards to tourism arrivals, spending and tourism trade balance,” says Brown. “China and Brazil are truly growing at fast rates and are getting a lot of attention, but Canada is number one by far.”

Supporting factors to arrival figures include Brand USA’s marketing effort, the increase in travel taxes in other countries, steady population growth, the ‘sweet-spot’ for Baby Boomer travel and cross-border travel to fly out of U.S. airport.

“Some estimates suggest that fewer than 5 million passengers per year drive across the border to fly out of U.S. airports, but that the number of people who then take flights to non-U.S. destinations are low,” says Brown.

Outbound travel will be negatively impacted by depreciation of the loonie as well as weak Canadian household finances which are still burdened by high levels of debt, including consumer and credit card debt. The high cost of fuel and government taxes also represent an additional strain.