Canadian Travel Expenditures Likely to Decline Significantly
What might be brewing as a big problem for travel and tourism businesses picked up momentum this week.
President Trump was pumping his unwelcome sign to Canadians and Europeans with new restrictions on those nationals traveling within the US for more than 30 days. They’ll need to register with the US government.
Add that to the high cost of a US vacation, and you can see Canadian travelers going x-USA. And when Canadians don’t travel, local travel agencies suffer. Their decreased bookings and revenue are the result of many factors. Agencies will need to adjust their marketing focus and perhaps reorganize their companies.
The Pro-US theme Trump is reiterating in the media suggests America’s trading partners will be taking a back seat for an extended period. The hopes for Trump backing off are slim now. The US’s new economic renaissance is more important than international trade and the travel and tourism sector.
A Drop From Every Direction
With lower international trade, the corporate business travel industry is likely to be hit the hardest. Canada’s travel and tourism sector will be hit by both a reduction in Canadians traveling to the US (down 40% by some estimates). US travelers will cut back on international travel too.
A recent Leger survey found that nearly half of Canadian travellers (48%) say they are less likely to visit the U.S. in 2025 compared to last year. In contrast, only one in ten (10%) say they are more likely to travel south, while 43% report no change in their U.S. travel intentions. The silver lining is that these Canadians will have funds to travel within Canada. Yet when the cold winds blow, they will likely just shift to book Mexico vacations, Costa Rica trips, or Caribbean vacations.
Will American Travelers Save the Day?
It doesn’t look like it. According to the results of a Global Rescue Snap Survey conducted following President Trump’s address to Congress, 7 out of 10 (70%) surveyed travelers said Americans will be perceived more negatively and less welcome when traveling abroad. So Canada will likely see fewer American visitors this summer.
Local Canadian travel agencies are seeing both sides of their customer base cut. Their Canadian customers are finding the cost of travel outside Canada too expensive due to the collapse of the value of the looney.
That lack of flow of travelers on both sides will hit Canadian travel agencies, hotels, tour companies, airlines, and tourist destinations hard. If the country slips into a recession, the numbers could be crippling, especially in Quebec and Ontario where a manufacturing recession is about to happen.
Retaliation by Canada Will Lead to Even Less for Local Travel Agencies
Canadian agencies will need to reorganize their staffing, product offerings, brand positioning and then upscale their digital marketing to attract travelers from the available market. Local agency’s own customer lists will be used more and new offers made to attract new business.
Travel between the two countries could fall 10 to 20% resulting in tens of billions in dollars in losses of revenue. Counter tariffs would likely escalate the situation and substantially decrease trips.
If the price of oil drops, and the US doesn’t buy Canadian aluminum, steel, lumber, dairy, and automobiles, they won’t be buying Canadian dollars to pay for them. The forecast for the CAD has to be worse than the financial media are projecting, especially since investment flows into Canada will drop. A reduced BofC interest rate should also deflate the CAD dollar.
Is there any silver lining? Canada will be a cheap country to take a vacation in and Americans might still be interested. If Canadian travel agencies and destination tourism companies choose to reach foreign travelers and highlight Canada’s affordability, it might ease this travel industry crash. Travel agencies and DMOs really need to act now to reorganize their companies using technology and optimized marketing to attract and convert travelers to customers.
US travelers may be interested in specific destinations such as Banff as this news report suggests. Canadians might be reviewing the top travel destination alternatives.
More Bookings from Americans?
While some parts of the country are reporting and forecasting increased bookings from Americans, it’s not common. Stats show that overall, US bookings have declined. Americans are having their issues too, and may prefer domestic travel this year. The world is a less inviting place for Americans now.
Travel is associated with business relations and for those buying homes in the US. Canadians selling their Florida or Arizona homes will get a nice profit, however, their travel down there comes to an end.
The US Travel Association reports that 10% to 20% of the US travel market is Canadian spending. That number could be cut in half as the real impact of the tariffs begins to bite through 2025. The travel embargo plus the tariffs should have a material effect on the US economy and the forecast for the stock market, at least for the next 6 months.
Canadians are planning trips within Canada and to foreign destinations, but as this recession grows, they’ll likely cut back hard on trips and vacations. Trips will be shorter and perhaps local. With other nations expected to be hit by US tariffs too, inbound trips to Canada will decline in number and revenues as well.
Travel agencies, tour companies, airlines, hotels, car rental firms and destinations will all suffer decreased bookings. This will force price reductions and more heavily marketed travel deals. Canadian travel businesses will benefit from adopting more affordable travel marketing services to expand reach and optimize lead conversions. Doing more with less will be the theme in 2025.
3 Big Factors will Sink the Canadian Travel Market
Three notable elements of the reduced Canadian presence in the US are a publicized boycott, a weakening Canadian dollar and rising unemployment across Canada, particularly in Ontario and Quebec. Alberta, widely assumed to be immune to the tariffs, isn’t. Trump announced tariffs on Canadian oil and gas and has said the US doesn’t need anything from Canada.
It’s a disappointing outcome of the President who could have used a US content requirement gradually to fulfill his agenda. Yet it looks as though he considers a sudden, firm withdrawal from international trade a better strategy to corral investment back in the US. His ambition is a challenging one that might require significant support, even threats to achieve.
Of course, when the impact to US businesses is understood, American’s backlash against his government might be too much to ignore. There’s still hope for tariff repeal under pressure. Whether this is good for the US is beside the point for Canadian travelers who will lose their cherished vacations in Florida, Texas, California, Arizona and Nevada.
But trust is gone and the US destinations have lost their luster. There’s no magical aura now in Vegas, Florida, Disneyland, or California destinations. The thrill is gone as they say, and it may take a long time to bring that back.
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