Visitor Demand Forecast (July 2020 Update) · Our April / May COVID Economic Impact Forecasts were based on assumptions on traveller behaviour, border & travel restrictions and economic

Visitor Demand Forecast(July 2020 Update)

Our April / May COVID Economic Impact Forecasts were based on assumptions on traveller behaviour,

border & travel restrictions and economic impacts

Given new developments, we are revising our core assumptions and scenarios

2

Summary

Scenario Assumptions Recover to 2019 levels by… Tourism

Impact

Ap

ril / Ma

y

Virus Contained Travel resumes in June 2022 -35%

Virus Not Contained Uneven travel resumption 2024 -59%

Ju

ly

1. September Restart Borders re-open at end of

August/start of September

2023 -54%

2. Borders closed to

2021 (upper bound)

Borders closed to 2021 2023 -43%


2021 (lower bound)


Health Restrictions

Restrictions on international and

domestic mobility/travel

Gatherings, including leisure

and business group activities

Health insurance coverage

Economic conditions

Economic lock down

implemented worldwide as initial

control measure

Impact on GDP, employment,

government spending, trade

Consumer Sentiment

High unemployment

Uncertainties on near future

income prospects

Compromised disposable

income

3

Three areas of uncertainty driving our updated

forecast of demand

Resident Sentiment

Uneven willingness of

communities to welcome visitors

from different areas

State of the industry

(i.e. Supply)

Open/closed businesses

Reduced capacity to host

visitors

Local business health and

safety guidelines

Labour conditions

Travel Conditions

(key driver of our updated

scenarios)

Border Restrictions

Travel Bubbles/airbridges

Travel insurance

4

Other areas of uncertainty

Assumed to not be a constraint on travel

Only 7% of Canadians feel that it is safe to travel

now

According a Leger poll, 51% of Canadians find it

stressful to leave the house to be in public

Availability of a vaccine or treatment against

COVID-19 is the top condition for travel safety in

Canada

5

Safety concerns impeding travel demand

6%

10%

11%

9%

5%

9%

7%

6%

11%

4%

7%

BC

AB

SK

MB

ON

QC

NB

NS

PEI

NF

Canada

“I feel safe to travel now”

Source: Destination Canada, Global Tourism Watch Covid-19, June 2020 wave (COV8)

Which of the following conditions would make you feel most

confident that it's safe to travel again?

After containing the virus, the

economic recovery will follow two

phases: reopening and recuperation

Assumptions:

1. No 2nd COVID-19 wave• Public and safety measures to

manage COVID-19 are sufficient to

prevent a return to containment phase

2. Pandemic to run its course by

Mid-2022• Vaccine or effective treatment to be

available by Mid-2022

6

Assumptions of the Bank of Canada

Source: Bank of CanadaTime

Recuperation

Reopening

Containment

7

Public Health Agency of Canada’s approach

RecuperationReopening Containment

Canada is at a stage where we are loosening

restrictions

Relative to Canada, the US and Mexico are still

struggling to control the spread of COVID-19

8

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

7-M

ar-2

0

14-M

ar-2

0

21-M

ar-2

0

28-M

ar-2

0

4-A

pr-2

0

11-A

pr-2

0

18-A

pr-2

0

25-A

pr-2

0

2-M

ay-2

0

9-M

ay-2

0

16-M

ay-2

0

23-M

ay-2

0

30-M

ay-2

0

6-J

un-2

0

13-J

un-2

0

20-J

un-2

0

27-J

un-2

0

4-J

ul-2

0

COVID-19 cases per million to July 7, 2020

Canada

United_States_of_America

Mexico

Flattening the curve in the Americas

Canada has COVID-19 under control so far

For the most part, Europe control is managing the

outbreak and beginning to lift travel restrictions

• within the EU; and

• with other countries that meet a set of criteria*

*Criteria includes testing, surveillance, contact tracing, containment,

treatment and reporting, as well as the reliability of the information

9

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0


Canada

United_Kingdom

Germany

France

Flattening the curve in Europe

https://www.consilium.europa.eu/en/press/press-releases/2020/06/30/council-

agrees-to-start-lifting-travel-restrictions-for-residents-of-some-third-countries/

https://www.consilium.europa.eu/en/press/press-releases/2020/06/30/council-agrees-to-start-lifting-travel-restrictions-for-residents-of-some-third-countries/

The situation in Asia-Pacific varies greatly among

countries

Several have signaled their intention to close their

borders to non-essential travel until at the end of

2020

10

-

10.0

20.0

30.0

40.0

50.0

60.0


Canada

Australia

Japan

South_Korea

China

India

Flattening the curve in Asia-Pacific

Government spending and support

measures have cushioned the impact

of the lockdown and should help the

economy rebound faster over the

reopening phase

11

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

2021Q3

2021Q4

Government spending minimizing the impact of Covid-19 on the economyIndex (2019 Q4 = 100)

GDP

Private Consumption

Gov't consumption

The reopening phase of the recovery is underway

Source: Oxford Economics

High unemployment level will put a

damper on private consumption per

capita

May 2020 unemployment rate

peaked at 13.7% up from a pre-

COVID-19 February rate of 5.6%1.

12

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

70

75

80

85

90

95

100

105

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

2021Q3

2021Q4

2022Q1

2022Q2

Une

mp

loym

en

t ra

te

Pri

va

te c

on

su

mp

tio

n p

er

ca

pita

an

d G

DP

Consumer confidence to be held back by high unemployment and risk of Covid-19 resurgence Index (2019 Q4 = 100)

private consumption per capita

Unemployment rate

Consumer sentiment facing headwinds


1 Source: Statistics Canada, Labour Force Survey, May

2020

Following a steep drop of -17.4% in

2020 Q2, the Canadian GDP is

expected to rebound back to 2019

levels by mid-2021

Key forecasts:

13

70

75

80

85

90

95

100

105

110

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

2021Q3

2021Q4

2022Q1

2022Q2

2022Q3

2022Q4

2023Q1

Canada GDP growth expected to rebound along the virus contained scenarioIndex (2019 Q4 = 100)

Baseline (upside)

Worstcase scenario

June update

Canadian Economy (compared to April/May)

A steeper drop but a faster rebound


GDP Forecast

from:2019 2020 2021

Oxford Economics 1.70% -7.20% 7.30%

Bank of Canada 1.70% -7.80% 5.10%

IMF 1.70% -8.40% 4.90%

TD Bank 1.70% -6.1% 5.2%

National Bank of

Canada1.70% -7.1% 4.90%

Uncertainties over employment and income

prospects are leading most Canadians to curtail

consumption

But some households are accumulating savings

may display pent-up demand, boosting some

consumption

Overall, Canadians are indicating they will spend

less on vacation than they did before COVID-191

14

-40% -30% -20% -10% 0% 10% 20%

Travel and transportation

Restaurants, cinema, social…

Durables (cars, appliances,…

Education

Clothing, footwear

Health and personal care

Shelter

Groceries

“After situation normalizes, relative to your spending before COVID-19 outbreak, do you expect that your spending on the following will be...”

Canadian consumers plan to concentrate on

essentials

Source: Source: Canadian Survey of Consumer

Expectations, Bank of Canada calculations 2020 Q21 Results consistent between Destination Canada’s GTW Covid-19 survey (June

2019), question COV 13) and the Bank of Canada’s Canadian Survey of Consumer

Expectations, 2020 Q2

The Virus Contained scenario

assumed travel recovery

starting in May-June 2020.

The Virus Not-Contained

Scenario assumed a slow

gradual recovery starting in

June-July 2020

(min. of 85% loss)

15

-0.5% -1.6% -61.8% -76.6% -76.6% -47.4% -35.1% -30.2% -26.0% -21.7% -17.2% -12.7%-1% -2%

-71%

-85% -85%

-77%

-69% -69%-64%

-59%

-52%-45%

-100.0%

-90.0%

-80.0%

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Tourism recovery scenarios, April 2020Year-over-year change in tourism revenues

Virus Contained Virus Not-Contained

Recall our April / May Visitor Demand

Assessment

The April 2020 forecast

projected losses of 85% in April

and May, followed by a gradual

recovery driven by domestic

and the US Drive markets.

Air arrivals also restarted in

June 2020, but at slower pace.

16

-100%

-90%

-80%

-70%

-60%

-50%

-40%

Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Virus not contained scenario Year-over-year change in tourism revenue, April 2020 Projection

Domestic

US Drive

US Fly

Overseas

We assumed US Drive and Fly would support

recovery

Air arrivals of non-resident on

non-essential travel is not

allowed in Canada until further

notice.

All travelers arriving from abroad

are required to have a quarantine

plan showing how they will

quarantine from 14 days.

17

Air service is not expected to resume until August

at the earliest

3%

0%

-64%

-100% -99% -99%

8%

0%

-55%

-97% -97% -97%

Jan Feb Mar Apr May Jun

Visits to/in CanadaJanuary to June 2020

Year-over-year change

US Air Overseas

Sources: Statistics Canada. Primary Inspection Kiosk (US and Overseas Air) data to June 30, 2020

DC’s current estimates on international spend

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Virus Contained Scenario

Virus Not Contained Scenario

DC Estimated Tourism Spend (as of 2020-6-21)

2019 Tourism Spend

Source: COVID-19 Impact and Recovery Reports, Updated June 30, 2020”, Destination Canada

Our April projection

The worst-case scenario, “Virus Not-Contained” assumed travel would resume by July 1

• Domestic and US Drive arrivals were assumed to resume relatively quickly together

• International air arrivals from the United States and from overseas were assumed to

follow

Current reality

International travel will not resume until beyond the summer peak season

• US-Canada border crossings not reopening August 21st at the earliest

• Air arrivals for non-essential international arrivals not allowed until further notice

• 14-day quarantine is mandatory

19

DC’s assessment is that we need to re-think our

scenarios

1. September restart & re-opening of borders

• Domestic travel gradually improves,

• US Land ports re-open after August 21st,

• Air arrivals of non-residents resume September 1st.

• No quarantine required

2. Borders closed until 2021 (upper range)

• International arrivals of non-residents ban until the end of 2020

• Domestic travel gradually improves

• Canadians convert 100% of their leisure outbound travel spending toward

domestic destinations

3. Borders closed until 2021 (lower range)

• As above, except Canadians convert a fraction of their leisure outbound travel

spending toward domestic destinations

20

Possible scenarios going forward

• Canadian economic recovery will be contraction of -7.2% in 2020, bouncing up to +7.3% 2021 (per Oxford

Economics and general economic forecasts)

• Vaccine / Treatment not available until mid-2022, but COVID-19 will be mainly controlled within Canada (per Bank of

Canada)

• Traveller's desire to travel, to consider, plan and book continue to improve, with only minor setbacks (as seen and

tracked in Destination Canada Recover and Impact Reports)

• Resident sentiment (desire to welcome travellers) continues to climb, and residents will welcome travellers as

restrictions allow (as seen and tracked in Destination Canada Resident Sentiment Reports)

• The supply of tourism product & transportation infrastructure is not a limit on demand (i.e. supply will be able to meet

demand)

• Drive will recover faster than short-haul flights which will recover faster than long-haul flights

• Based on assumptions of traveller perceptions of safety and barriers related to length and cost of travel

21

Key assumptions across all scenarios

Total tourism expenditures in Canada in 2019

($Billion):

Total: $105

Domestic sources:

• Intra-provincial $33.2

• Inter-provincial $13.6

• Other expenditures* $37.3

International Exports:

United States $11.3

Overseas: $10.4

Jobs sustained by tourism: 745,800

22

Baseline:


$0

$2

$4

$6

$8

$10

$12

$14

Jan

/2020

Fe

b/2

020

Ma

r/20

20

Ap

r/202

0

Ma

y/2

020

Jun

/2020

Jul/2

020

Au

g/2

020

Se

p/2

020

Oct/2

02

0

Nov/2

020

Dec/2

020

Bill

ion C

AD

Tourism Demand in Canada, 2019

Other expenditures Within Provinces Between Provinces

International - US International - Overseas

Sources: Destination Canada,

(Monthly estimates derived using Statistics Canada VTS, NTS and NTI, STR Accommodation Revenue)

* Other expenditures include other spending Canadians goods and

services, including airfares, travel services and pre-trip expenditures


($Billion):

Total: $43.9 (-54%)

Domestic sources:

• Intra-provincial $18.7 (-44%)

• Inter-provincial $4.2 (-66%)

• Other expenditure $16.5 (-58%)1


United States $2.6 (-77%)

Overseas: $1.9 (-82%)


a lost of 405 thousand jobs (54% drop)

e23

1. Borders reopening by September 2020

$0

$2

$4

$6

$8

$10

$12

$14

Ja

n/2

02

0

Fe

b/2

02

0

Ma

r/20

20

Ap

r/20

20

Ma

y/2

02

0

Ju

n/2

02

0

Ju

l/20

20

Au

g/2

02

0

Se

p/2

02

0

Oct/2

02

0

Nov/2

02

0

Dec/2

02

0

Bill

ions


Other expenditures Within ProvincesBetween Provinces International - USInternational - Overseas 2019 Total Tourism Revenue



1 Includes predominantly airline revenue losses of $14.9 B.

High number of job losses over the peak

summertime

Canadians visiting their own provinces will

be the main source of tourism earnings,

followed by inter-provincial travel over the

second half of 2020

24

1. September

Reopening of borders

-100%

-80%

-60%

-40%

-20%

0%

Change in tourism expenditures by sourceYear-over-year change

Within Provinces Between Provinces

International - US International - Overseas

Sources: Environics Analytics, Weekly Tourism tracker to July 5th, 2020: Statistics Canada. Table 24-10-

0041-01 International travellers entering or returning to Canada, by type of transport

-

200

400

600

800

1,000

Jobs sustained by tourismThousands

Scenario A Baseline

https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2410004101



With border restrictions lifted, travel

should return to 2019 levels:

• For domestic by July 2022

• From the United States by July 2023

• From overseas by July 2024

25


-$60.5

-$29.7

-$8.9

$5.2

$15.1

-$70.0

-$60.0

-$50.0

-$40.0

-$30.0

-$20.0

-$10.0

$-

$10.0

$20.0

-$70

-$60

-$50

-$40

-$30

-$20

-$10

$-

$10

$20

2020 2021 2022 2023 2024

Tourism Revenue Compared to 2019

Domestic US Overseas Total

With border restrictions lifted, travel

should return to 2019 levels:


• From the United States by July 2023

• From overseas by July 2024

26


-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

Jan

Fe

b

Ma

r

Ap

r

May

Jun

Jul

Au

g

Se

p

Oct

Nov

Dec

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Se

p

Oct

Nov

Dec

Monthly tourism spending losses in Canada % change compared to 2019


2020 2021

In 2019, Canadians spend $27.7 billion on

vacation trips US and overseas visitors each

injected $11.3 billion in Canada on business and

non-business trips

27

$8.1

$7.3

$6.5

$5.9

$1.4

$3.3

$4.6

$2.0 $1.7

$3.1

$4.7

$1.8

$-

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

2019q1 2019q2 2019q3 2019q4

Bill

ions

Canadian travel in-destination spending compared to international spending in Canada, 2019

Outbound, Leisure

United States

Overseas

Canadians spend more on vacation abroad than

international visitors do in Canada on any trip purpose


($Billion):

Total: $59.7 (-43%)

Domestic sources:

• Outbound $12.3



• Other expenditure $23.9 (-37%)



Overseas: $1.6 (-85%)



28

2. Borders Closed to 2021: Upper Bound

Maximum potential gains from conversion of leisure outbound trips are significant (21B)



$-

$2

$4

$6

$8

$10

$12

$14

Jan

-20

Fe

b-2

0

Ma

r-20

Ap

r-20

Ma

y-2

0

Jun

-20

Jul-2

0

Au

g-2

0

Se

p-2

0

Oct-2

0

Nov-2

0

Dec-2

0

CA

D B

illio

ns


Outbound conversion to domestic travels potential

International - Overseas

International - US

Between Provinces

Within Provinces

Other expenditures

2019 Total Tourism revenue


($Billion):

Total: $59.7 (-43%)

Domestic sources:

• Outbound $12.3






Overseas: $1.6 (-85%)



29

2. Borders Closed to 2021: Upper Bound

Maximum potential gains from conversion of leisure outbound trips are significant (21B)



$-

$2

$4

$6

$8

$10

$12

$14

Jan

-20

Fe

b-2

0

Ma

r-20

Ap

r-20

Ma

y-2

0

Jun

-20

Jul-2

0

Au

g-2

0

Se

p-2

0

Oct-2

0

Nov-2

0

Dec-2

0

CA

D B

illio

ns


Outbound conversion to domestic travels potential

International - Overseas

International - US

Between Provinces

Within Provinces

Other expenditures

2019 Total Tourism revenue

With border restrictions lifted, travel should return

to 2019 levels:

• For domestic by Early 2022

• From the United States by September 2023

• From overseas by September 2024

Distance based, short/medium haul to recover

faster than long-haul

30

2. Borders closed to 2021: Upper Bound

-$54.2

-$25.2

-$15.4

-$4.0

$6.1

-$70.0

-$60.0

-$50.0

-$40.0

-$30.0

-$20.0

-$10.0

$-

$10.0

$20.0

-$50

-$40

-$30

-$20

-$10

$-

$10

$20

2020 2021 2022 2023 2024

Annual tourism spending losses/gains in Canada$Billion compared to 2019



to 2019 levels:

• For domestic by Early 2022



Distance based, short/medium haul to recover

faster than long-haul

31

2. Borders closed to 2021: Upper Bound

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

Jan

Fe

b

Ma

r

Ap

r

May

Jun

Jul

Au

g

Se

p

Oct

Nov

Dec

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Se

p

Oct

Nov

Dec



2020 2021


($Billion):

Total: $41.3 (-61%)

Domestic sources:

• Outbound $1.6






Overseas: $1.6 (-85%)



32

3. Borders Closed to 2021: Lower Bound

Conservative estimate of conversion (20% ) inject $2.7 billion over worst case



$-

$2

$4

$6

$8

$10

$12

$14

Jul-2

0

Au

g-2

0

Se

p-2

0

Oct-2

0

Nov-2

0

Dec-2

0

CA

D B

illio

ns


Other expenditures Within Provinces

Between Provinces International - US

International - Overseas Import Substitution


to 2019 levels:




33


Converting outbound leisure to domestic could inject $2.7 billion

-$63.4

-$32.0

-$16.2

$0.1

$13.6

-$70.0

-$60.0

-$50.0

-$40.0

-$30.0

-$20.0

-$10.0

$-

$10.0

$20.0

-$70

-$60

-$50

-$40

-$30

-$20

-$10

$-

$10

$20

2020 2021 2022 2023 2024

Annual tourism spending losses/gains in Canada$Billion compared to 2019



to 2019 levels:




34


Converting outbound leisure to domestic could inject $2.7 billion

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

Jan

Feb

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Se

p

Oct

Nov

Dec

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Se

p

Oct

Nov

Dec



2020 2021

Border restrictions will disrupt both inbound

and outbound travels.

Canadians travel appetite and propensity for

outbound travel will be essential to lift tourism

revenues

Scenario 2 (Borders Closed to 2021: Upper

Bound): If we have full conversion of

outbound tourism: -43%

Scenario 3 (Borders Closed to 2021: Lower

Bound): If we have some conversion of

outbound tourism: -61%

35

Converting outbound travel to domestic will be key to

minimize the impact of border closure



-

1

2

3

4

5

6

7

8

Jan

-20

Fe

b-2

0

Ma

r-20

Ap

r-20

Ma

y-2

0

Jun

-20

Jul-2

0

Au

g-2

0

Se

p-2

0

Oct-2

0

Nov-2

0

Dec-2

0

CA

D B

illio

ns

Monthly Tourism ExpendituresScenarios for 2020

Scenario B (Lower Bound) Scenario C (Upper Bound)

More severe border and travel restrictions than anticipated are have lowered our

scenarios

• From a loss between -35% (Virus Contained) to - 59% (Virus Not Contained)

• To a loss between:

• -43% (Borders Closed to 2021: Upper bound)

• -54% (Borders open September)

• -61% (Borders Closed to 2021: Lower Bound)

There is still a lot of uncertainty moving forward

36

Tourism revenue to fall around 43-61% in 2020

Our April / May COVID Economic Impact Forecasts were based on assumptions on traveller behaviour,

border & travel restrictions and economic impacts

We are revising our core assumptions and scenarios

37

Summary

Scenario Assumptions Recover to 2019 levels by… Tourism

Impact

Ap

ril / Ma

y

Virus Contained Travel resumes in June 2022 -35%

Virus Not Contained Uneven travel resumption 2024 -59%

Ju

ly

1. September Restart Borders re-open at end of

August/start of September

2023 -54%


2021 (upper bound)



2021 (lower bound)


Thank you!Merci!

1. Statistics Canada:

Economic figures: National Tourism Indicators 2020 Q1

Domestic and outbound travels: National Travel Survey 2018 and 2019

International visitors: Visitor Travel Survey, 2018, 2019 and Small Area Estimates

Border data: IPIL, PIK, Frontier Counts

2. Global Tourism Watch Covid-19 travel intention survey (June 2020)

3. Oxford Economics

4. Tourism Economics Tourism Forecasts

39

Data sources

Documents

Visitor Demand Forecast (July 2020 Update) · Our April / May COVID Economic Impact Forecasts were based on assumptions on traveller behaviour, border & travel restrictions and economic