Fundamental Changes in the Tourism Landscape

DOUGLAS – At a staff meeting in August, in the middle of one of the most volatile summers Victoria tourism operators have ever witnessed, Delta Ocean Pointe general manager Kimberley Hughes made an announcement.

“I told my staff they could take a breather,” says Hughes, “because our occupancy had dropped off.”

In a year fraught with challenges for tourism, fewer heads on beds don’t usually make for a happy hotel story. But Hughes’s maxed-out worker bees sighed in relief; at last, occupancy had levelled off. At 92 per cent.

Sound crazy? It was, a bit, considering the Ocean Pointe was way behind in the first two quarters of 2009. Like most tourism operators in the city, Hughes says it was a nail-biter coming into the summer when numbers were down and sales looked grim. But eventually, the people came, buoyed by value-crammed packages and screaming deals. “We picked up 33 points of occupancy from the beginning to the end of July,” says Hughes.


The Delta’s swooping numbers tell part of an interesting story — 2009 was the year of unpredictable results. A number of tourism operators in and around the city were down. Many, through aggressive pricing and packaging, stayed on par with last year. And curiously enough, a few – like the Empress, which set records in February and July – came out well ahead of projections.

“It’s been insane,” shrugs Rob Gialloreto, CEO of Tourism Victoria. “It’s been what we thought it would be – a real rollercoaster ride.”

“No one went into the year expecting any growth,” says Pat Allabarton, general manager of Milestones on the Inner Harbour. At the start of 2009, the Tourism Industry Association of Canada predicted a nationwide contraction of between three and five per cent. Later in the summer, Statistics Canada announced tourism across the country had fallen for the third straight quarter, nearly two and a half per cent since the start of the economic downturn.

Two and a half per cent? That’s nothing. For Victoria operators, the thinking all along was that it might be worse. Much worse. Gialloreto says many area operators’ estimates were below 10 per cent, especially as major hotel chains in the United States were posting dips as low as a sphincter-clenching 19 per cent.

“Most people I talk to are down anywhere from 10 to 12.5 per cent,” says Allabarton. “If you were down less than that, you felt like you were doing well,” she says.

Victoria is accustomed to a large number of U.S. visitors, but earlier this year, there was a 10 per cent decline in U.S. overnight visitors to B.C. and a four per cent dip in day trippers. Pick your scapegoat. New passport regulations, a flaccid economy, or a strong Canadian dollar – they all add up to the same thing.

“We had way fewer Americans. There’s tons of economic uncertainty in the U.S.,” says Hughes. In 2009, Harbour Ferries saw its U.S. numbers plunge by 25 per cent and quickly switched to marketing closer to home.

At the Butchart Gardens, U.S. visitation has dropped a whopping 30-40 per cent since 2001. “That was a major sector for us,” says general manager Dave Cowen, who ramped up marketing in the Seattle area with attractive packages with the Coho and Clipper. “The U.S. consumer is good for us,” he says. “They like to spend.”

Bourree agrees. “We need people from Texas and Arkansas,” he says, “not from Penticton. They spend more money.”

Near the Inner Harbour, where ferry and cruise ship passengers wander into town, American numbers are higher. “We’re still seeing people come up from California, Washington and Oregon,” says Mike Boyle, Bard and Banker general manager. “A lot of people in the U.S. were staying closer to home, maybe coming over on the Clipper for a two-day excursion to Victoria.” Despite a slump in sales of around 15 per cent, he says the Bard has snagged its share of customers by offering strong specials and good value.

The Hotel Grand Pacific had about the same number of American visitors as last year, although James concedes that this decade, the numbers of U.S. visitors coming to Victoria haven’t recovered since 9/11. Even the Coho noticed a 10 per cent decrease in American travel traffic this year.

But as American and other international travellers were staying home, Canadians were filling those gaps. Bourree says these domestic travellers are what sustained Victoria’s tourism industry in 2008. Visitors from Ontario and Alberta were outnumbered only by people from our own province – especially those from Vancouver Island. “We’ve experienced a significant increase in the close-in market,” says Hobbis, citing visitors from Calgary and Edmonton, as well as Port Alberni and Nanaimo.

Gialloreto says the shift from international to domestic travel began last year, and only intensified in 2009. “It’s fundamentally changing the tourism landscape for the foreseeable future,” he says. Victoria operators are facing a very different future with a lot of hard work to market the city and keep Victoria’s tourism pipeline filled. “I don’t see us reverting back to a time when the season kicks off strong and we just ride it for the rest of the year,” says Gialloreto.

It’s a finding shared by David Roberts, manager of sales and operations for Prince of Whales, Victoria’s major whale-watching operator. “It’s very different than it was even a couple of years ago, when people were coming in droves. Now, you work for every single client.”