FOCUSED SUPPORT FOR THE LOCAL TOURISM AND HOSPITALITY SECTORS IN THE ECONOMIC RESTART (2021)

The tourism and hospitality sectors¹ have undoubtedly been seriously devastated and impacted by the ongoing pandemic. Realization and awareness of the depth and long-lasting nature of these impacts on the province’s economy; for SMEs, jobs and the ability to restart is imperative.

Despite some provincial and federal relief, the industry is at a critical juncture and needs further support. Focused effort and initiatives are needed in economic restart plans, as without adequate solutions the economic entrenchment of this sector will be increasingly difficult to reverse on the road to recovery and to re-establish the industry as a driving force of the province’s economic engine.

Background

Tourism and hospitality have for decades been the face of British Columbia and Canada around the world, contributing more than $4.5 billion in taxes annually to all levels of government. The industry has also been a strategic catalyst in helping to attract investment and talent to our province, while also contributing to a vibrant economy and a high quality of life. The BC Tourism Task Force report released December 2020, says tourism contributes more than $20.5 billion to BC's economy and employs more than 160,000 people.

As part of its revenue objectives for 2020, the Province of British Columbia targeted a 6% increase in tourism-related receipts from the Provincial Sales Tax and Municipal Regional District Tax (the accommodation and lodging tax). Signifying the important tax base the industry provides and demonstrating that government is eager to realize the tax revenues of the visitor economy, but the tourism industry is calling for continued help in the road to recovery and economic restart.

In planning for recovery, government and others hoped that British Columbians would provide a much- needed boost to struggling tourism providers by traveling within the province and spending vacation dollars closer to home. But as this pandemic continues and BC remains on unstable ground with unpredictable factors and resulting public health order restrictions, local visitors are simply not enough to sustain the industry in many areas of the province.

The impact on the industry cannot be understated. The pain spans the sector: restaurants, hotels, destinations, convention venues, aviation-related businesses and other ventures.

Pre-pandemic, BC’s restaurant industry was the province’s third-largest private-sector employer, generating $15 billion annually, or 5% of the province’s gross domestic product, according to Restaurants Canada. ² Vancouver Airport Authority (VAA) CEO, Tamara Vrooman, pinned passenger volume at Vancouver International Airport (YVR) in mid-December at 14.6% of what it was a year earlier.

The VAA laid off 25% of its 550 employees in May, but Vrooman said a small number of those workers have been brought back. Significant cuts were also made by private companies that combine to employ around 26,000 people at YVR, although Vrooman said some of those workers have been rehired recently.

Expansion projects at YVR, including new parking facilities, remain on hold.³

Similarly other BC airports such as Abbotsford Regional Airport passenger numbers in 2020 are only about one-third of what they were in 2019, with about 323,000 people compared to the 1 million passenger milestone of 2019.⁴ In Kelowna, its airport experiencing a comparable approximately 35% decrease in passenger traffic as of half way through last year in 2020.⁵

The plunge in travel has been a nightmare for destinations. Some, such as the Vancouver Aquarium, have closed indefinitely.

Science World CEO Tracy Redies said she expects her attraction to lose close to $2 million in 2020, down from a normal year in which it would have broken even.

“In years gone by, we were close to $20 million in revenue – $19 million or $18 million – while this year, we will be closer to $6 million,” she said.⁶

Ian Tostenson, CEO of the British Columbia Restaurant and Foodservices Association estimated that about 20% of the province’s restaurants have closed as a result of the pandemic and could rise to more than 30% by the time restrictions ease.⁷

BC Hotel Association president and CEO Ingrid Jarrett told BIV that her $3.2 billion industry, which pre- pandemic employed approximately 60,000 people to oversee 80,000 hotel rooms, has been ravaged, with occupancy of less than 30% at the end of 2020. “That is a 60% drop from 2019,” she said. “We have 46% of properties reporting that if they don’t receive access to government-supported financing, they will not stay in business – and the timeline for that is between now and the end of March.”⁸

Moreover, a misconception people have of the hotel sector is that large businesses dominate, Jarrett said. The reality is that small and medium-sized businesses partner with large hotel companies to use established brands. “About 82% of all [hotel] properties in BC are small and medium-sized, independently owned and operated businesses,” Jarrett said. “They are barely hanging on.”⁹

Although tourism industry leaders and provincial government have been meeting throughout the pandemic including with the Premier, the operating climate has been immensely challenging due to ongoing and new restrictions that are imposed sometimes very short notice.

In October 2020 the Tourism Industry Association of British Columbia (TIABC) asked the Province for a $680-million recovery package.¹⁰ The components of the $680 million support requested for the tourism industry, together with employment benefits that will flow from such investments, are:

The Province responded to TIABC’s proposal by committing $50 million for a Tourism Task Force that released a report with recommendations in December 2020 and found that tourism contributes more than $20.5 billion to BC's economy and employs more than 160,000 people.¹¹

Of particular note are the following recommendations from the BC Tourism Task Force Report (2020):

1. Postponement until December 2022 of any fixed costs, such as property taxes, utility rates and tenure or other Crown fees.
2. A government incentive program to encourage travel within BC in combination with a strong awareness campaign about the safety of tourism activities.
3. A ‘Welcome to BC’ program to encourage domestic and international visits, as restrictions ease and international borders have reopened.

As a result of findings, the government provided an additional $55 million in support to previously announced $50 million announced in September its economic recovery plan. This was in response to the report’s recommendation for a $105 million fund dedicated to relief to help the tourism sector to be immediately launched. The grant is to be administered through the existing Small and Medium-Sized Business Recovery Grant program (Ministry of Jobs, Economic Recovery and Innovation). The commitment also includes $5 million to Indigenous Tourism BC to support Indigenous tourism businesses.¹²

When considering the dramatically less stimulus package than proposed by TIABC, restrictive public health orders crippling the sector, stigma attached to travelling, BC’s tourism and hospitality sectors have a long path ahead before returning to anything that resembles the vibrancy of pre-pandemic levels. Moreover, government restrictions on travel, gatherings, events and restaurant operations are only part of what is holding the industry back. The other half of the equation is persuading the public that leisure travel and activities are safe.

THE CHAMBER RECOMMENDS

That the Provincial Government:

1. Provide additional financial resources and tax relief to the sectors most impact by the pandemic, such as tourism, hospitality and entertainment as recommended by the BC Tourism Task Force; and
2. Continue open dialogue and close consultation with the tourism industry while leveraging industry specific data collected, by stakeholders like the BC Chamber of Commerce and Pulse Check Surveys, to inform ongoing recovery.

¹ Tourism & Hospitality sectors include: Airline Industry, Hotel and Restaurant Industry, Tourism Operators, Cruise Industry ²BC's recovery economy: Pandemic ravages BC tourism and hospitality businesses - Hospitality, Marketing & Tourism | Business in Vancouver (biv.com)

³BC's recovery economy: Pandemic ravages BC tourism and hospitality businesses - Hospitality, Marketing & Tourism | Business in Vancouver (biv.com)

⁴Abbotsford Airport hit hard by COVID-19 pandemic – Abbotsford News (abbynews.com)

⁵Kelowna airport on pace for worst year in decades - Kelowna News - Castanet.net

⁶BC's recovery economy: Pandemic ravages BC tourism and hospitality businesses - Hospitality, Marketing & Tourism | Business in Vancouver (biv.com)

⁷BC's recovery economy: Pandemic ravages BC tourism and hospitality businesses - Hospitality, Marketing & Tourism | Business in Vancouver (biv.com)

⁸BC tourism task force asks governments for more help - Hospitality, Marketing & Tourism | Business in Vancouver (biv.com) ⁹BC tourism task force asks governments for more help - Hospitality, Marketing & Tourism | Business in Vancouver (biv.com) ¹⁰tourism_task_force_final_report_-_dec_9.pdf (gov.bc.ca)

¹¹tourism_task_force_final_report_-_dec_9.pdf (gov.bc.ca) pp.7

¹²BC commits $105 million to support tourism sector | BC Gov News