Canadian Tourism Industry: Tourism Services

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Table of Contents

Introduction
Tourism Services: Sub Sectors
Revenue Sources for this Industry
Costs Associated with Operation
Target Audience in the Sector
Barriers to Travel and their Effects on the Sector
Conclusion
References

Introduction

The overall tourism industry entails various sectors and sub-sectors, all of which contribute towards adding value to the entire industry. Up to eight major sectors have been formulated within the larger tourism industry based on their closely related features and functionalities.

They include transportation, accommodation, meetings events & conferences, food & beverage, attractions, tourism services, travel trade, as well as adventure tourism, recreation & ecotourism (Tourism Industry Association of Canada, 2012).

This paper seeks to discuss the tourism services, including illustrating existing subsections within the industry, defining revenue sources, and explaining some of the costs that relate to the operations. The sector entails providing support tourism-related activities, promoting other sectors in the tourism services, and serving the traveling public with information centers and reservations.

Tourism Services: Sub Sectors

Government

Direct participation by the federal government, through established organizations, helps in the growth of the sector in various ways. As a critical player, the government assists through enhancing services, offering knowledge and information, as well as providing funds. An illustration of the government’s participation in the sector includes collecting valuable market research, as well as promoting the numerous destinations

The government also issues policies that have a direct impact on the operations in the sector. Such policies determine the establishment of the infrastructure system that is directly associated with tourism. Some of the infrastructures include roads and parks. The authorities in Canada directly market the country on the international market scene.

On the local scene, the provinces and territories have established their marketing systems that seek to create awareness amongst all the prospective tourists. To enhance their performance, the local marketing activity incorporates contributions and associations from other established systems at the municipality level. They also foster marketing, promotional, and research activities (Tourism Industry Association of Canada, 2012).

Industry Associations

The associations exist for purposes of serving specific sub-sectors or the entire industry. Industry associations such as the ‘Convention Bureau’ established in the Prince Edward Island region, have their main role concerned with marketing and advertising the island’s tourism sector.

The tourism education council exists in every Canadian territory and province with their main roles involving training and professionally developing the individuals employed within the tourism industry.

Other associations in this sub-sector focus their attention, mainly on advocacy and lobbying. The Tourism Association, for instance, covers the entire country’s tourism services industry and comprises of all the critical players within the sector. Some of these stakeholders include hotels and travel agencies. Other specific sub-sector associations like in the restaurant and food sector only include hotels and restaurants.

Marketing Services

The tourism service providers and product sellers undertake the promotion of their numerous services to attract customers. Competition within the sector is high. Thus each of the players has arranged specialized marketing services and staff to woo customers into their premises.

Research

Many of the government’s tourism departments involve both researchers and analysts whose activities target the improvement of service delivery and overall performance. Market research firms equally exist, serving the same objective of improving and developing service delivery. Market research significantly assists the industry players in their decision making plans (Tourism Industry Association of Canada, 2012).

Information is collected widely by the research and analysis, including on market competition. The resultant reports are used for purposes of planning and decision making. They appraise the entire tourism services sector, analyzing the particular effects that are likely to be experienced in the economy in detail. The researchers can accurately deduce what the travelers need and expect at any given time once these findings have been obtained.

Retail

The overall retail subsector is made up of all the retail entities that serve tourists or related tourism industries in one way or the other. Such retailers sell important products or services needed by the tourists, essentially contributing revenues to the Canadian economy. Such retailers may include barbers who shave the tourists when they are in the country, or those selling a variety of merchandise such as socks and mobile phones.

Revenue Sources for this Industry

Visits to Attraction Sites

The tourism industry mainly involves individuals visiting scenic sites for their relaxation and fun. Canada attracts both international and domestic visitors whose varied expenditures during the excursions contribute to the revenue collected within the entire tourism services industry.

According to The Canadian Tourism Industry (2012), the international and domestic tourists who visited Canada in 2011 spent a total of $78.8 billion (Tourism Industry Association of Canada, 2012).

Accommodation

Tourists require accommodation services when they are on their excursion. Hotels and special lodges located strategically within the scenic regions or areas offer the accommodation services at a fee. The total revenue earned by the accommodation service providers also includes additional services offered by the hotels and lodges, such as meals and drinks.

Transportation

Different firms and agencies exist for purposes of providing transportation services to the tourists. The transportation agencies offer various modes of transport, including road and air transport services for ferrying individuals from one location to another (Tourism Industry Association of Canada, 2012). The tourists pay for the services rendered, and the service providers use part of the revenue earned to buy fuel and spend on repair services.

Food and Beverage Services

Tourists depend on the local foods and beverages during their prolonged stay in Canada as they continue with their excursion activities. Players in this subsector earn revenue as the tourists spend their money on the food and drinks. The players use this money to acquire additional stock and expand their businesses.

Meetings, Events, and Conferences

Special facilities built for purposes of hosting meetings, events, as well as conferences equally provide a significant avenue from where revenues in the tourism services can be earned (Tourism Industry Association of Canada, 2012).

Apart from site seeing, visitors to Canada or the local nationals may consider using some of the available facilities for holding meetings, conferences, or events. They pay a fee to secure these facilities. The fee contributes to the overall revenue earned by the tourism services industry.

The huge revenue achieved from the tourism industry is mainly generated from the four leading tourism commodities of transportation, accommodation, food, and beverage, as well as other tourism related services like recreation and travel services (Tourism Industry Association of Canada, 2012).

Costs Associated with Operation

High-Cost Air Transport

Apart from a few visitors originating from the USA, Canada’s tourists mainly use air transport for their transportation into the country (The Canadian Chamber of Commerce, 2013). The air transport sector, however, includes high costs resulting from numerous policies introduced by the government. These user levies and fees charged in the aviation market force passengers to pay a higher cost, of which between 40% and 70% is contained in the several policies (The Canadian Chamber of Commerce, 2013).

Apart from charges contained in government policies on air transportation, the government further imposes taxes on the user fees, which amounts to about 100 million additional Canadian dollars obtained from the passengers.

In essence, the imposed costs have made the average departure from any of the Canadian airports to be close to 30% more expensive compared to departures from the US (The Canadian Chamber of Commerce, 2013). The policies introduced by the government on air travel have damaged the restaurants, accommodations, arts events, and sports sectors because all the other tourism sectors rely on the air mode to conduct their operations.

Marketing Costs

High competition in the tourism service sector has resulted in industry players seeking to create awareness about their products and services. The marketing efforts are not only being made in Canada but internationally as well as the numerous industry players make efforts to attract more buyers (The Canadian Chamber of Commerce, 2013).

The marketing expenses are equally being incorporated within the tourism operations as it is almost impossible to maintain operations without marketing the services and activities on offer. As competition increases in the industry, tour firms and other related service providers are forced to increase their marketing budgets to attract more customers and expand their revenue base (The Canadian Chamber of Commerce, 2013).

Target Audience in the Sector

Canada’s tourism sector is targeting both local populations and international travelers as its potential market.

Demographics

In 2011, up to 317,021 Canadians comprised of the target audience within the country’s tourism service sector. Ontario produced the highest number of domestic tourists during the year, which stood at 123,926, while Quebec had the second highest figure of 83,737 (Canadian Tourism Commission, 2012).

Other provinces with significant numbers of domestic tourists included Alberta and British Columbia with 3,162 and 31,756 respectively. Provinces and territories that produced the lowest number of domestic tourists included Prince Edward Island and Newfoundland and Labrador, which produced 1,386 and 4,314 tourists, respectively (Canadian Tourism Commission, 2012).

In the same year, 2011, Canada had more than 25 million and 66 thousand non-resident tourists entering Canada. The USA is by far Canada’s largest international tourism market because it has 20.54 million travelers to Canada during the same year. In 2012, the total number of non-resident tourists visiting Canada increased to 25.32 million with the USA, making up 20.72 million tourists of the overall figure (Canadian Tourism Commission, 2012).

The US leads with 11.88 million trips in terms of the overnight trips made by nonresident tourists to Canada in 2012. This is equivalent to 6.33 million Canadian dollars worth of expenditure (Canadian Tourism Commission, 2012).

The UK followed by a total of 597 thousand overnight trips, worth 785 million Canadian dollars, while France was third with 423 thousand trips and 530 million Canadian dollars in expenditure (Statistics Canada, 2013).

Germany and Mainland China complete the list of Canada’s top five markets with 277 thousand and 273 thousand overnight trips worth 417 million Canadian dollars and 486 million Canadian dollars respectively (Canadian Tourism Commission, 2012).

Psychographics

Both the domestic Canadian tourists and travelers from the USA who form the bulk of foreign tourists in the country are cultural tourists. This category of tourists is comprised of generally older individuals with better education and earning more money compared to the traveling public. They often spend more funds on holiday, elongate their duration of stay in specific areas, and actively participate in additional activities.

Both Canadians and Americans value their respective cultures and are well educated. They are willing to learn and are more curious about the happenings in their vicinity. Both countries are experiencing an aging population, and the residents have a great love for traveling.

Canada has put in place an elaborate mechanism for advertising its tourism market, both locally and internationally. Each of the provinces and territories has established their marketing departments or agencies that focus on creating market awareness for their tourism potentials. The federal government leads the way in advertising the country as a perfect tourist destination through the Canadian Tourism Commission (CTC).

The organized provincial and territorial marketing agencies work in collaboration with the CTC to make it easier and possible for the entire industry to market itself as the perfect tourist destination globally.

Additionally, private advertising is also being undertaken to enhance overall marketing efforts. Private groups and organizations organize to create and fund their advertising. Advertising mainly relies on the use of paid media to reach targeted audiences and potential markets.

Overly, Canada’s advertising is effective. It entails a combination of research activities that determine the preferences of the various categories of tourists before advertising the same to the target markets.

Canada’s annual tourism statistics also portray a gradual growth in the number of nonresidents who travel into the country. The gradual growth is a perfect indicator of the fact that the advertising and overall marketing efforts reach a significant number of new potential travelers, resulting in the improvement of tourists to the country.

Barriers to Travel and their Effects on the Sector

Low Number of Visitors

Barriers to travel directly affect the number of travelers, especially the non-residents, who anticipate visiting Canada as tourists at any given time. The delays and difficulties faced by the potential tourists in getting their travel details ready to deter them from visiting Canada, and they opt to travel to other countries as excursionists.

In essence, the barriers to travel deny the tourism sector an opportunity to get additional revenue because the eventual number of tourists who visit the country is smaller (Woodside & Martin, 2008). It is critical to note that the barriers to travel result in lower collectible taxes by the government because a larger turnout of tourists also translates to a bigger margin of taxes collected by the federal and regional authorities.

Revenue by the related Industries

The effects of barriers to travel further extend to affect other related industries and subsectors. With a lower turnout of tourists visiting the country, the hotels are not able to maximize their profits as would be the case if the turnout was large (Woodside & Martin, 2008).

The travel and transport agencies equally make losses or relatively smaller profit margins when there is a reduced tourist turnout. Other significant sectors such as the events, conference, and meeting organizers equally suffer from low opportunities because of the relatively smaller number of the nonresident tourists who visit Canada for excursion (Woodside & Martin, 2008).

Employment

The tourism sector is among the largest employer of Canadians because of its widespread effect on the economy. People working in the transport sector, in the hotels and catering industry, foods and beverages, and retailers all depend on the booming tourism industry for their livelihoods.

These large numbers of employees are threatened because of the lower number of nonresident tourists arriving in Canada because of complications and barriers to travel (Woodside & Martin, 2008). The elimination of such barriers would, in turn, observe a large number of Canadians getting employed within the larger industry and spur growth and development because of the equally large number of tourists who visit the country.

Ramada: A Tourism Service Industry Player

The Ramada chain of hotels is a significant player in the Canadian tourism services industry. It mainly provides accommodation to travelers on excursions. The Ramada hotel is located in the vicinity of the Niagara Falls, which is one of Canada’s most scenic sites.

The popular falls attract a significant number of travelers, who in turn rely on Ramada for the provision of accommodation services. Thus, the hotel’s main source of revenue relies on its provision of accommodation services to travelers (Ramada, n.d.).

Ramada Hotel competes with many other accommodation service providers located in the Niagara Falls vicinity. As such, the company spends a significant amount of its revenues to fund its elaborate marketing and advertising activities. The marketing expenditure, in turn, comprises of a significant cost of operation for the company (Ramada, n.d.).

Also, the hotel is required to meet all taxes levied by the government and other fees charged by industry regulators. For instance, all the commodities purchased by the hotel, including furniture, foodstuffs, and materials, among many others are levied numerous taxes set by the government in its efforts to raise revenues through taxes.

Ramada Hotel mainly targets the nonresident tourists mainly because of its large international expansion. International tourists from countries such as the USA and the UK are more likely to book themselves into Ramada Canada because of the hotel’s presence in these countries, respectively (Ramada, n.d.).

Apart from the nonresident tourists, however, the hotel also targets Canadian tourists who intend to visit the Niagara Falls for excursion purposes (Ramada, n.d.).

The hotel advertises its services both locally and internationally. Its marketing activities are carried over a wide selection of channels, including on the electronic and print media.

The Ramada Hotel uses an online advertisement to reach its existing and potential customers from all over the globe as part of adopting advancements in ICT. The extensive advertisement adopted by the hotel for marketing its services is practically effective because the hotel has managed to increase the number of tourists visiting its premises each year (Ramada, n.d.).

Conclusion

The tourism industry in Canada comprises a multiple of sub-sectors, all of which contribute towards value addition. The sector’s main source of revenue includes the expenditure made by travelers on excursions, amounts paid for travel, accommodation, and food and beverages. The federal and regional governments practice taxation on the tourists to obtain revenue that helps in the running of the country.

The industry players also pay taxes and other government policy fees, on top of the marketing expenditures that they incur. These comprise their overall cost of operations. The USA is Canada’s largest market for non-resident tourists, with annual travelers from the country comprising of about 75% of the total tourists who visit Canada. Both the US and Canadian travelers visiting Canada’s scenic features and areas are cultural tourists.

They are generally older individuals with better education and earning more money compared to the traveling public. The advertising of the country’s tourism service is effective because it has seen the number of tourists to Canada increase gradually over the years.

References

Canadian Tourism Commission (2012). Delivering value for Canada’s tourism businesses through innovation and efficiency. Web.

Ramada (n.d.). Niagara Falls Fallsview. Web.

The Canadian Chamber of Commerce (2013). Uncompetitive travel & tourism strategies. Web.

Tourism Industry Association of Canada (2012). The Canadian tourism industry: A special report. Web.

Woodside, A. G. & Martin, D. (2008). Tourism management: analysis, behaviour, and strategy. Oxfordshire, UK: CAB International.

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