Overseas Visitor Markets in Ontario - Best Prospect Markets

Transcription

1 Ontario Tourism Market Assessment Research Study Final Report Presented to: Ontario Ministry of Tourism Competitiveness Study February 2009

2 Queen s Printer for Ontario, 2009 Although copyright in the research papers is held by the Queen's Printer for Ontario, the papers were prepared by external companies and their conclusions do not necessarily represent the views of the Government of Ontario. The research papers were commissioned by the Ontario Ministry of Tourism for the Tourism Competitiveness Study and as such their conclusions are intended for this purpose only and shall not be relied-upon by third parties. ISBN (PDF) 2

3 Table of Contents At TNS, we know that being successful in today s dynamic business environment requires more understanding, clearer direction and greater certainty than ever before. While accurate information is the foundation of our business, we focus our expertise, services and resources to give you greater insight into your customers behavior and needs. Our integrated, consultative approach exploits our depth of coverage across all the research, analysis, marketing, and industry issues that will be required for this work. That is what sets TNS apart. Thank you for allowing us to explore your business needs. The comprehensive program that follows is designed to help you achieve your goals. We hope you will trust TNS to provide the insight you need to sharpen your competitive edge. Executive Summary... 4 Strategic Overview and Recommendations Detailed General Summary Overview of Visitation and Spending - Domestic versus U.S. versus Overseas.. 23 Overview of Visitation and Spending - U.S. versus Overseas North American Opportunity Markets Overseas Opportunity Markets Domestic Markets Quebec Market United States Detroit New York Massachusetts Illinois New Jersey/Connecticut Florida Texas California Overseas Markets Europe The U.K France Germany South America Central America Mexico Asia Korea Japan China India Australia

4 Executive Summary 4

5 Study Overview Although the global tourism market is growing, Ontario is competing with more destinations than ever before: The global tourism industry is characterized by newly popular destinations; Intensified competition; and Growing disposable incomes worldwide. For Ontario to be competitive, it needs to strategically pursue markets with the highest potential for growth over the next 10 years or so, in terms of total tourist expenditures, while nurturing its current base of source markets. This Study provides recommendations for the Province on: Best prospect markets (Canadian provinces, U.S. states and Overseas markets) which present Ontario with the highest potential for growth over the next several years in terms of total tourist expenditures by targeting: Populations that are interested in Ontario; and Populations offering the best prospects for translating interest in Ontario to a behavioural response and increased tourism volume. 5

6 Methodology This Study undertook research in the following markets: Domestic Markets including Quebec and Western Canada. Tier One/Near U.S. markets to provide recommendations on the potential of various consumer groups within these border regions. Tier Three and Tier Four U.S. potential markets. High potential Overseas growth markets. Attention was given to: Size Nature of these markets Needs and interests of the target populations Based on available data, this study produced expenditure projections for various potential markets. Within the identified markets, consumer segments were identified that represent Ontario s most likely consumers. 6

7 Overview Key Findings Domestic Markets - Ontario s domestic market continues to be the anchor for the province s tourism industry and its main source of volume: Ontario s domestic market is 4.5 times larger than the U.S. market in terms of numbers of visitors (person visits) and 3.5 times larger than the U.S. market in terms of total dollars spent. Ontario s proximity to major U.S. population centres and relatively ease of access to many overseas destinations via Toronto s transportation hub is a double-edged sword. It presents opportunities to attract large numbers of visitors from the U.S. and overseas but also facilitates the outbound movement of domestic travellers. Although recent currency exchange rates may have moderated the outbound effects, the potential for this sort of leakage is always present. While Canada s western provinces (B.C., Alberta, Saskatchewan) and Quebec hold the largest untapped pools of potential visitors to Ontario, Quebec is a better prospect than the West. In fact, U.S. Tier One markets are a better opportunity than the western provinces and should be pursued ahead of Western Canada. U.S. - The U.S. market is eight times larger than the overseas market in terms of visitors (person visits) and U.S. overnight visitors spend more per person, per night in Ontario than do overnight travellers from other overseas markets: U.S. Tier One is Ontario s key U.S. market: Eastern Michigan (including Detroit); Northern Ohio and Western New York; Tier Three U.S. markets hold considerable potential: New York City, Chicago, New Jersey, Philadelphia and Washington D.C.; and Tier Four U.S. markets hold some potential (principally, California, Texas, Florida, Arizona, Georgia and North Carolina). However, potential visitors are scattered across these states making them less attractive than the aforementioned Tier Three U.S. markets. There is, however, potential to strategically target large population centres in this Tier such as Los Angeles, San Francisco-Oakland, Phoenix and Dallas-Fort Worth. Overseas - While the UK will remain the top overseas market through 2012, it is clear that China will be overtaking the traditional markets of Germany and France in terms of total visitor spending in Ontario in the next year or two. Mexican tourism expenditures are also expected to overtake those of Germany and France. Indian tourism expenditures may overtake those of Germany by Although a lower priority, monitor Brazil and South Korea. 7

8 Ontario s Best Prospect Markets: Quebec Market Quebec Key Segments: Mature Families, Mature Singles and Couples, and Seniors Profile Untapped potential comprised of roughly 0.5M non-visitors open to the idea of visiting Ontario under the right conditions. Represents the largest source of Canadian visitors from outside Ontario. Current visitors are disproportionately Anglophones who are visiting friends and relatives and tend to stay overnight. Interest in Ontario is fairly broadbased and includes those of average means. Value is an important criterion in trip selection. Quebecers attuned to visiting Ontario express a wide range of interests which fit well within Ontario s existing tourism offering: visiting small towns and villages, beaches, parks, hiking trails, natural landmarks, family attractions and to stay at a B & B or country inn, winery tours and theme parks. Areas of interest: Ottawa, Toronto, Kingston, Prince Edward County and Southern Ontario. Northern Ontario is particularly appealing to Quebecers from the nearby Outaouais/Abitibi region. Recommendations Marketing should seek to familiarize Quebecers with Ontario. Address engrained cultural resistance to Ontario, and English Canada generally, among Francophones. Reach out to Francophones (e.g., French advertising that is sensitive to Quebec cultural nuances; French-speaking tourism staff; French travel information and signage). Destination websites and brochures are popular among Francophones. Target Montreal and communities along the border. Similarly, give some emphasis to Ontario destinations and product in close proximity to the Quebec border in order accentuate the ease and convenience of choosing Ontario. Profile Ontario s small towns and villages, parks, hiking trails, natural landmarks, beaches, family attractions, B & Bs, country inns, winery tours and theme parks. Don t compete directly with Quebec s iconic attractions, but place more emphasis on differentiating Ontario from Quebec. (e.g., different cultural experience, different landscape and history). Perceived familiarity with Ontario and assumed similarity to Quebec (particularly in terms of landscape and history) represent impediments to stimulating interest. Leverage cultural/language differences ( it s like visiting a foreign country without the hassles ) Mass media have a role to play. Television is hugely popular in Quebec. Anglophones can also be targeted via non-destination websites and travel magazines. 8

9 Ontario s Best Prospect Markets: Tier 1 U.S. Markets Market Tier One U.S. Markets: Eastern Michigan; Northern Ohio; Western New York urban markets Consumer Segments: Key Target: agerange (older parents, working older couples and retired couples) Secondary Target: age-group comprised of a fragmented market with diverse life stages (older and younger families, young and middle-aged singles, and young couples without children) Profile Apathy toward Ontario - been there, done that. The pool of open non-visitors is small; the potential lies with previous visitors. It is important to maintain support here, particularly with respect to fueling incoming shortstay and same-day revenues. However, growth potential is limited and therefore the marketing strategy, here, would be defensive. Concerns include: economic uncertainty, safety of a destination, wants to avoid the hassle of foreign travel. Urban and cultural pursuits are popular. Have broad-ranging interests and are more active and outdoors-oriented than the typical U.S. pleasure traveller. Activities of interest: golfing, horseback riding, sailing and cycling. Recommendations Maintain focus on these core markets. Build interest in a return visit to Ontario by broadening the range of products promoted and building bridges from popular, familiar ones. Ontario should position itself as a safe locale without the hassle associated with foreign travel. Promote the availability of quality, mid-range accommodation. Promote how Ontario s product meets the interests of both active and less-active travellers in communications. In the short-term, leverage the lower Canadian dollar and work to reduce existing concerns about border crossing difficulties. 9

10 Ontario s Best Prospect Markets: Tier 3 U.S. Markets Market Tier Three U.S. Markets: New York City, Chicago Consumer Segments: Key Target: agerange (older parents, working older couples and retired couples) Secondary Target: age-group (younger, upwardly mobile individuals and couples) Profile Currently maintain large populations of open non-visitors to Ontario. Urban and cultural pursuits are popular. Some evidence that U.S. travellers to Ontario tend to have broad-ranging interests and are more active and outdoors-oriented than the typical U.S. pleasure traveller. Ontario s appeal more congruent with natural features (i.e., Niagara Falls) and the natural environment rather than with manmade entertainment offerings or sun and sand. Concerned with economic uncertainty. Toronto viewed as more green/clean than any U.S. urban centre. Specific to New York City: Toronto s profile and image are virtually non-existent among New Yorkers. Safety is highly desirable. Specific to Chicago: Interested in historic sites. Recommendations There is a general need to build an awareness and image profile or umbrella for the Ontario brand in these markets under which specific offerings and destinations can be positioned. Continue to build on past efforts by promoting key components of the Ontario tourism product. Promote Ontario s urban environment and related activities to allure and enhance commitment to return. Generate buzz around the urban experience offered by the GTA. Given the growing interest in environmental matters, promote Ontario as green/clean. Ontario should position itself as a safe locale. Promote Ontario as an affordable destination e.g., availability of mid-range accommodation. Promote Ontario s historical offerings to Chicago market. 10

11 Ontario s Best Prospect Markets: Tier 3 & 4 U.S. Markets Market Undeveloped Tier Three U.S. Markets: New Jersey, Philadelphia, Washington, DC Consumer Segments: Key Target: agerange (older parents, working older couples and retired couples) Secondary Target: age-group (younger, upwardly mobile individuals and couples) Tier Four Distant U.S. Markets: California, Florida, Georgia, Texas and Arizona Profile New Jersey ranks first among all states for household income. Philadelphia and Washington DC each offer a large pool of potential visitors. May prefer travel to New York and Boston, as closer to home than Toronto. Drawn by urban and cultural interests, as well as more active/outdoor pursuits. Growing interest in environmental matters. Toronto viewed as more green/clean than any U.S. urban centre. Concerned with the economic uncertainty. Large numbers of open non-visitors. Recommendation Launch marketing efforts as budgets allow. Target New Jersey much like a large urban centre (a campaign targeting New York City could potentially be expanded to include the state of New Jersey). Promote Ontario as green/clean. Promote Ontario as an affordable destination e.g., availability of high quality, mid-range accommodation (superior to NYC in this respect). Monitor the numbers of potential Ontario visitors, possibly undertaking research if numbers of potential visitors appear to be growing. The next step would involve identifying activity and life-stage/psychographic segments for targeting. The initial approach should be tightly focused geographically to optimize ROI (e.g., Los Angeles, San Francisco, Dallas- Fort Worth, etc.). 11

12 Ontario s Best Prospect Markets: United Kingdom Market United Kingdom Average age of a British visitor to Canada has fallen from 51 (in 1997) to 44 years of age (in 2007 Profile While travel to Canada and in particular to Ontario has been decreasing in recent years, the U.K. is Ontario s largest overseas source of tourism revenue and will continue to be for at least the next 5 to 10 years. As a commonwealth country, UK travellers feel a high level of comfort in visiting Canada. and view Canadians as warm and friendly. One of the key motivational factors for visiting Canada is the natural scenery which seems to intermingle with large cities and urban destinations. Visiting friends and relatives ( VFR ) is a key reason for British travel to Canada. Lack of sufficient knowledge about Canada as a destination and the product available are the largest barriers to visiting. Canada is often viewed as too vast and can be intimidating to visitors who are used to travelling shorter distances. British very commonly use the internet to book travel. Recommendation Increase awareness of Ontario destinations within Canada and Ontario s unique regional product offer. Promote the natural beauty of wilderness areas, rivers and lakes, as well as Ontario s historical sites particularly in relation to British colonial history. Promote Ontario s diversity in terms of urban/rural product, and use this to continue to attract larger numbers of younger travellers on their first trip to Canada. As with all overseas destinations, don t shy away from the possibility of packaging Ontario with other Canadian provinces to enhance drawing power within a national (CTC) strategy. Promote Ontario as an affordable destination. Use clear and comprehensive personalized web services that offer clear travel plans and itineraries. Testimonies and word-of-mouth (given that U.K. travellers who have visited Canada are typically satisfied and rate Canada ahead of the U.S. and Australia as a destination they want to visit). TV commercials and travel shows which would highlight the various parts of Ontario should also be considered for U.K. television programming. 12

13 Ontario s Best Prospect Markets: China Market China Well-established, middleaged families with a visiting friends and relatives ( VFR ) connection. Nouveau riche. Managerial employees likely Joint Venture, foreign company years of age. Canton province strongest market followed by Beijing. Profile China s growing middle class presents the best opportunity to increase visitation. But, without ADS there continue to be limitations. VFR tends to be the key reason for Chinese to visit Canada, particularly from Guangzhou/Canton province. Canada is not perceived as a destination with lots to see or do. Growth of consumerism in China could dissuade travel in near future as consumers purchase household conveniences. The internet is a strong source of information for Chinese overseas travellers. Great lack of awareness of Ontario, and its tourism offerings. Ontario/Canada seen as a destination for immigration or education but not necessarily for travel. Recommendation Concentrate on increasing awareness for future travel rather than short term gain. Lack of familiarity with Canada (Ontario) needs to be addressed. Create a strong brand image that has cache value that will stand out against competitive destinations. Use the web to promote all of Ontario s product providing details on how to get the most out of a trip as this market wants to see as much as possible. Again, links to neighbouring provinces could increase overall drawing power. Create a risk-free itinerary to make travel as easy as possible. TV has strong influence on choice of travel destination (investigate the success of Dashan television show featuring Canada to determine if it would be useful to do a followup in the same format). VFR from Canton province constitutes most immediate potential. Try to leverage Vancouver 2010 games to benefit Ontario as a necessary destination if you visit Canada. 13

14 Ontario s Best Prospect Markets: Mexico Market Mexico travellers tend to be middleaged or older and well educated. Strong brand recognition. Educational travellers- look for education elements incorporated in their trips. Shopping is very popular, even in comparison with other overseas visitors. Profile Growing middle class that is likely to travel outside of the country. Outdoors and major attractions seem to be key motivational activities for Mexican travellers Educationally-orientated travellers. Tend to be pleasure travellers who like to sightsee, shop, and participate in outdoor activities and local culture. Ontario is the strongest Canadian market for Mexican tourists but is facing competition from B.C. Strong desire to see places of historical importance such as world heritage sites, and as much as possible on one trip. Lacking awareness of available product in Ontario. Travel magazines, shows and guides are strong sources of information. Recommendation Strong internet penetration. Use web to provide greater knowledge about Ontario s product. Focus on outdoor experiences and historic sites, potentially Northern experiences, such as wildlife viewing to compete with travel motivators more associated with B.C or other destinations (e.g., whale watching, Rockies). Use travel media to target this group (e.g., articles, editorials, videos, etc.) to build the Ontario brand. Word of mouth is also important. Incorporate urban learning experiences with rural outdoors experiences to respond to interests in education, shopping, and seeing wildlife and world heritage sites. Highlight heritage sites (Niagara Falls, The Rideau Canal), the outdoors, as well as cultural elements within the outdoors, and shopping as key elements in presentation to Mexicans. The combination of these diverse elements in concert with education/historical underpinnings offer good potential to differentiate Ontario from other provinces in Canada. 14

15 Ontario s Best Prospect Markets: India Market India Higher socio-economic class (one-third of population). VFR market is strong. Tends to be younger years of age. Status Seekers. Ontario captures most of the trips from India to Canada. Profile VFR tends to be a principal reason for travelling to Canada, but more as an afterthought to seeing the sights. Higher socio-economic class, younger. Social activities, such as nightlife, clubbing, and experience local culture. Sightseeing and shopping top motivators. Niagara Falls is a key attraction for most Indian visitors. Status is a key travel motivator for Indian travellers. Interest in Canada is limited compared to other more exotic destinations in Asia or Europe, which may be perceived as more enriching from both a cultural and status perspective. Recommendation Promote Ontario as a must see status making destination, particularly Niagara Falls. Build profile of other iconic, potentially status-worthy Ontario attractions and activities. Consider building on VFR connections. Use Canadian hosts as ambassadors and conduits for extending the travel experience. Aim to build word-of-mouth advertising as Indians tend to recount travel experiences to colleagues, friends and family. Potential opportunity in winter months (honeymoon season) as the tendency is to travel to colder climates of the Himalayans but could create more status to visit Canada, particularly if linked to unique must-do activities (e.g., snowmobiling, dog-sledding, etc.) Promote the nightlife and local culture available in Ontario as enticements to this market. Promote the strong Indian cultural enclaves in Ontario as evidence of a welcoming non-threatening environment within a distinctively foreign land. Television and radio are appropriate vehicles, focusing on major urban centres. The regional capital of Chandigarh should be included in any media plan given the large number of Ontarians originally from that region. 15

16 Strategic Overview and Recommendations 16

17 Strategic Overview Focus Spend to Ontario s strengths, i.e., where knowledge of Ontario and pools of convertible interest are greatest. This is especially important in the current economic climate. Indeed, even maintaining current volume may be a challenge. A three-tier planning and investment strategy is recommended: 1. Regional Markets Focus on markets where there is high potential for return on investment now. In a weaker economy, travellers may be restricting their destination options geographically allowing Ontario to tap into a relatively larger pool of potential visitors closer to home. Key markets include, Ontario, U.S. near markets, select U.S. mid-markets and Quebec. This does not imply accepting the status quo. To the contrary, these markets need to be approached with growing sophistication in terms of reaching relevant target groups with appropriate product and messages, and making use of emerging media to engage potential visitors with greater assurance. Packaging product will also become increasingly important as a means of simultaneously adding value and encouraging extended stays. 17

18 Strategic Overview 2. Traditional Overseas Markets It is important for Ontario to maintain its standing in the traditional overseas markets, where the province already has a presence. While these markets are not necessarily growing, they will continue to provide valuable revenue streams for the foreseeable future. In particular, the U.K. market is expected to remain the largest source of overseas visitors for at least the next five to ten years. Work with the Canadian Tourism Commission (CTC) and independently to educate U.K. travellers and provide them with trip-planning information. Online sources will be a cost-effective medium for communicating the desired message. Customize websites for other major overseas markets such as Germany and Japan. 3. New Overseas Markets Plan longer-term to build new overseas markets. Monitor and consider assigning higher priority to budgets for Mexico, China and India. First steps should include online educational and promotional efforts, tailoring the site for each market. Co-ordinate and collaborate with the CTC to ensure that Ontario s desired message and images are included in CTC efforts. 18

19 Strategic Overview Although a lower priority than the aforementioned three countries, South Korea and Brazil have also been identified as holding potential. In particular, Brazilian spending in Ontario currently surpasses that of Australians and is projected to grow to match that of visitors from France by Significant budgets should not be devoted to developing these emerging markets immediately. Instead, emphasis should be placed on the exploration of opportunities and the eventual crafting of growth plans. Some fundamental questions still need to be answered, such as: How should these markets be segmented and target groups defined in a manner that best serves Ontario s interests? What messages and product are relevant to these target groups? How much will it cost to break into these markets, and which media and communications approaches will be most effective? It is also likely necessary to come to terms with the CTC s leading role in marketing Canadian destinations overseas and whether Ontario s objectives can be accommodated effectively within the existing structure. Is it possible for Ontario to gain the leverage it needs within these emerging markets and, if not, what are the alternatives? It may very well be that Ontario s objectives can be well accommodated within the overseas marketing program for the Canadian brand, and certainly this would be desirable. Regardless, it will be necessary to work closely with the CTC to ensure that strategic directions are congruent, that Ontario receives appropriate attention, and that budgets are sufficient and media mix optimized to achieve success. 19

20 Overview Recommendations and Priorities Canada Don t ignore Ontario as a source market. It is absolutely vital to the health of the domestic industry and open to competitive encroachment. Continue to develop the Quebec market, placing particular emphasis addressing Francophone sensibilities, emphasizing points of differentiation from Quebec and aligning product to interest (both in terms of geographical proximity and activities). The three western provinces (B.C., Alberta, Saskatchewan) do not represent high potential for Ontario at the present time. United States Maintain a presence in all Tier One markets as an important defensive/ maintenance measure. Pursue the Tier Three markets of New York City and also Chicago. Develop New Jersey, Philadelphia and Washington D.C. as budgets allow. Consider a targeted strategy for major Tier Four markets longer term. 20

21 Overview Recommendations and Priorities Overseas Work with the CTC to ensure that Ontario s desired presence and positioning is appropriately represented in overseas marketing for Canada (coordination of strategic direction). Maintain a presence in the traditional core European countries (Germany, France) and Japan. Focus on the U.K. as it will continue to be the overseas revenue leader. Develop China, followed by Mexico and India, as budgets allow. Due to proximity, Mexico represents a better immediate target than India. Mexicans travellers interests in nature and outdoor experiences, history and educational experiences fit well with the Ontario offering. Monitor the growth of the middle-class in India and develop communication and advertising programs as budgets allow. Determine whether a low-cost host strategy targeted to major ethnic communities in Canada (Chinese, Indian) is viable as a means of generating greater tourism revenue from incoming VFR. Although a lower priority, monitor Brazil and South Korea 21

22 Detailed General Summary 22

23 Overview of Visitation and Spending - Domestic versus U.S. versus Overseas 23

24 Ontario Continues to be a Key Tourism Market While the purpose of this Study is to explore the tourism potential of specific countries and U.S. regions, the importance of the domestic market cannot be ignored: It is 4.5 times larger than the U.S. market in terms of numbers of visitors, and 3.5 times larger than the U.S. market in terms of total dollars spent. Ontarians need to be continually reminded of the tourism opportunities within the province. And these, products and product combinations need to be regularly refreshed. Traffic Volume (#) Expenditure Volume ($) Expenditure Per Person ($) Ontario 78.9 $13.0 $165 Canada (excl. Ont) 4.7 $1.5 $319 U.S $3.8 $216 Overseas 2.2 $2.6 $1,204 Person-visits to Ont. (millions) # spent in Ont. (billions) Average $ per person Source: Statistics Canada Travel Survey of the Residents of Canada (TSRC) 2006; International Travel Survey (ITS)

25 Proportion of Visitors by Origin Market (2006) Three-quarters (76%) of visitors to Ontario are travelling within the Province (i.e., Ontario residents). Next to Ontario s domestic market, one in six (17%) are U.S. visitors - by far Ontario s largest source of foreign visitors. In fact, in 2006, U.S. visitors outnumbered other international travellers by a ratio of 8:1. Visitors from other Canadian provinces are the next largest group, accounting for one in twenty (5%) visitors to Ontario. Finally, two per cent of visitors are international visitors. Ontario Other Canada U.S. International Source: Statistics Canada Travel Survey of the Residents of Canada (TSRC) 2006; International Travel Survey (ITS)

26 Overview of Visitation and Spending - U.S. versus Overseas 26

27 Total Visits Visitors from the U.S. comprise the lion s share of foreign travellers to the Province. In 2006, U.S. residents made more than 17M visits to Ontario, compared to 2M visits by overseas residents. There has been a fairly steady downward trend in U.S. visits from 2002 through Overseas visits faltered in 2003 (SARS was the main reason) and despite recovering in 2004, have been stagnant since then. Although data is not yet available, the high fuel prices experienced in 2007 and 2008, coupled with the economic challenges of 2008 are expected to have considerably curtailed travel to Ontario from U.S. and overseas markets *Source: Statistics Canada ITS, US Visitors (000)* Overseas Visitors (000)* 27

28 Total Visitors The decline in U.S. visitors between 2002 and 2006 stemmed mainly from a decrease in same day visitors. Same day visits in 2006 still outnumbered overnight visits (61% vs. 39% of all U.S. visits, respectively). However, unless this negative trend changes by the end of the decade, the proportion of same day visitors could decline to levels below that of overnight visitors. 30,000 25,000 US Total Visitors Overseas Total Visitors US Overnight Visitors Overseas Overnight Visitors US Same day Visitors Overseas Same day Visitors 20,000 # in '000 15,000 10,000 5, Source: Statistics Canada ITS,

29 Same Day Spending Same-day visitors spending patterns generally reflect the same trends as same-day visits to the province, with a significant downward trend in spending among U.S. visitors. Overseas same-day visitors are more lucrative to Ontario than U.S. same-day visitors, as the former likely compress more tourist activities into a single day. While overseas visitors represent only 2% of the total same-day visitors in 2006, they account for a disproportionately large share (14%) of the total dollars spent by same-day visitors in Ontario. 1,500 1,385 $ in million 1,000 1,142 1, US Overseas Source: Statistics Canada ITS,

30 Overnight Spending Overnight visitors spending patterns generally reflect the same trends as overnight visits to the province, with a slight downward trend among U.S. visitors and a slightly upward trend among overseas visitors. Overseas overnight visitors tend to be thrifty compared to their U.S. counterparts and are worth marginally less per person per night, than U.S. overnight visitors. However, because they tend to stay longer, overseas visitors spent almost 3 times as much in Ontario in 2006 than did U.S. overnight visitors on a per person basis. Thus, while they represent only 22% of the total overnight visitors in 2006, they account for a disproportionately large share (45%) of the total dollars spent by overnight visitors in Ontario, making them valuable contributors to Ontario. 5,000 $ in million 4,000 3,000 2,000 3,491 2,292 2,815 3,325 2,199 3,045 3,024 2,370 2,519 US Overseas 1,000 1, Source: Statistics Canada ITS,

31 Total Spending Overnight and Same-Day Visitors spending patterns generally reflect the same trends as overnight visits to the province, with a slight downward trend among U.S. visitors and a slightly upward trend among overseas visitors. Most of this decline is due to a decrease in same-day visitors. Overnight visitation from the U.S. has weakened only slightly. The U.S. will continue to be an important source of visitors in both the short and long-term. There is an immediate need to keep Ontario in the mind-set of U.S. residents and take advantage of opportunities to reinvigorate volume flow. 5,000 4,000 4,876 3,957 4,383 3,930 3,795 US Overseas $ in million 3,000 2,000 2,483 2,341 2,489 2,646 1,797 1, Source: Statistics Canada ITS,

32 North American Opportunity Markets 32

33 Ontario s Best Prospect Markets: North America Market Recommendation Eastern Michigan/Northern Ohio/ Western New York urban markets (Tier One) New York City, Chicago (Tier Three) Quebec New Jersey, Philadelphia, Washington DC (undeveloped Tier Three markets) Distant U.S. markets with large numbers of open non-visitors such as California, Florida, Georgia, Texas and Arizona (Tier Four) Maintain focus on core markets. Continue to build on past efforts. Target Montreal and Quebec communities along the Ontario border. Launch marketing efforts as budgets allow. Monitor the numbers of potential Ontario visitors, possibly undertaking research if numbers of potential visitors appear to be growing. The next step would involve identifying activity and lifestage/psychographic segments for targeting within significant population clusters. 33

34 North American Opportunity Markets North American Tourism Dollars (2006) Michigan and New York represent the largest U.S. markets for Ontario, while Quebec and Western Canada (B.C., Alberta and Saskatchewan) represent the largest domestic markets. In terms of total visitor expenditures, Michigan, New York State and Quebec are comparable. The long-term decline of same day visitor traffic from the U.S. will continue to present a challenge for Ontario All Canada Ontario Quebec Manitoba Western Canada Atlantic Canada $659 $127 $465 $ Visitor Expenditures (in millions) $14,523 $13,059 Michigan NY State Ohio California Pennsylvania Illinois Minnesota Florida Texas Wisconsin Massachusetts New Jersey $739 $612 $261 $232 $178 $150 $146 $134 $120 $106 $105 $99 Source: Statistics Canada Travel Survey of the Residents of Canada (TSRC) 2006 ; International Travel Survey (ITS) , 34

35 North American Opportunity Markets North America - Important Core Markets: The U.S. market currently offers Ontario a much more attractive opportunity than individual overseas markets. The U.S. market is eight times larger than the overseas market in terms of visitors and U.S. overnight visitors spend more per person per night, in Ontario than do overnight overseas market visitors. Tier One markets will continue to be key. Within Tier One, there are several markets that carry particular weight: Eastern Michigan (including Detroit), Northern Ohio and Western New York are each home to more than 100,000 nonvisitors who are open to the idea of travelling to Ontario if the right opportunity were to be presented to them. More importantly, there is strong support for Ontario among the 4.7M visitors from these states who might be encouraged to make a return visit. North America - Potential Markets: Tier Three markets hold considerable potential. The top two, in terms of numbers of potential visitors are New York City and Illinois (largely Chicago), each with more than 500,000 residents who are non-visitors to Ontario but who are quite open to choosing it for a future trip. Southeastern Pennsylvania (principally Philadelphia), New Jersey and Washington D.C. also hold considerable promise and should be included in future planning as budgets allow: Southeastern Pennsylvania has 324,000 who are open to visiting Ontario (with 204,000 residing in Philadelphia). New Jersey has 457,000 who are open to visiting Ontario. Washington D.C. has 289,000 who are open to visiting Ontario. 35

36 North American Opportunity Markets North America - Potential Markets: Tier Four also holds some potential for Ontario but is less attractive than Tier Three (and not simply due to greater distance). While there are large numbers of people open to visiting Ontario living in the states of: California, Texas, Florida, Arizona, Georgia and North Carolina, these potential visitors are geographically scattered and therefore difficult to reach cost-effectively with sufficient weight and frequency to be persuasive. For example, while Texas has 614,000 potential visitors to Ontario, they are scattered across a large state, which poses a significant challenge with respect to marketing. In contrast, a Tier Three city such as Washington D.C. has 289,000 potential visitors within one MSA, which lends itself to more focused communication efforts (i.e., messaging and media). Tier Two markets hold some potential but are clearly less attractive than those in Tier One and Tier Three since Tier Two essentially represents more distant areas within the Border States with generally lower population concentrations. The Tier Two market potential is largely spread over Western Michigan, Central & Western Ohio and Eastern New York State. Efforts to target Tier One are also likely to have a positive impact on some of the Tier Two markets through advertising spillover. Canada Within Canada, the West and Quebec hold the largest untapped pools of potential visitors to Ontario (997,000 and 554,000, respectively). Quebec s proximity presents Ontario with a relatively greater opportunity to attract potential visitors from this province than from among the more distant pools of potential visitors scattered throughout the three most western provinces. 36

37 Overseas Opportunity Markets 37

38 Ontario s Best Prospect Markets: Overseas Overseas Market U.K. Germany, France, Japan China Mexico India Brazil Recommendation Boost efforts to attract more U.K. residents (while the U.K. is a traditional market, it contains undeveloped potential which may require less effort to capture than new, emerging markets). There are significant opportunities among emerging overseas outbound travellers in the younger age cohorts. Maintain a presence in these core markets Increase marketing efforts in major urban centres Somewhat lower priority than China; Launch marketing efforts as budgets allow, focusing on key urban markets. Place emphasis on the unique combination of urban life, natural experiences history and education that Ontario offers within Canada. Launch marketing efforts as budgets allow, focusing on key urban markets, including the Punjab. Place emphasis on differentiating, unique, status-worthy experiences that will fuel conversation back home. Monitor economic conditions and tourism statistics to see whether it may be worthwhile to launch marketing efforts. 38

39 Overseas Opportunity Markets To help set the overseas markets into context, U.S. visitors provide an extremely important revenue stream. Visitors from Michigan and New York State spend more in Ontario annually than do overseas visitors from the top six countries combined. The U.K. and to a lesser extent Japan are currently the two most attractive overseas sources of tourism spending in Ontario Visitor Expenditures (in millions) Michigan NY State $739 $612 UK Japan China Germany Mexico France India Brazil South Korea Australia Netherlands Spain Source: Statistics Canada ITS, $116 $113 $104 $92 $69 $66 $48 $24 $250 $154 $151 $530 39

40 Overseas Opportunity Markets The Overseas Market: Regionally, Europe is by far the largest overseas market for Ontario generating 1.1M visitors in In distant second position, the region of Asia supplied 658,000 visitors to Ontario during the same year. In terms of growth, while the European outbound market has been expanding considerably in recent years, visits to Canada and to Ontario have not been growing. Asia and the much smaller region of South America however, are exhibiting steady growth in Ontario visitation. Despite this, at current growth rates, Asia will not overtake Europe in terms of numbers of visitors to Ontario for at least 10 years. Nevertheless, Asian expenditures in Canada and Ontario are strong and growing. In particular, spending by Chinese visitors to Ontario is expected to overtake that of Japanese visitors in the next couple of years. Similarly, spending by Indian visitors to Ontario is expected to overtake that of French visitors in the next few years. All of this implies that it is important for Ontario (via Canada) to maintain a strong presence in its traditional overseas markets over the next few years, but to also begin implementation of strategies to develop a presence and tap into the potential of newly emerging markets. This is a transitional phase that is likely to play itself out over a long period of time. It should be noted as well, that there is no intended implication here to abandon the traditional source markets long-term. It is anticipated that they will continue have a prominent place as drivers of external tourism volumes. However, they will ultimately become part of a larger and more diverse global mix of source markets. 40

41 Annual Growth in Long-Haul Travel from Key Markets The following chart reflects the potential of various key markets based on their travel to destinations that are at least as far as Ontario. It does not reflect the incidence of visiting Ontario. Based on this definition, Brazil, Spain, Australia and Mexico hold considerable potential. This data is taken from the report Identifying Ontario s Opportunities in the Overseas Travel Market. Percent Change Average Annual Rate Of Growth % % % % % % Country: UK France Japan Germany Australia Italy Netherlands Spain Mexico Brazil Source: Ministry of Tourism: Identifying Ontario s Opportunities In The Overseas Travel Market (Oct. 2008) 41

42 Overseas Opportunity Markets Overseas Market Projected Change in Long-Haul Travel Of these key markets with the exception of Japan, all are expected to grow substantially between 2006 and 2012 based on the analysis in the report Identifying Ontario s Opportunities in the Overseas Travel Market. Although China and to a lesser extent Brazil, are expected to realize the greatest growth, the potential opportunities for Ontario need to be considered in light of actual visitation and expenditures. The U.K. will continue to be the leading source of overseas visitors based on these projections. It should be noted that India is not included in this analysis. Visits To Places Equal Or Farther Than Ontario Rate Of Change /2006 Country Of Origin: UK 13,512,870 14,525,810 16,099, % France 5,666,060 6,600,580 7,170, % Germany 5,497,170 6,405,930 6,920, % Japan 5,019,890 4,391,290 4,872, % Australia 2,700,000 3,137,510 3,566, % Italy 2,532,270 2,940,590 2,940, % Netherlands 2,238,180 2,695,080 2,939, % Spain 2,169,960 2,492,480 2,721, % Brazil 1,665,280 2,253,310 2,523, % Mexico 1,573,840 1,790,890 2,035, % Switzerland 1,280,820 1,487,330 1,648, % Sweden 1,270,580 1,509,690 1,628, % Korea, Republic 1,051,730 1,105,360 1,233, % Belgium 786, , , % China 646, ,980 1,054, % Source: Ministry of Tourism: Identifying Ontario s Opportunities In The Overseas Travel Market (Oct. 2008) 42

43 Potential Spending based on Visitation Forecasts The top five overseas revenue generators are expected to retain their leading positions through 2010, but by 2012, India may overtake Germany. Moreover, while the U.K. clearly is expected to retain its number one status, the ranking of the other top countries will change. China is expected to overtake Japan as the runner-up in terms of tourism dollars. Mexican tourist spending will possibly overtake that of the Germans. Note: The projected visitation and potential spending are based on a forecast by Oxford Economics for visitation to Ontario. Origin Current and Projected Total Visits in Ontario Current and Projected Spending in Ontario UK Japan Germany France Mexico India China South Korea Australia Netherlands Brazil Spain 421, , , ,000 $530,334,577 $509,000,000 $499,000, , , , ,000 $250,095,230 $195,000,000 $204,000, , , , ,000 $151,266,219 $154,000,000 $155,000, , , , ,000 $112,521,878 $114,000,000 $118,000,000 98, , , ,370 $115,528,089 $165,000,000 $165,000,000 86, , , ,339 $103,573,942 $135,000,000 $145,000,000 85, , , ,134 $154,198,155 $215,000,000 $234,000,000 68,046 88,370 85, ,103 $68,877,591 $89,000,000 $87,000,000 60,125 65,609 65,636 70,866 $65,597,371 $72,000,000 $72,000,000 56,519 59,914 56,987 63,144 $47,745,130 $51,000,000 $48,000,000 45,983 54,721 59,258 66,318 $91,744,951 $109,000,000 $118,000,000 30,313 33,693 36,988 38,211 $23,995,983 $27,000,000 $29,000,000 Source: Ministry of Tourism: Identifying Ontario s Opportunities In The Overseas Travel Market (Oct. 2008); ITS $528,000,000 $219,000,000 $160,000,000 $129,000,000 $186,000,000 $171,000,000 $282,000,000 $102,000,000 $77,000,000 $53,000,000 $132,000,000 $30,000,000 43

44 Domestic Markets 44

45 Canada Current and Potential Domestic Visitors The West holds the greatest untapped potential for visitors (non-visitors open to visiting Ontario). However, due to distance, Quebec may offer greater potential reward. 1, Quebec Domestic Market Ontario Border Provinces Quebec Manitoba Rest of Canada The West Atlantic Atlantic The West , Manitoba Source: TAMS Conversion Model, Total Ontario Ontario Permanent Residents # in '000 Visitor Open 45

46 Quebec Market 46

47 Quebec Summary The Quebec market represents the largest source of Canadian visitors from outside Ontario. Overnight visitors constitute the majority of visitors from Quebec. However, these visitors are disproportionately Anglophone and visiting friends and relatives. Quebec also holds untapped potential, with roughly 0.5M non-visitors open to the idea of visiting Ontario under the right conditions. Quebecers who express any interest in visiting Ontario, express a wide range of interests which fit well with the existing tourism offering. In particular they mention that they would like to visit small towns and villages, parks, hiking trails, natural landmarks, family attractions and to stay at a B&B or country inn. Winery tours and theme parks are also high on the list of intended activities. Interest in Ontario is centered around the cities of Ottawa, Toronto and Kingston, but also extends to include southern Ontario. Northern Ontario is particularly appealing to those from the nearby Outaouais/Abitibi region. To make inroads into Quebec, Ontario needs to reach out to Francophone travellers as well as Anglophones. This requires French advertising that is sensitive to Quebec cultural nuances and does not appear to compromise. Travel information also needs to be provided in French. French signage will also create positive touch-points. The key to advertising and communications is to address the lack of familiarity with Ontario and perceptions of Ontarians as being unfriendly/unwelcoming people. There is also a need to focus on what is distinctive relative to Quebec itself. This is a challenge given similarities in geography, environment (the outdoors) and the strength of Montreal and other centres in Quebec as focal points for culture and entertainment. Strategies need to be developed to make Francophones feel welcome in Ontario. Having staff who can reach out to Francophones in their own language could be leveraged to make French Quebecers feel comfortable in Ontario. 47

48 Quebec Summary Interest in Ontario is fairly broad-based, and includes those of average means. Value is an important criterion in trip selection. Mature Families, Mature Singles and Couples and Seniors are the best prospects. Given its population, the Greater Montreal area is a good target. However, all regions along the Quebec/Ontario border offer good prospects, particularly if an effort is made to attract Quebecers to specific local events and attractions in close proximity to their point of origin. Similarly, give some emphasis to Ontario destinations and product in close proximity to the Quebec border in order accentuate the ease and convenience of choosing Ontario. Profile Ontario s small towns and villages, parks, hiking trails, natural landmarks, beaches, family attractions, B & Bs, country inns, winery tours and theme parks. Don t compete directly with Quebec s iconic attractions. Place more emphasis on differentiating Ontario from Quebec (e.g., different cultural experience, different landscape and history). Perceived familiarity with Ontario and assumed similarity to Quebec (particularly in terms of landscape and history) represent impediments to stimulating interest. Leverage cultural/language differences ( it s like visiting a foreign country without the hassles ). Mass media have a role to play. In particular, television is hugely popular in Quebec. Destination websites and brochures are popular among Francophones and provide good means of delivering secondary support to broadcast and print. Other means of targeting Francophones include non-destination websites and government tourism offices. In addition to mass media and brochures, Anglophones can also be targeted via non-destination websites and travel magazines. 48