MANITOBA CHAMBERS OF COMMERCE STATE OF THE TOURISM INDUSTRY RECOMMENDATIONS NOVEMBER 2015

MANITOBA CHAMBERS OF COMMERCE STATE OF THE TOURISM INDUSTRY RECOMMENDATIONS NOVEMBER 2015

INTRODUCTION The state of the tourism industry in Manitoba is on the precipice of something great. Over the past decade, financial investment by the various levels of government and the private sector have been critical in regards to key capital projects. For example, the development of the Canadian Museum for Human Rights, Investors Group Field, Assiniboine Park, expansion of the Winnipeg Convention Centre and many others as well as the support for local events and festivals throughout the province. The provincial government deserves credit for bringing world class events, like the FIFA Women s World Cup, the Junos, and the Grey Cup to Manitoba. That investment has been critical to the tourism industry in regards to providing the building blocks that are essential to ensure Manitoba has a quality product to offer potential visitors. In addition, the work that has been done by Travel Manitoba as the lead marketing and development agency for tourism in Manitoba has further enhanced the tourism opportunities in Manitoba. This organization has shown leadership in working with tourism partners and strengthening relationships with the business community. The Manitoba, Canada s Heart Beats brand has been a game changer. It was well researched, developed and executed and has resulted in increased awareness of Manitoba as a tourism destination and has been recognized provincially, nationally and internationally for awards. But more needs to be done if we are to take advantage of what we have achieved to date that will result in increased tourism, jobs and revenue to the Manitoba economy. 1

The Manitoba Chambers of Commerce (MCC), established in 1931, is the umbrella organization for Manitoba s chamber movement. With a membership comprised of 69 local Chambers of Commerce, as well as direct corporate members, MCC is Manitoba s largest and more diverse business lobby, representing close to 10,000 businesses and community leaders. One of the advantages the Manitoba Chambers of Commerce enjoys is the ability to discuss issues facing the business community across Manitoba with a wide range of business leaders and experts in different fields. The Manitoba Chambers of Commerce believe tourism is a critical pillar that can grow and strengthen Manitoba and our economy. Over the last two years, our organization has worked with local chambers and tourism stakeholders across the province and that has provided us with a solid understanding of the importance of tourism and the financial impact it has on Manitoba. We have established a Tourism Committee representative of various sectors in the industry. The MCC tourism committee has discussed the state of the tourism industry in Manitoba and has identified a clear need to establish greater awareness of the importance the industry plays within Manitoba and the significant impact tourism has on the provincial economy and everyday citizens. Manitoba Chambers of Commerce Tourism Committee Merv Gunter, Frontiers North and Chair, Manitoba Chambers of Commerce Michelle Gervais, Tourism Riel Doug Stephens, Wow Hospitality Jim Baker, Manitoba Hotel Association Bill Martin, Manitoba Bed and Breakfast Association Claudette Leclerc, Manitoba Museum Paul Turenne, Manitoba Lodges and Outfitters Association Pit Turenne, Aikens Lake Lodge Chuck Davidson, Manitoba Chambers of Commerce Cory Kolt, Manitoba Chambers of Commerce 2

MANITOBA IS GAINING STRENGTH AS AN INTERNATIONAL TOURISM DESTINATION There is no doubt that Manitoba is gaining strength as an international tourism destination. The following factors demonstrate that the tourism industry is gaining momentum: Compelling Brand The new tourism brand, Manitoba, Canada s Heart Beats has established itself as an authentic identifier of all that is Manitoban, drawing together industry, business, government and residents. Research has demonstrated the brand is inspiring potential visitors to consider Manitoba as a vacation destination and has the potential to have a significant impact in the province s key target markets. Industry Alignment Regional tourism associations and destination marketing organizations have aligned with the provincial tourism campaign. They have adopted the new brand and are including campaign images and theme lines in their websites and marketing materials. Alignment of marketing resources is critical to ensure tourism partners are not working at cross purposes. Business Community Engagement The new provincial brand has successfully engaged the business community with partnered investment increasing by 24% in 2014. Several businesses who do not have direct ties to tourism have invested to support the airing of branded commercials on both domestic and international Air Canada flights, signaling growth in the understanding of the importance that the tourism industry has on the provincial economy. Competitive Attractions and Entertainment Newly built attractions are gaining visitor attention; The Canadian Museum for Human Rights, the Assiniboine Park Conservancy s redevelopment of the Park and Zoo, Upper Fort Garry and the renewal of the Manitoba Museum can be regarded as confident indicators of Manitoba s tourism potential. Consumers are increasingly seeking travel opportunities that deliver new experiences and Manitoba s tour operators are responding by introducing a new range of activities. New itineraries have been created to offer residents and visitors a diverse range of tourism products and experiences featuring warm hospitality, abundant wildlife, spectacular scenery, natural wonders and outstanding culture and the arts. 3

Accommodations It is time we focus our attention on marketing to people across the globe, so they can start sharing in the Manitoba travel experience. The Canadian currency has lost values against the US dollar and the British pound and Euro are projected to lose value in 2016. Exchange rates can influence where visitors choose to vacation and how much they spend. This will make Manitoba more appealing as a destination. The magnitude of growth projected for outbound travel from China is incredible and Manitoba should ramp up quickly on both the marketing and hospitality service sides. In 2015, revenue from Manitoba s accommodation sector is projected to grow by 3.9 per cent. With the strong market performance anticipated for 2015, the per-room hotel value is projected to increase 5.1% from 2014. Over the next 4 years, the room supply in the Winnipeg hotel market is projected to increase by 9%, but demand growth is projected to outpace the rate of supply growth, allowing hotel values to increase even as new supply is absorbed. Winnipeg s per room value is projected to reach its highest level in 2018. Major Events Manitoba has a solid track record and reputation for hosting major national and international events. Winnipeg s recent experience hosting seven games of the 2015 FIFA Women s World Cup has shown that major events have huge economic impact on communities throughout the province. Entries from the US in June 2015 were up over 57% compared to the previous June, accompanied by a sizeable rise in hotel occupancy and room rates. Air Access Access to Manitoba has improved considerably with the opening of Winnipeg s new $500 million Winnipeg James Richardson International Airport. The new airport has not only enhanced the visitor experience, it has attracted new international air access to the province such as the new Westjet service to the UK and the opening of New Leaf, a domestic/ international carrier based now in Winnipeg. Air Access is a critical component in Manitoba s marketing equation. Expanding convenient access from Manitoba s international markets is essential for international market development and growth. Meetings and Conventions With the opening of the expanded Winnipeg Convention Centre in the Spring of 2016, Manitoba will have the capacity to attract larger meetings and conventions. Delegates spend 4 times more than leisure visitors and on average spend nearly $1,000 per stay on transportation, hotels, dining and shopping. Travel Manitoba is leveraging support from Destination Canada to target the US and key overseas markets. 4

TOURISM SECTOR PROFILE Tourism in Manitoba remains one of the biggest drivers of the economy bringing in more than $1.52 billion in expenditures annually. Based on 2012 tourism data from Statistics Canada the amount spent by visitors in Manitoba totaled more than $1.5 billion. That makes up about 2.8 per cent of our total Gross Domestic Product (GDP). Tourism contributes $552 million in tourism tax revenues and $596 million in export revenues. Tourism also means jobs for Manitobans. The tourism industry is made up of close to 5,500 tourism businesses creating close to 25,000 direct, indirect and induced jobs throughout Manitoba, and today, local universities and colleges offer certificate and degree programs in tourism, encouraging our youth to seek career opportunities in this segment. The Importance of Tourism Dollars in Manitoba Might Surprise You $1.5 BILLION DOLLAR INDUSTRY $596 MILLION IN EXPORT REVENUE 23,500 TOURISM JOBS $552 MILLION TOTAL TAX REVENUE $256 MILLION IN PROVINCIAL TAXES Manitoba Total Visitation - 2012 * Manitoba Other Canadian Provinces United States 9% Overseas 4% 1% Manitoba 9,152,000 visits Other CDN Provinces 994,000 visits USA 378,000 visits 86% Overseas 78,000 visits *Statistics Canada Travel Survey of Resident of Canada (TSRC) and International Travel Survey (ITS) 5

A SUSTAINABLE INVESTMENT IN TOURISM In November of 2012, the government released an action plan on tourism. In it, they called for a review to determine a sustainable funding model to support tourism and marketing development. The Manitoba Chambers of Commerce, on behalf of our members and tourism stakeholders as a whole, is calling on the provincial government to work with industry stakeholders to implement the sustainable tourism investment model presented to them by Travel Manitoba. The MCC Tourism Committee knows that increased investment in tourism marketing has the potential to contribute more to Manitoba s economy. The Manitoba Government is sending a mixed message to tourism stakeholders. Although they have invested significantly in capital to build new attractions, the investment to market those products has not kept pace. This Field of Dreams Build it and they will come mentality is not a recipe for tourism success. Despite the fact tourism represents close to 3% of our provincial GDP, Travel Manitoba, the lead organization for marketing and developing Manitoba s tourism industry, receives $7.5 million of investment from the provincial government. That investment has not increased in over a decade and ranks 10 th for tourism investment when compared to other provincial jurisdictions. Province * Budget (million) Provincial Tax Revenue Budget as % of Tax Revenue British Columbia $50.6 $1,200.0 4.2% Alberta $72.9 $1,117.0 6.5% Saskatchewan $15.2 $264.0 5.7% Ontario $174.9 $3,970.0 4.4% New Brunswick $12.9 $99.2 13.0% Nova Scotia $13.1 $131.0 10.0% Provincial Average 7.3% Manitoba $7.5 $241.1 3.1% Tourism businesses in the province rely on Travel Manitoba to explore opportunities for growth in the United States and overseas markets. The high cost of marketing severely limits our capacity to capitalize on Manitoba s growth potential and Manitoba tourism businesses are increasingly relying on the domestic market which accounts for 61% of tourism expenditures. Manitoba s competitors are investing aggressively in marketing to high potential markets where Travel Manitoba does not have budget capacity to invest. Marketing to longer haul markets remains a challenge for Manitoba. 6

Plan 96/4 was developed by Travel Manitoba and approved by their Board of Directors. The plan proposes that the provincial government increase its investment in marketing programs by simply dedicating 4% of provincial tourism tax revenues to fund Travel Manitoba. The additional investment would be used exclusively, 100%, to increase their marketing efforts. Plan 96/4 has the potential to increase annual tourism expenditures by over 35% to $2.1 billion by 2020. Sustained, incremental investment will allow Travel Manitoba to market to high-value international visitors, who spend considerably more a minimum of $545 on average per visit than domestic visitors. With sustained incremental investment, Travel Manitoba will target increases of 1-3% in high value visitors over the next six years. Plan 96/4 has the potential to deliver $288 million in new money as well as an additional $46 million in tax revenue to the province. The province s investment would be more than offset by an increase in provincial tourism tax revenues. The Return on Investment for the government is immediate. An initial incremental investment of $3 Million would be more than offset by an increase in provincial tax revenues. This additional revenue provides the government with the ability to increase investment in priorities like healthcare, education, and infrastructure and of course tax relief. 7

Plan 96/4 has already been reviewed and assessed by Western Management Consultants (WMC), an independent third party who has concluded that the findings are both reasonable and attainable. The WMC report confirms: That the average per trip expenditure of $545 is very conservative. WMC has recently reviewed older data in which overseas average spending levels were twice this figure and US per trip spending was 30% higher than the selected figure. As a result the return on investment may be higher than projected. That for a proposed incremental marketing investment of $28.2 million over five years, an additional $288 million in total provincial tourism expenditures could be realized from high yield markets. This is a return of 10 times the investment. That based on the above total tourism spending, WMC verifies that an incremental $46.0 million in provincial tourism tax revenue at an incremental cost of $28.2 million for the period 2015-2020 could be achieved. That incremental investment will increase their potential to leverage private investment in tourism marketing initiatives going forward. It is imperative for the provincial government to change their mindset and see this plan as investment in Manitoba. Manitoba has the tourism products in place and an effective brand to market Manitoba as a world class destination. Without sustainable investment that provides the tourism sector with the marketing tools it requires, very few outside of Manitoba will even know our attractions exist. 8

BUILD A PROVINCIAL TOURISM STRATEGY Tourism is a complex industry. It is not defined by a single sector and is multifaceted, supported through word of mouth, return visitation, and through marketing in partnership with Travel Manitoba. The MCC Tourism Committee recognizes that Manitoba s tourism industry is entering a new era of prosperity and growth. There is a need for strong tourism policies and a framework to help guide and prepare everyone involved to tackle the challenges that lay before the industry. Travel Manitoba has a solid business plan that has successfully aligned the industry under one brand to market Manitoba s tourism experiences internationally. However, the MCC Tourism committee has identified a need for coordinated leadership to focus the tourism industry on priorities such as: enhancing the quality of our existing tourism experiences; creating new and enhanced tourism experiences; improving hospitality; enhancing direct air access from international markets; improving the tourism infrastructure (roads, rail, signage); and growing or enhancing destination areas. Alignment of key stakeholders under one provincial tourism strategy will give Manitoba its best chance to be successful. Collaboration, a clear definition of roles and alignment will bring efficiency to our efforts. Tourism is a shared responsibility between the public and private sectors to ultimately drive more economic development across the province. It is too difficult task for any single entity to accomplish alone. The Manitoba Chambers of Commerce is requesting that the provincial government invest in the development of a comprehensive provincial tourism strategy to coalesce the industry around a clear, unified and effective future strategic direction. Manitoba has the potential to realize economic benefits from tourism in all of our tourism regions, by providing what the traveler wants, and by tapping into new and growing markets both domestically and abroad. Rethinking Manitoba s future as a tourism destination means that a broad cross section of stakeholders needs to be open to possibilities and contribute in meaningful ways to a shared vision and key strategies for growth. It s important that we continue to collectively engage in an open and transparent process in crafting the plan. 9

The tourism industry in Manitoba is on the precipice of something great and we need to advance the development of a provincial tourism strategy quickly to ensure we capitalize on this tremendous economic development opportunity. We urge the provincial government to host a Tourism Summit before the end of January 2016 to encourage dialogue on key opportunities in marketing, product development and capacity building. THE MANITOBA CHAMBERS OF COMMERCE RECOMMENDS: a That the provincial government adopt a sustainable funding model such as the Plan 96/4 tourism investment model proposed by Travel Manitoba and increase its annual investment in tourism marketing. a That the Province of Manitoba in collaboration with tourism stakeholders develop a provincial tourism strategy. a That the Province of Manitoba, in collaboration with the MCC Tourism Committee and Travel Manitoba, host a Tourism Summit by the end of January 2016. 10