Pending deal with China bodes much-needed boost to tourism

Canada's struggling tourism sector may soon get a boost from an unlikely source: the Chinese government.

Chinese President Hu Jintao's official state visit to Ottawa this week may indicate the two countries are finally close to signing a new bilateral deal that was promised six long months ago.

After Prime Minister Stephen Harper paid his first visit to China in December, triggering a thaw in the once-frosty relationship between the two countries, domestic tourism officials hailed the news that China was finally willing to grant Approved Destination Status (ADS) to Canada.

While more than 100 other countries already enjoy such status -- enabling them to market tour packages to China's increasingly sizable army of affluent, middle-class travellers -- Canada has long been frozen out of the action.

The December announcement was supposed to change all that. But a formal bilateral agreement has yet to be drafted and signed between the two countries. And with the peak summer tourist season already underway, it's too late to capitalize on the ADS designation, even if it's formalized soon.

Still, the Chinese leader's visit to Ottawa this week, coinciding with the run-up to the weekend-long G20 summit in Toronto, may finally give the verbal agreement some life, boosting prospects for Chinese tourism heading into 2011.

China's weekend announcement that it plans to allow the yuan to gradually increase in value against other currencies also promises to boost the buying power of Chinese citizens -- another potential boost for tourism to Canada, which is generally regarded as a high-cost destination.

Let's hope so.

Relief can't come too soon for Canada's tourism industry, which has been alternately ravaged in recent years by recession, high fuel prices, tough new U.S. passport rules and the lofty loonie. All have conspired to reduce the number of travellers from the U.S., traditionally the main source of foreign visitors.

This year, the sagging euro is also dampening tourist traffic from Germany, France, Italy and other European countries. So any increase in the flow of visitors from China would be welcome.

As it stands, the number of Chinese visitors is still modest. In 2008, about 161,000 Chinese citizens -- largely business travellers, students and relatives -- visited Canada, up marginally from the previous year.

In Alberta, the total was roughly 24,000, or just 1.5 per cent of all foreign visitors, says Don Boynton, spokesman for Travel Alberta. Like many others, he's anxiously hoping for some good news from the Chinese president.

"We don't have the green light yet, but we've been anticipating it for some time and we're ready to go as soon as the governments sign off on it," he says.

"Edmonton Tourism is one of the key players in our industry here in the province that's chomping at the bit. There won't be an overnight advertising blitz. There's still some preparatory work that's needed, but we can't start those conversations until we have the technical details worked out."

Once China does formalize the ADS designation, the Conference Board of Canada expects total inbound traffic to grow by roughly 50 per cent by 2015. But even that projected growth could turn out to be conservative.

In other countries that already have ADS, such as Australia and the U.S., the number of visitors has skyrocketed. Given that, the Canadian Tourism Commission says Canada could see a 40-per-cent spike in the number of Chinese travellers in the first year alone.

For his part, Gordon Houlden, who heads the China Institute at the U of A, regards the Conference Board's estimates as more realistic. He doesn't foresee an immediate spike in numbers. But even so, he says the long-term impact on Western Canada's tourism sector will be significant.

"What's happening now with Chinese tourism is that people are largely self-selecting (their travel plans) and getting visas and coming to Canada on their own or through family members. So (the Conference Board's projections) over time are realizable," he says.

"While China still has very modest average net incomes, there are tens of millions of people who are now middle class or upper-middle class. There's something like a third of a million millionaires in China, and somewhere between 50 and 100 million people who would be solidly middle class by almost any definition," he adds.

"So that makes it a large-ish country of people who have the means to travel. This could be a very important shot in the arm, over a period of years. And that should benefit the Alberta economy -- in particular those small or medium-size businesses that don't get involved in the large trade deals we see between Canada and China."

Sourced=edmontonjournal