For Quebec at least, the drop in Canadians travelling to the U.S. appears to be providing an economic boost, as domestic tourism is proving a strong driver of the provincial economy this year, according to a report from economists at Desjardins Group.
The latest GDP data showed that, while the goods sector is struggling in Quebec, service industries are doing relatively well — particularly the accommodation, food services and recreation sectors, which are getting a boost from local tourism.
“Even as several traditional drivers of Quebec’s economy are showing signs of slowing, tourism spending continues to support economic activity in many parts of the province,” said the report, released on Friday. “And given the recent shifts in Quebecers’ travel habits, tourism could turn out to be a standout contributor to the provincial economy this year.”
One key driver of this trend is the drop in cross-border tourism over the past couple of years, in the wake of U.S. trade action against Canada, and the increasingly hostile U.S. political environment.
For instance, Desjardins noted that, in May, while Canadian trips to the U.S. were down 25% from two years ago, for Quebec cross-border trips were down 33% versus 23% for the rest of Canada, “suggesting Quebecers are staying away in larger numbers.”
While some of this has been offset by increased foreign travel that avoids the U.S., the trend has also increased domestic tourism — which is boosting the local economy.
Indeed, Desjardins estimates that Quebec could see nearly $1 billion in added economic activity, if “a third of the tourist dollars typically spent in the U.S. were instead spent in Quebec.”
Looking ahead, the domestic tourism trend represents a likely benefit for the provincial economy.
“Amid ongoing U.S. protectionism and modest economic growth province-wide, where people choose to vacation is just as important to the economy as the choices they make at the grocery store,” the report said. “Seasons and destinations may change, but one thing remains the same: when tourism spending stays in Quebec, so do the benefits.”