The Tourism Industry Association of Canada (TIAC) is calling attention to the challenges many of Canada's travel and tourism business have in staying afloat - even after pandemic restrictions have ended - due to insurmountable debt and a decline in international visitors.
According to research commissioned and published by TIAC, 45 per cent of businesses in the Canadian tourism sector said they are likely to shut down unless the government steps in to adjust their loan conditions.
"Unless there’s some change to the payback system and the payback requirements, they’re in danger of closing in the next three years,” Beth Potter, CEO of the trade organization, is quoted as saying by the Toronto Star.
The recent study assessed the amount of debt businesses had accumulated from federal government loans, lines of credit, and other credit facilities that helped sustain their operations during pandemic-related periods of inactivity. It also measured the businesses' confidence in their ability to repay this debt.
Based on the findings, more than half (55 percent) of businesses in the tourism sector are uncertain or lack confidence in their capacity to fulfill debt payments, including both principal and interest, within the next two years. The loans to be repaid include those taken out through federal pandemic relief programs such as the Canada Emergency Business Account (CEBA) as well as the Regional Relief and Recovery Fund and the Highly Affected Sectors Credit Availability Program.
In response, the tourism association is urging the federal government to extend the zero-interest repayment deadline for CEBA loans until 31DEC, 2025. It is also requesting that Ottawa increase the forgivable portion of fully repaid loans from up to 33 per cent to 50 per cent, and extend the qualifying deadline for loan forgiveness until the end of 2024, rather than the current year-end deadline.
“Further measures are needed to ensure the full economic recovery of tourism businesses,” said Walt Judas, Chair of the PTTIA and CEO of the Tourism Industry Association of BC. “While the CEBA and its related programs served as a vital financial bridge during the height of the COVID-19 pandemic, these businesses remain in a volatile position. Yes, doors are open, and travellers are returning to Canada, but the research is clear that greater flexibility is needed to allow businesses to get out from under the massive financial implications of the pandemic.”
About 30 per cent of survey respondents reported more than $250,000 in outstanding debt. One in five claimed debt between $100,000 and $250,000.
One reason weighing on repayment efforts is a lack of overseas tourists compared with 2019. In MAR, the combined number of visitors to Canada and returning residents sat at 77 per cent of MAR 2019 levels, according to the most recent figures from Statistics Canada.
Even in the United States, whose travel industry rebounded more quickly than Canada’s, business and international travel remain below 2019 levels.
The survey was conducted by NANOS on behalf of TIAC with support from the Provincial and Territorial Tourism Industry Association (PTTIA).
The full report and tabulations can be found here.