TIAC Warns That Industry Is On The Brink Of Disaster
TIAC wants this country’s next federal government to continue to lend a financial helping hand to a beleaguered tourism industry, with TIAC president Beth Potter bluntly warning Thursday that her industry is “on the brink of disaster” if measures that were created to assist firms struggling during the COVID-19 pandemic aren’t extended.
Potter — speaking from Banff, where TIAC is holding its first in-person event since the start of the pandemic — labelled the tourism industry “the first hit, hardest hit and the last to recover” from the pandemic fallout.
The impact on the visitor economy has been greater than SARS, the 2008 economic crisis and 9/11 combined, she continued.
“Prior to COVID-19, tourism was Canada’s fifth-largest sector, sustaining more than 1.8 million jobs,” Potter continued. “But since the pandemic, the industry has lost two summer seasons, drained financial reserves, taken on massive debt and now has difficulty attracting enough employees as it strives to relaunch…”
“Tourism is on the brink of disaster without continued federal support.”
A newly released TIAC report found that tourism businesses have faced devastating revenue losses due to COVID-19.
- Almost 40% of respondents say they would have to shut down their businesses today if they no longer received support from government programs.
- One-third of respondents expect more than a 50% decline in revenue in 2021
- compared to 2020.
- One-third of respondents lost between 75% and 100% of revenue compared to the same time in 2019.
- 64% of respondents indicated low cash flow as a challenge facing their business, with a majority citing financial shortfalls and burdens as the biggest risk currently impacting them.
- Almost half of respondents have taken on over $50,000 in debt to keep their business afloat.
- A majority of respondents predict it will take between 1 to 3 years for sufficient tourism demand to return to the pre-pandemic level of profitability.
- 65% of respondents accessed the Canada Emergency Wage Subsidy (CEWS), and 35% accessed the Canada Emergency Rent Subsidy (CERS).
“Even with extensive vaccinations and the gradual lifting of restrictions, a bleak fall and winter is certain,” Potter warned. “There will be no conventions, limited business and government travel, and the wind down of support programs (CEWS and CERS) could not come at a worse time.”
Potter is urging “all parties to support a qualified and limited financial support program from September 2021 to May 2022 to the hardest-hit businesses.”
TIAC wants to see:
- Survival support for the hardest hit tourism, hotel and event businesses of any size that have experienced a 40% loss in revenue in any 12-month period after March 31, 2020.
- Government support would cover negative cash flow from normal financial operations (i.e., excluding capital expenditures and non-cash items such as depreciation or accruals). Support would not exceed 75% of normal cash expenditures.
- The program would run through to May 31, 2022 and cash flow would be calculated on a cumulative basis inclusive of CEWS and CERS.