The Ontario Tourism Industry

Head Table Guests

Gareth Seltzer, Vice-President, Private Banking, Guardian Capital Advisors and a Director, The Empire Club of Canada; Geoffrey Cambridge, OAC student, Danforth Collegiate and Technical Institute; Dr. Daniel Dryer, Chaplain and Director, King Bay Chaplaincy; Gary Selke, Vice-President, Institutional Equity RBC Dominion Securities; David Lipton, President, Sensors Quality Management; Jan Ruby, Assistant Deputy Minister, Tourism Division, Ministry of Tourism and Recreation; George Cooke, President and CEO, Dominion of Canada General Insurance; Duncan Jackman, Investment Officer, Personal Trust and Investment, Cassels Blaikie and a Director, The Empire Club of Canada; Ken Rotman, Managing Director, Clairvest Group Inc.; Josef Ebner, Vice-President, Delta Chelsea Inn; Martin Peskin, Executive Vice-President, Cara Operations; and Donald Ziraldo, President, Inniskillin Wines Inc.

Introduction by David Edmison

When we think of American Express, we think of vacations and travel. Thanks to effective advertising, we also conjure up visions of someone relaxing on the beach, sipping a pina colada without a care in the world, despite having lost his traveller's cheques. Simultaneously, another harried tourist races from phone booth to phone booth and taxi to taxi trying to arrange for replacements for lost cheques, which much to his dismay were not American Express. And when the traveller's cheques are exhausted, there's always the American Express card. The well-earned reputation of trust, reliability, convenience and peace of mind usually means we "don't leave home without it"--whether we're going to the Caymans or to K-Mart.

The American Express Company was founded in Buffalo in 1850, as a small freight-forwarding company, moving goods across the Canada/U.S. border. Its roots in Canada go back before Confederation, with the opening of the Hamilton office in Canada West in 1853. The business of the company has evolved from expressing hard goods, to dispensing currency and cash substitutes. Today, American Express is a large travel, financial and information services organisation, operating all over the world. Last year's sales exceeded $15 billion (U.S.).

American Express operates two companies in Canada, Amex Canada Inc. and Amex Bank of Canada. Its Canadian banking license was acquired in May 1990. With us today to talk from this dynamic company, and the executive responsible for its continued success and expansion in Canada is Alan Stark. Mr. Stark has the dual responsibility as President and General Manager of Amex Canada Inc. and President and CEO of Amex Bank of Canada, positions he has held since 1993.

In these capacities Mr. Stark has led Amex's move into the Canadian credit-card market from its stronghold in the charge-card sector. He has also expanded Amex's card-reward programme to become one of the most successful in the Canadian market and a standard for American Express worldwide. Under his leadership Amex's corporate travel and payments' services have enjoyed sustained growth, including the acquisition last year of the corporate travel-management business of Thomas Cook.

Our guest has spent 20 years with American Express, previously working for Air Canada at its European Headquarters in London, England. He has an educational background in marketing, and this, combined with his travel experience, has led to frequent invitations to speak on travel and tourism issues. He serves as Chairman of the Marketing and Information Technology Committee for the Government of Ontario's Tourism Council, and as Chairman of the Quebec Tourism Circle, an industry forum established by American Express.

Mr. Stark is active in a number of community organisations. He is a volunteer with the Toronto Breakfast Club which provides healthy breakfasts to needy children in the city and he is a board member with Junior Achievement of Canada, an organisation which runs in-school programmes to introduce young people to the world of business.

Our guest is multilingual, fluent in French and German and can hold his own in Dutch and Spanish. He is an outdoorsman who enjoys jogging and golf and plays a mean game of tennis. I've absolutely no doubt that while enjoying these outdoor pursuits, "He never leaves home without it--his racquet, that is!"

Ladies and gentlemen, I ask you to welcome our distinguished guest, Mr. Alan Stark.

Alan Stark

It suddenly struck me yesterday. Tomorrow I appear at The Empire Club lunch!

In panic I remembered amongst the pristine, unopened, unread business titles, stuff like "Wisdom of Teams," "In Search of Excellence," "Pathways to Performance," there were some beautifully bound books which might help me--The Empire Club addresses throughout the 1980s. I then spent a couple of hours happily engrossed in some of the speeches--and was struck and honoured by the distinguished names who have gone before me. And especially some of the other Brits--Margaret Thatcher on "Responsible and Prudent Economies," "Lord Carrington, then head of NATO, on "Forty years on--since the beginning of NATO," and Sir Edmond Hillary on "Beyond Everest." Come to think of it, he was a New Zealander, but we are in The Empire Club--so I can claim him perhaps as an honorary Brit. All of the aforementioned of course were moderately well qualified to speak on their given subjects. I come before you with the advantage of being a relative newcomer to my subject. I have been only three years in Ontario and dare to speak on the Ontario tourism industry. So, if any of my remarks today make any sense to you, it is probably because of my long international experience with American Express and the fresh outlook I bring to Canada.

Equally, if my remarks make no sense at all, it is for the same reason.

Anyway, as Monsieur Parizeau might say, "Revenous a nos moutons." Let's get back to our sheep or back to the business of the day.

I wonder if you have ever thought that we're not just having lunch at the Royal York? Have you ever thought instead that we're spending our noon-hour at the absolute epicentre of Canada's tourism industry? Two blocks west is the world's most advanced sports and entertainment complex, the SkyDome. A few feet behind is the highest free-standing structure on earth, the only man-made thing, aside from the Great Wall of China, that astronauts can pick out when they look back on earth. A few blocks up the road, the Eaton Centre has grown to be Toronto's second-largest visitor attraction, and remember: it wasn't built to attract tourists; it's a shopping mall. And surrounding us on three sides are some of the most beautiful and successful live theatres anywhere, part of what has made Toronto the third-largest producer of live theatre in the world, superseded only by London and New York. Garth Drabinsky's "Phantom of the Opera" has been running for well over 2,000 days and nights to packed houses. And if you're wondering what the "Phantom" has to do with tourism, remember: 80 per cent of its audience now comes from more than 100 miles away from Toronto.

You would think with attractions and statistics like this that tourism would be booming here in Ontario. In one sense, it is. Hotel occupancy rates, for instance, are up by 13 per cent over three years ago. And more Americans are coming across our border--attracted in part by our low-cost dollar. Compared to years past, we're doing fine. But compared to other destinations, it's a different story.

Neither Canada nor Ontario which accounts for 40 per cent of Canada's travel industry are living up to their extraordinary potential. You'd think that with all our awesome landscapes, our safe cities, clean air and vast wilderness that Canada would be one of the world's most attractive visitor destinations--especially in an age when more and more visitors want the best of two opposite worlds when they travel. But at a time when Americans should be flooding across our borders to throw money at our tourism operators and store keepers, they're trickling through. Otherwise, why is it that every 10-per-cent drop in the value of the Canadian dollar generates an eight-per-cent-drop in Canadian overnight travel to the U.S.? But the same 10-per-cent depreciation only generates a four-per-cent increase in overnight travel from the U.S. Why is it that our supreme brand name in visitor destinations, a place just 30 miles due south of us across Lake Ontario--Niagara Falls and the surrounding area--is experiencing absolutely flat growth in the number of visitors it is attracting?

The answer is complex and perhaps even chronic. As someone whose career has embraced tourism in Europe and Asia, I am always puzzled why Canada, and Ontario in particular, are not higher on the list of the world's favourite vacation spots. The reality is Canada isn't a particularly popular place to visit--unless you're a Canadian, of course, and the dollar forces you to explore your own backyard. In fact, Canada was once ranked sixth in the world in terms of attracting visitors from beyond its borders. But that was back in 1980, over a decade ago. Over the last 10 years, we have seen Canada drop back to 12th position as a world-travel destination, many tens of millions of people behind France, which is number one, and even behind Hungary, which is 5th. The Asian countries have knocked us back, to be sure. They're growing at a rate of eight per cent per year. But if you think they're just starting from a lower base, I should remind you that both France and Germany are growing faster than Canada on a straight percentage increase basis. Does it really matter that we're becoming less competitive in comparison to other nations? I mean, we're becoming more competitive in areas such as telecommunications and auto making. We can't expect to win them all.

Well, yes, of course it matters, and for reasons other than nostalgic patriotism. The first reason is that we have the human, physical and financial resources to regain our prominence and maximise our potential as a travel destination. It's not as if we're expecting to become a world leader in surf board making or rice growing, where we have no competitive advantage at all.

The second reason is that tourism is booming everywhere else. It's not only a winner in terms of industries; it's fast becoming the winner. Look at countries the world over and you'll see that tourism is one of the fastest, if not the fastest growing sector of their domestic economies. A ' decade from now, the World Travel and Tourism Council predicts that worldwide, tourism will account for 11.4 per cent of direct and indirect GDP. The travel industry is expected to more than double in size--generating some 126 million more jobs than exist today. By the year 2005, more than one in 10 people in the global work force will make their living in a tourism-related job.

Whatever call to arms I'm sounding about Canada should be heard with particular clarity here in Ontario. The province accounts for two out of every three international visitors to Canada. It supports close to 400,000 direct and indirect jobs and contributes almost $19 billion directly and indirectly to the gross provincial product. In fact, tourism across Ontario is so pervasive that, for the past 10 years running, it has been the province's fourth-largest export industry--attracting some $4.3 billion in export earnings last year through visits from Americans and other international guests. So given that tourism is already such a critical component of our province's economy, and if we believe that it has the potential to be one of the chief drivers of its economic renewal the question is: Can Ontario regain its rightful place in the world market?

The answer has to be "yes." We have to make our way past the Hungarys to be a bigger player in the global market and turn around the province's $3.3 billion travel deficit. I'm not saying that we should stop Ontarians flying south in the winter. I am saying that we need to attract more Americans to come north in the summer--and more British and French and Japanese. We don't have to build more beautiful vistas, unspoiled brooks or gorgeous lakes.

And we don't have to build many more big-city attractions. For the most part, they're here already and if they're not, they're under construction--like the expansion to the Metro Toronto Convention Centre, two blocks west of here which will enter the big leagues. Two years from now, it will become one of the top 20 convention centres in North America. I believe strongly that what we do have to build for Ontario tourism is better marketing--so that more visitors will feel compelled to come to Ontario. Because there's one thing we all know: once someone visits Ontario, they want to stay longer and visit more often.

I know that Bill Saunderson, the Minister of Tourism, will be listening carefully for the next shoe to drop. But Bill, I can assure you that this isn't going to turn into a pitch for more resources. Not one new dollar of provincial government money need be spent in order to renew--to revolutionise--Ontario's tourism industry. The key will be to spend that money more effectively. Ottawa has already stepped in. Just over a year ago, Prime Minister Chrétien announced the formation of the Canadian Tourism Commission, chaired by former Minister Judd Buchanan. What's refreshing is that the federal government not only announced that Ottawa has given priority to packaging and marketing Canada as a single destination, it has actually put some money behind the initiative.

With the announcement of the Canadian Tourism Commission came an increase in federal funding from $15 million to $50 million annually. Much of this $50 million is being used to leverage additional marketing money through partnership with the provinces, major attractions, hotels and airlines, as well as groups of small businesses. The federal government initiative gave the industry the first thing it badly needed--more money to leverage partnership opportunities to attract more visitors.

This leads us to the point now where the tourism industry in Ontario collectively steps up to the plate. It really began for me two years ago, when after some exploratory meetings between Queen's Park and a group of senior tourism industry leaders, two things became clear--one, the industry had some very clear ideas about how to market itself; and two, it came to believe it could do this not as a client of the government, but as a partner with government--with a leadership role. For the past decade, the same decade that saw our share of the world tourism market decline, the people with the real clout in Ontario's tourism industry were not industry people--not the owners of the Gananoque Bed and Breakfast or the CN Tower--but the provincial government whose marketing budget grew during the 80s to almost $19 million. Today it is less than half of this. To be sure, past governments talked to the thousands of tourist operators about how these sums should be spent. But that consultation was limited and sporadic at the best of times.

Over the course of the last decade, the province has thrown millions of advertising dollars at the United States and Europe in order to get international visitors to think of Ontario for their next vacation. This led to some beautiful award-winning commercials, but no beautiful increases in foreign visitors. The reason is clear--the name "Ontario" means nothing to people outside Canada or a few of the border states. It never has and, no matter how much you spend proving otherwise, I don't believe it ever will. Other countries' states and provinces have avoided this temptation to spend large amounts of taxpayers' dollars vainly trying to build awareness of something consumers simply will not bother to recognise. This is not because Americans or Europeans are "geographically-challenged." It is because, in marketing terms, the brand-name of Ontario simply does not exist. To cut through the advertising clutter in a market as gigantic as the whole of the U.S. to create a brand for Ontario would take years and millions upon million of dollars.

So why market Ontario? Why put millions of dollars behind such slogans as "Ontario: Yours to Discover," or "Ontario Incredible," or "Ontario: Take a Breather"? Why not build on the images of that much better-known place--Canada--that brand-name known throughout the world? And why not focus directly on the cities and attractions of Ontario, Canada, which research and common sense tell us are much better known abroad than the province of Ontario? Nobody, for example, travels from the U.S. to visit "Beautiful Warwickshire." But millions of Americans make the trip every year to Stratford, England, to see Shakespeare's birth-place.

So why should we expect them to come to Ontario when they are far more likely to be attracted to the Stratford Festival, or Niagara Falls, or downtown Toronto, or a wilderness experience in Algonquin? That is just one of many recommendations contained in a report that has just been prepared for the Ontario Tourism Council by its Marketing Initiatives Committee, which I had the honour to chair.

The Ontario Tourism Council is a non-profit corporation of tourism industry professionals across the province, formed to create a new strategic marketing alliance between the industry and the government.

Michael Beckley, the President and COO of Commonwealth Hospitality (the largest hotel management firm in the country) is the chair. Other OTC board members here today are: Kirk Shearer, the President of the Metro Toronto Convention and Visitors Association, and Rod Seiling, the Executive Director of the Hotel Association of Metropolitan Toronto. The Council's ultimate goal is to create an effective marketing organisation similar to other successful jurisdictions in Canada and around the world. The British Tourist Authority, the Maison de la France, and the Australian Tourist Board are all public-private-sector partnerships that have won greater market share for their respective nations.

All of these organisations are contracted by government and receive support both from government and from industry partners such as airlines, hotel associations and cultural attractions.

What the Ontario Tourism Council envisages is a new tourism marketing organisation that would fulfil a number of responsibilities. These include: acting as a central clearinghouse for partnerships and events; facilitating marketing partnership with the Canadian Tourism Commission to maximise the federal dollars available to us; developing a comprehensive data bank for partnering opportunities; and providing direction for marketing the province's attractions within Ontario, within Canada, into the United States and beyond.

With Ontario, the need for an industry-based marketing organisation is even more apparent: when you have a multi-billion dollar product whose thousands of parts range from ice fishing on James Bay to Beauty and the Beast on King Street. When you have under $10 million to market it with, you need to use those few dollars creatively and in a highly focussed way. The people who know that product best are the private-sector operators who have put their own money, experience and expertise into making it grow. The people who know how to market Ontario's visitor attractions most creatively are also in the private sector. We believe these groups can function more effectively under the umbrella of a single-purpose, private-public-sector partnership. The industry as a whole can function more effectively when it is closer to its suppliers and closer to its customers. And I would submit that the government can function more effectively when it leaves the private sector to do what the private sector does best--re-privatises the tourism industry in order to help it grow.

An idea like stopping trying to create a brand for Ontario is just one of many recommendations put forward by the Tourism Council's Marketing Initiatives Committee. The report is not chiseled in stone. It is a work-in-progress, and we want everyone with a stake in the industry to take part in it. Starting in November, the OCT will be travelling to communities across the province in order to hear from more Ontarians how best the industry can design a new tourism marketing organisation that is distinctively "made in Ontario." On November 17, we will be holding our first workshop here in Toronto and I invite any of you who are interested to attend.

While our marketing report contains over a dozen specific initiatives and recommendations, let me give you a flavour of how some of them could change the marketing of Ontario for the better. Here is a preview of six of the most important strategies that reflect the industry's thinking:

Number 1. We agree with the Canadian 'Tourism Commission that we should give a very high priority to keeping Ontario travelling within Ontario rather than buying competing product in the U.S. And since the majority of inter-provincial trips are taken to the province next door, we believe it's in Ontario's best interests to capture more of the Quebec market--to encourage more Quebeckers to visit Ontario at the same time as we're encouraging more Ontarians to vacation here. After all, Quebec has for many years been the largest single source of out-of-province domestic trips to Ontario, accounting for some 2.7 million visits. These efforts will contribute to reducing out-travel payment deficit with the U.S.
Number 2. We strongly agree with the view supported recently by Hollis Harris of Air Canada that we want to make Toronto a "best in class" gateway city. Our aim should be to make Toronto the gateway to Canada and, for international visitors, the gateway to North America. We want to encourage visitors to stay longer and draw them further into the province. To do this, we need to capitalise on the opportunity that Open Skies has presented Toronto, since the ease of air travel greatly expands the city's origin markets. I saw an airport poster in Dallas recently for example, which was selling Dallas-Toronto for $99.
Number 3. We need to draw travellers visiting other gateways and the national capital further into the region and the rest of the province.
Number 4. We want to really capitalise on our great assets of natural and cultural attractions.

We have barely begun to tap our potential to be the best in the world at providing outdoor activities, adventure holidays, and native tourism packages. We use the words "in the world, best-in-class" frequently in our report. Since we believe we still have massive opportunities to improve the infrastructure, the marketing, and the distribution of these very strong assets. And we will need to be best-in-class to compete.

On the other hand, we are already becoming world-renowned for creating blockbuster annual events year-round, whether it's the Barnes Exhibit that drew 700,000 visitors to the Art Gallery of Ontario last year, or the 20th annual Toronto International Film Festival, which drew more members of the international media last month than the Economic Summit did in 1988. Last month, "Phantom of the Opera" celebrated the start of its seventh year in Toronto, while next month, Sunset Boulevard opens for what we hope will be an equally long run. Creating block buster events which really capture national and international interest is a key element in our recommended strategies.

Number 5. We want to market good value.

When 95 per cent of the American travel is domestic, that is, within America, and only 0.7 per cent of American travel is to Ontario, its immediate neighbour, we need to tap the double potential of open skies travel combined with major dollar savings. Think about it: we have to let Americans know that here in Ontario they get 35 per cent more for their dollar.

Number 6. We need to target new U.S. visitors, as well as repeat visitors. As I'm sure we've all experienced, once we lure visitors to Ontario, they become enthusiastic and they become repeat visitors. Ninety per cent of U.S. visitors to Ontario are here on their second, third or more trip. But it takes more than word-of-mouth to get an American, or anyone else, to visit some place foreign for the first time. It takes reinforcement of positive Canadian images through the media, together with advertising that doesn't simply create a favourable impression but actually prompts people to make a booking. We recommend resource allocations more strongly against attracting new U.S. visitors.

Let me conclude by making a simple observation. I hope I have made the case this afternoon for the need to let the tourism industry play a more important role in the province's economic well-being. Especially through the creation of more jobs. How would it do this? Well, by playing a more important role in its own destiny. We have the product. And for reasons beyond our control, we have the pricing too. What we need is effective marketing. It's tempting to sell marketing short--to view it as a frill that can either be cut in order to meet someone's deficit savings or not really necessary if you have the right product and pricing. In other words, "If you build it, they will come." Well, many millions of dollars spent promoting lovely images of Ontario have proved one thing: they won't.

To develop the kind of sales-oriented marketing programmes that sell packaged tourism experiences with themes and meaning we need a new approach. We need a public-private-sector partnership in a new, business-driven, tourism marketing organisation.

And to get to that point, what we need most of all is a will to change. With it, we can start the long process of regaining all that lost market share, of re-introducing the world to our attractions, and of re-balancing our tourism deficit.

The will to change is something I'm glad to see is in the air these days. Change and common sense. It was said best in the September 27th Throne Speech: "Your government is assessing which of its activities are unnecessary, and which others are best left to business." It will pursue alternatives such as partnership between government and private businesses, and opening government operations to outside business." And while the prospect of this kind of change is causing all kinds of people and interests in Ontario to cringe, when the subject is tourism and change, all sides can be smiling. For the result will be what all sides want--a more efficient, pro-active industry focussed on getting a greater share of the world's visitors to the country the United Nations has once again, and quite accurately I would say, declared the best place on earth to live.

Thank you.

The appreciation of the meeting was expressed by Gareth Seltzer, Vice-President, Private Banking, Guardian Capital Advisors and a Director, The Empire Club of Canada.