The tourism sector showed moderate growth in the second quarter of 2024, marking the second consecutive quarterly increase in spending. As reported by Statistics Canada, total tourism spending reached $18 billion, up 0.7% from the previous quarter. This comes on the heels of a 1.4% increase in the first quarter, signaling a steady recovery as both domestic and international tourism rebounded.
Tourism’s contribution to Canada’s gross domestic product (GDP) rose by 0.8% in the second quarter, outpacing the economy-wide growth rate of 0.5%. This increase was driven by notable gains in transportation services, which saw a 1.8% rise, and accommodation services, which experienced a 0.8% boost. Despite these gains, the sector’s overall output remains 6.4% below pre-pandemic levels, reflecting the lingering effects of the COVID-19 pandemic.
Jobs linked to the tourism industry grew by 0.3% during the quarter, following a 0.9% increase in the first quarter. The recreation, entertainment, and air transportation sectors saw the most significant job growth, with increases of 1.3% and 1.7%, respectively. However, this progress was tempered by a 1.2% decline in employment within the accommodation sector. Overall, Canada’s total employment increased by 0.6%, leading to a slight decline in tourism’s share of total jobs to 3.3%.
Spending on passenger air transport was a major driver of growth, rising by 1.0% in the second quarter, while spending on accommodation services increased by 1.2%. These sectors were instrumental in pushing overall tourism spending upward, with travel demand continuing to recover, particularly in air travel. However, challenges such as rising costs and operational bottlenecks remain prevalent in the air transport sector, which could limit future growth.
Domestic tourism spending increased by 0.7%, with passenger air transport and accommodation services being the largest contributors. The ongoing recovery of air travel within Canada is significant, reflecting increased consumer confidence and the easing of restrictions in recent months.
International visitors to Canada contributed to the sector’s positive performance, with spending rising by 0.5% in the second quarter. Although this marks a slight deceleration from the 0.8% growth recorded in the first quarter, it is notable that overnight travel to Canada by international visitors increased by 3.7%. This resurgence in foreign travel follows years of restrictions, and the demand for accommodation services by these visitors, up by 0.9%, accounted for almost half of the total growth.
International visitors continue to play a crucial role in Canada’s tourism recovery. However, their share of total tourism spending has remained stable, highlighting the strong recovery in domestic tourism compared to pre-pandemic levels.
Tourism continues to be a vital source of revenue for all levels of government in Canada. In 2023, government revenues attributable to tourism reached $29.6 billion, up 12.8% from 2022. This substantial increase was driven primarily by tourism-related taxes, including the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST), which together generated $15.2 billion in revenue.
The federal, provincial, and territorial governments collected the lion’s share of this revenue—93.7%—while municipalities and Indigenous governments accounted for the remainder. Notably, revenues from tourism exports rose by 43.6%, reflecting the strong recovery of international tourism. This surge was largely fueled by a 45.0% increase in spending by international visitors in Canada.
For every $100 spent by Canadian tourists within the country, an average of $26.40 was generated in government revenue, while non-resident tourists contributed $25.39 for every $100 spent. Overall, tourism spending generated $26.16 in government revenue per $100 spent, a 3.9% decrease from 2022.
Tourism remains a critical pillar of the Canadian economy, contributing significantly to the country’s GDP and job market. With its nominal GDP share rising to 1.60% in the second quarter, the industry’s recovery is well underway. However, the lingering gap between current performance and pre-pandemic levels suggests that more time is needed before a full recovery is realized.
Domestic tourism, which accounted for 77.0% of government revenues related to tourism in 2023, remains the backbone of the sector. Nevertheless, the ongoing recovery in international travel is helping to diversify the sources of revenue and solidify tourism’s role as a key driver of economic growth.
While the tourism sector is on a positive trajectory, challenges remain on the horizon. Inflationary pressures and higher operational costs, particularly in air travel and accommodation, could hinder growth in the coming quarters. Additionally, ongoing labor shortages in certain sectors, such as accommodation services, continue to affect employment growth, despite the overall increase in tourism jobs.
The second quarter of 2024 marks another step forward in Canada’s tourism recovery, with incremental gains across key sectors such as air transport and accommodation. While domestic tourism continues to be the main driver of growth, the resurgence of international visitors offers promising prospects for the future. As governments benefit from the revenue generated by the tourism sector, the focus will remain on supporting the industry’s growth and addressing the challenges ahead.