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Boom or bust: the state of Alberta tourism depends on your postal code

Mountain towns are busier than ever, but venture outside the Rockies and it's a different story

Nov 21, 2016

by Alberta Venture Staff

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Alberta is known for its boom and bust economy, with the focal point being the oil and gas markets. But there’s another, more predictable boom and bust cycle in the province, one driven by the changing of the seasons rather than the price of WTI, and it’s familiar to anyone with a business in the Rocky Mountains. “It’s the chipmunk theory here,” says Marc LeBlanc, owner of Jasper’s Liquor Lodge, a small boutique retailer with regular tastings and an eight-station Enomatic wine dispensing station. “You have to make it in the summer to make it through the winter.” LeBlanc and his wife, Megan, launched the business in 2007, so they’ve seen the cycle nine times now. He says businesses have to contend with the seasonal peaks and valleys, but that – with the low Canadian dollar, an influx of tour buses from the U.S. and steady European traffic – the summer months have been really strong for years. “You’d have to go back five years to find a time when we weren’t hitting the peak numbers,” LeBlanc says. “People in Jasper talk about the July lull, which happens after the Canada Day weekend, when the Calgary Stampede draws a lot of the traffic. But this year was full throttle, from the end of June through August.” And this chipmunk has gathered a lot of nuts. The day before we spoke in August, LeBlanc received a $30,000 delivery from one of his suppliers.

Unfortunately, the world looks very different when you come out of the mountains. David Kaiser, president and CEO of the Alberta Hotel and Lodging Association, says one of the most important metrics for a hotel is the revenue-per-available-room, or RevPAR. “We can be 100 per cent full, but if we sell rooms for $5 per night we’re not making money,” he says. “But if our rates are high and there’s nobody there it doesn’t matter either. So you put those two numbers together and get the reality.”

The RevPAR numbers in Alberta back up LeBlanc’s anecdote. For the six months ending in June 2016, the RevPAR for the mountain resorts was up 13.5 per cent over the same period a year earlier. But it was down 10 per cent for Edmonton, 20 per cent for Calgary and 30 per cent for the rest of Alberta. The five-year trend is even starker. While RevPAR in the mountains is up 170 per cent, in Edmonton and Calgary it held steady and in the rest of the province it dropped 16 per cent.

Kaiser says the decline reflects both an overbuild of supply coming out of the good times and the plunge in the price of oil: If you’re operating a hotel in Bonnyville, for instance, oil and gas workers, not tourists, drive your revenue. And if there are no workers in the field, rooms are empty regardless of the price.

On top of the oil-driven downturn in the flatlands, Kaiser says the tourism and lodging industries have been hit by unfriendly provincial government policies, including corporate tax increases and the ongoing stepped increase in the minimum wage. The government has also reduced the marketing budget of Travel Alberta, the provincial agency charged with promoting Alberta across the country and around the world. Travel Alberta has had a remarkable string of marketing successes in recent years – in particular the Remember to Breathe campaign – but this its marketing budget was cut by almost 10 per cent, from $54.5 million to $49.5 million. A spokesperson for Ricardo Miranda, the minister of Culture and Tourism, cited the need for fiscal restraint when Alberta Venture asked about the cut, but when you consider that the four per cent tourism levy charged on hotel rooms alone brought $81 million to provincial coffers in 2015-16, it seems like a poor decision from a return-on-investment perspective.

Kaiser does give the government credit for supporting the development of more “export-ready” tourist products outside the mountains. He says the government is investing in existing attractions in major centres, like the Calgary Zoo and Fort Edmonton Park, but getting meaningful options in the hinterlands will be tougher. “You’re seeing a lot of head scratching around what do we have locally to promote and who should we be aiming this product at?” he says. “Is it realistic for people moving in and around Alberta?”

Back in Jasper, LeBlanc is doubtful that efforts to draw a lot of tourists out of the mountains will counter the beauty that surrounds him. “You have to fish where the fish are,” he says. “What I hear from a lot of international tourists is that this is the most gorgeous place they’ve ever been to. We’ve heard that in Jasper for a long time, but it seems that people are more engaged than ever with the idea of getting outdoors and experiencing nature.”

And that’s not a bad thing for affected businesses. In fact, it might be too much of a good thing. LeBlanc says the hotels in town are already full in the summer, and that the challenge will be to balance development with protection of the parks’ environmental integrity. He cites the federal government’s recent announcement of support for a $66-million, 107-kilometre bike trail from Jasper to the Columbia Icefield. It’s controversial, like any development in the national parks, but LeBlanc says it’s the kind of low-impact development that might be appropriate. “It’s not just some publicly traded American corporation building a gimmick off the side of the highway and disturbing an otherwise beautiful cliff,” he says, referring to the Glacier Skywalk, the stunning but controversial new addition to Jasper National Park which is owned by Phoenix-based Viad. LeBlanc would rather see money go into relatively low-impact development of trail infrastructure. “Ninety per cent of visitors don’t go more than 10 metres from their car,” he says. “We want to encourage people to interact with the mountains more.” Either way, LeBlanc sees a bright future for business operators in the mountains. “People live in tight urban spaces all over the world, and Jasper is one of those places that are going to remain wild and wide open,” he says. “I don’t see this place going out of style.” The question is, how many of those people will be enticed to come out of the mountains and try something else on for size?

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