Tourism Industry in Canada: Elasticity

   Tourism in Canada is a top ten export with respect to revenue generated (over $15 Billion per year) and also contributes to the earning of the title of No. 1 country brand (by Futurebrand).  To say that tourism is an important industry in Canada would be an understatement.  However, like most industries, tourism is not immune to the economic turmoil currently occurring throughout the world.  Despite the volatility in the economy in most parts of the world, there are some countries that are actually seeing an above average increase in gross domestic product (GDP).  This translates into higher incomes and hence more discretionary income to spend on things like international travel, which involves the concept of income elasticity.  Also, like other industries, there are competitors in the tourism industry and they are other countries.  The choice of which "product" you will purchase is greatly affected by the cost of your product (influenced by currency exchange rates) as well as of competing products, which also brings the concept of cross elasticity into consideration when discussing the current state of the tourism industry in Canada.
   The largest increases in visitors to Canada from 2010 to 2011 were from China (23%), Brazil (10%), Mexico (7%), and India (6%).  Despite this increases from some countries, overall tourism is down 2% from 2010 to 2011.  These "developing" countries have all demonstrated above average GDP growth (3.1 - 9.5 %).  A higher GDP will translate into proportionately higher incomes for the residents of these countries, which means more people will be able to afford international travel (positive income elasticity) and Canada is one of many countries that they may choose.  The United States is one of Canada's main competitors in the tourism industry and has seen larger increases from China (37%), Brazil (27%), Australia (19%), and France (16%) and overall, the United States saw a 4% increase in tourism from 2010 to 2011.
   The reason for this disparity may be the "cost" of travel to the United States.  With the weakening of the US dollar, it is relatively less expensive to travel to the United States compared to Canada and other countries.  This is a good example of cross elasticity of demand.  When the price of one product (US tourism) decreases compared to another (Canadian tourism), with the consumers income staying constant (within a given time period), the demand for the less expensive product increases. 
   In conclusion, despite the increase in discretionary income in many countries allowing more people to partake in international tourism and travel, Canada has been unable to capture a significant portion of these due in part to the higher "cost" of travel to Canada due to the strength of our dollar.

Acknowledgements
Canada Tourism Commission (2010) Tourism Snapshot. Retrieved December 23, 2011 from http://en-corporate.canada.travel/sites/default/files/pdf/Research/Stats-figures/International-visitor-arrivals/Tourism-monthly-snapshot/tourismsnapshot_2011_09_eng.pdf