Weak Canadian economy, low loonie expected to limit cross-border travel

MONTREAL - The American sunbelt is expected to feel a chill this winter from Canada's weakened economy and a loonie that's lost more than a quarter of its value in the past couple of years.

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Overnight cross-border travel was down about nine per cent in the first nine months of the year over the same period last year, but more Canadians are likely thinking twice about forays to top destinations in Florida, Arizona, California and Texas this winter given the Canadian dollar is expected to drop even further.

"Clearly there's going to be some hurt in some of the traditional snowbird markets," Derek Burlton, TD Bank's deputy chief economist, said in an interview.

The bank is predicting the Canadian dollar will fall to about 71 cents US before recovering somewhat to 80 cents in the next couple of years.

Burlton said some Canadians - especially those in hard-hit Alberta who tend to visit Arizona and California - may stay closer to home this winter. But those who crave the retirement lifestyle may offset the higher cost of travel by cutting back on restaurant meals, shopping or even reducing the length of their vacations.

"The trips will happen, (but) I think there may be some efforts to mitigate some of the impact on costs from a weaker Canadian dollar," he said.

Douglas Gray, author of The Canadian Snowbird Guide and operator of the website snowbird.ca, said travelling south is too important to the snowbirds' quality of life for them to abandon their winter habit entirely.

"They may cut back a few weeks if they feel they need to because they have an incredibly tight budget, but generally speaking, people will make adjustments accordingly to try to stay there because that's where their friends are," he said from Vancouver.

Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida, said fewer Canadian visitors this year could hurt a slew of tourism-related businesses and generate lower state sales tax revenues.

"When you're talking about 25 per cent or so loss in the value of the loonie - that's a pretty significant hike in prices in stores or on menus in restaurants for Canadian visitors," he said.

Florida is among the top U.S. destinations for international travellers, including one in five Canadians who cross the border.

But for the first time in several years, travel from Canada to the state is dipping. Florida has been able to partially offset the drop in Canadians who used to drive south by attracting more air travellers with additional flights and new carriers to the state, including Toronto-based Porter Airlines, said Paul Phipps, chief marketing officer of Visit Florida.

Any hit from fewer Canadian visitors has been balanced by record numbers of travellers arriving from other locations. And Phipps adds that more than 700,000 Canadians own second homes in the state.

"So they're going to continue to travel because they already have their housing, and family and friends will come and take advantage of that secondary housing too."

After peaking in 2010, Canadians purchased US$11.2 billion worth of properties in the United States in the 12 months up to March 2015, said the National Association of Realtors.

They were replaced by the Chinese as the top international buyers with Florida, California, Texas and Arizona accounting for half of all sales.



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