Turbulence Ahead: Tough Business Conditions Await Tourism Operators This Summer

Turbulence Ahead: Tough Business Conditions Await Tourism Operators This Summer

Tourism HR Canada is predicting a summer with a high demand for tourism, but also one that will be fraught with labour difficulties for tourism operators. 

In the final month of 2017, Canada’s jobless rate added 79,000 positions and sank to its lowest level in four decades. At 5.7%, the unemployment rate is now below the level that is considered full employment. 

As reported by the Globe and Mail, a difficult year is expected for employers. In a strong job market, employers have to make extra efforts to retain their existing staff, who will be afforded plenty of opportunities for greener pastures. 

Tourism operators should expect to see particular difficulty this year, notably during the summer months. Our Canadian Tourism Employment Snapshot for December showed that tourism unemployment stood at 5.0%, down from 6.5% in December 2016. Readers should note our labour force data shows seasonally unadjusted rates, while the commonly reported rate of 5.7% for the whole economy is the seasonally adjusted rate.1

What is most concerning: the tourism sector’s unemployment rate fluctuates over the year. Below is the monthly trend line for tourism unemployment for the last decade. In 2017, the rate bottomed out at 4.4% in July and 4.8% in August—making summer, peak tourist season in most areas of the country, the most difficult time to find staff.

Figure 1 –Tourism Unemployment Rate 2006 to 2017

Tourism’s annual unemployment rate has also trended lower than that of the overall economy for the better part of last decade, as displayed here.

Figure 2 –Seasonally Unadjusted Unemployment Rate

We have already seen how labour shortages negatively impact tourism operators. There have been reduced business hours, hotel rooms taken out of circulation, and—in extreme circumstances—temporary closures due to a lack of workers.

Compounding the issue, this could be another record year for tourism in Canada. In 2016, Canada welcomed 20 million international visitors, the highest number since 2002. The celebration of Canada’s 150th birthday, combined with a low dollar and greater international recognition of Canada as a leader on the world stage, led to continued growth in 2017. This year is the Canada-China Year of Tourism, which will continue to drive international tourists to Canada.

On the business front, this is great news, but the labour situation may truly put the screws to business operators as they struggle to find the staff needed to meet demand. This, in turn, could hurt tourism’s economic impact and our reputation as a tourism destination, as travellers are potentially met with closed doors, lower levels of service, and a less rich experience than we could provide with a full complement of well qualified tourism professionals.

1 Seasonally adjusted data removes regular annual events, such as holidays, climate, and vacation periods, that affect employment. It is not available for the tourism sector. Using seasonally unadjusted numbers allows comparisons between the tourism sector and the overall economy.