Tourism HR Canada has published its latest labour supply and demand projections report—the final report of this series. This work was carried out by the Conference Board of Canada on behalf of Tourism HR Canada, and reflects statistical modelling of labour force, employment, and job vacancy rates out to 2040.
Preliminary and interim modelling projections have been published over the last three years, but this final report draws on more up-to-date data and incorporates contextual information gleaned from surveys and focus groups conducted over the past year with tourism operators and leaders.
Shortage Here, Surplus There
The long-range forecast for the tourism sector looks good. Models suggest that by 2040, the gap between labour demand (businesses looking for workers) and labour supply (people available for work) will narrow to just shy of 4,000 people—a marked improvement over the current state of the sector.
However, this sector-level generalization masks significant variation between industry groups: food and beverage services is projected to have a net shortage of around 28,000 workers, while recreation and entertainment is projected to have a net surplus of around 18,000 workers.
These figures are derived from the Conference Board of Canada’s proprietary MOST forecasting engine, which models the Canadian economy in relation to demographic, economic, labour, and external factors, and then derives tourism-specific projections from this larger model.
As with all projections, this model is not perfect and necessarily cannot take into account all possible trajectories that the sector may follow as it continues to recover and grow following the pandemic. However, all things being equal, these projections are a useful tool for identifying likely pressure points coming down the demographic pike, so that we can collectively act to address problems before they become crises.
A World of Opportunity: Tourism Growth Targets
These latest figures provide an interesting point of comparison for Destination Canada’s ambitious plan for 2030, which aims to see an additional revenue growth of $20B per year across the tourism sector.
Destination Canada’s models are based on Statistics Canada’s National Tourism Indicators (NTI), where tourism revenue is used to estimate employment generated by tourism. This is a different definition of “tourism employment” than what has informed the modelling in our report, but it is possible to calculate an approximate equivalence between the two systems using historical data in both the NTI and the Labour Force Survey (LFS).
When this mapping is applied to the projections in the Conference Board of Canada’s model, it shows that the tourism sector is on track to meet Destination Canada’s targets for growth, at least on the labour front.
Of course, different projections based on different assumptions and models are not always directly comparable, but it is nevertheless promising to see that these different models are converging on a very similar estimate of tourism employment in 2030. If anything, our models suggest that there is even the potential for additional labour growth—barring unforeseen disruptions, and all other things being equal.
Impact of Retention Rates, Study Permits
As well as modelling the baseline projection (all things being equal), this report also explores two distinct scenarios, outlining their respective impacts on the short- and mid-term state of the tourism sector.
- The first scenario presented is an increase in retention rates of 25% across the sector. In practice, this would be dependent on changes to bring workplace values cultures into closer alignment with what job-seekers are looking for (such as improvements across compensation and benefits, sustainability, and work-life balance) and increased career-pathing (such as training, mentoring, and supports for framing tourism as an attractive career choice). This scenario was modelled over a ten-year window, and the projections suggest it could see annual revenue increases of around $2.4B through to 2034. Food and beverage services would likely see the most benefit from this strategy, although all industry groups would see gains in bench strength and revenue.
- The second scenario explored is the impact of the government’s recent decision to cap international student visas: it models the effect over two years of a reduction of 35% in the number of student permits issued. As students make up a substantial proportion of tourism employment, particularly during the summer months and on evenings and weekends throughout the academic year, the impact of this policy change is potentially enormous. The Conference Board of Canada’s models suggest the cumulative impact over two years of this reduction is around $8B, and an average annual reduction of around 37,000 workers in tourism industries. Again, food and beverage services is likely to bear the brunt of this impact, as this industry group employs the largest share of workers aged 15 to 24.
Calls to Action
Some of the recommendations to come out of this report include perennial items such as addressing the sector’s poor reputational profile, improving working conditions in general, and making more strategic use of immigration programs to meet labour demands.
None of these are new calls to action, of course, but the modelling and analysis behind them, as presented in this report, lend more weight to the urgency with which they need to be addressed.
The report also draws attention to the fragmentation that characterizes the tourism sector overall, and calls for a more cohesive and coordinated approach to advocacy efforts. This includes the need to carefully examine and revisit the functional definition of the tourism sector, as the current standard definition and characterization is feeding into this fragmentation and undervalues the economic footprint of the sector at national, provincial/territorial, and regional levels.
At a time when tourism demand is expected to increase dramatically, we need to work together to raise the visibility and profile of the tourism sector across the country, or we risk missing out on the full growth potential over the next decade and a half.
The full projections report, The Future of Canada’s Tourism Sector: Labour Demand and Supply Analysis, can be downloaded here. The report is also available in French here.