On diversification

The CP reports that Canada's tourism numbers are on the upswing from almost all sources - but that the decline in U.S. tourism has nonetheless led to an overall drop in the industry:

Visitors from overseas are coming to Canada in droves, but the influx won't compensate for the cost of a proposed new travel document requirement that's already keeping Americans away, a prominent tourism advocate warns...

While the increase in overseas visitors is good news, the drop in U.S. travellers could mean a $2-billion shortfall for the tourism industry in 2005...

Because Canada's $57.5-billion tourism industry depends so heavily on U.S. visitors, a market that has declined some 30 per cent in the last five years, the good news from overseas is often overshadowed.

The article has a very negative tone due to the absolute drop in tourism. But the overall decline is a predictable result of Canada's overreliance on one market for tourists. In tourism as for other industries, the recent trend toward dependence on U.S. business has left Canada vulnerable to both economic weakness and arbitrary political decisions from our southern neighbour. And with both of these factors strongly in play, there's no realistic chance to make up for the loss of American tourists on an immediate basis.

That said, the current trend also appears to be toward a more sustainable long-term structure which isn't quite so reliant on U.S. tourists alone. The absolute drop is a symptom of the problem with relying too much on one source of tourists...but the growth elsewhere also signals an industry that's working to build a broader base so that it won't be so vulnerable in the future. And with any luck, the additional tourists coming from overseas will return home with a positive impression which will induce even more of their compatriots to give Canada a look.

Of course, it would also be a plus to attract back a higher number of Americans, and Canada should do its best to encourage policies which will allow that to happen. But Canada also needs to recognize the limitations on our ability to influence the actions of the U.S. - and to develop other markets to the point where the U.S.' problems don't inevitably lead to a decline at home. The result may be slightly less short-term gain than could be acquired through an effort to bring in the most U.S. dollars immediately with no regard for the associated risks...but the longer-term stability is more than worth the tradeoff.