U.S. travellers are staying away and locals consider the capital quaint. Changing the attitudes working against Victoria won't be a tea party.

When the organizer of a major U.S. medical convention visited Victoria in February, the blooming crocuses and other signs of spring that characterize the city in the imaginations of winter-gripped Eastern Canadians were hardly in evidence. Instead, panhandlers and low-end tourist shops stood out as the main features along streets that weren’t exactly bustling with tourists. It was a stark contrast from the happy front the city had put forth the previous June, when the unnamed organizer had been delighted enough to plan a return visit prior to booking the four-day convention at the Fairmont Empress Hotel, which would have been a major boost for the city’s business-starved conference centre. But panhandlers and a lacklustre retail sector helped nix the booking. An eight-per-cent decline in U.S. tourist traffic in the first six months of 2006 further dampened spirits in Victoria’s tourism sector. Though domestic visitor numbers stand to boost overall visits to the city by two to three per cent this year over last year’s total of approximately 4.15 million visitors, it has done little to increase the fortunes of tourism operators. And that’s largely because American tourists tend to spend more, stay longer and take in more attractions when they’re visiting than the domestic market. Revenues for the city’s tourism sector have increased an average of just two per cent a year over the past decade, even as the number of attractions has increased. Case in point: BC Experience, a destination that opened with much fanfare last June in the former Crystal Garden pavilion behind the Empress, had expectations of drawing 360,000 visitors a year. Owners announced in September that it was seeking protection from creditors in the face of an accumulated debt of $8 million. Observers give a variety of reasons for the downturn in U.S. traffic, a phenomenon that has dealt a blow to tourism operators across Canada. U.S. tourists’ presence in the Victoria market has fallen from 37 per cent two years ago to 33 per cent last year, and another drop is likely this year. (This isn’t the only troubling news. In Canadian Business’s recent survey of the best places to do business in Canada, Victoria ranked dead last.) The obvious culprits are a weak U.S. dollar and high gas prices, as well as confusion over passport requirements spawned by the Western Hemisphere Travel Initiative that will require U.S. citizens to have a passport when visiting Canada from 2008 onwards. Plus, there are the looming concerns over terrorism that have Americans spending their holiday dollars closer to home. And it doesn’t look like domestic traffic is going to fill the void – clearly, Victoria has an image problem, at least with the local market. Randy Wright, chair of Tourism Victoria’s strategic issues committee and VP of sales and marketing with Harbour Air Seaplanes, puts it succinctly. Citing scant interest among Lower Mainland residents in Victoria as a tourism destination, he believes the answer is simple: “Why are they not coming over here?” Wright asks. “Zzzzz – it’s sleepy hollow. The image is terrible.” The problems start at the aging Belleville international ferry terminal, one block west of the legislature. An agglomeration of makeshift structures comprise the terminal area, which welcomes the million or so U.S. travellers who arrive in the city annually aboard the Coho, Clipper and Victoria Express ferries. The Greater Victoria Harbour Authority and Provincial Capital Commission have talked about funding for a multimillion-dollar redevelopment of the existing terminal, but the question of funding now lies with the province and few operators expect a decision on the issue anytime soon. On Government Street, just off the esplanade that wraps around Victoria Inner Harbour from the ferry terminal past the city’s iconic legislature building and storied Fairmont Empress Hotel, a mix of kitsch and class greets visitors. High-end retailers such as Birks rub shoulders with shops selling Irish linen and Scottish tartans, nods to the city’s British inheritance. Other stores are packed with maple confections and icons of the city’s frontier roots. These flog their wares steps away from the precincts of the Bay Centre and Trounce Alley. Panhandlers mingle with homeless kids and their mangy dogs, hovering on corners, cap in hand, hinting at the grittiness one block over on Douglas Street. The mix disturbs Roger Soane, general manager at the Empress, who returned to Victoria in 2005 after five years at hotels in Alberta and Barbados. The hotel had lost upwards of 20 per cent of the summer business it traditionally saw from the U.S., and the downscaling of the retail mix in downtown highlighted the shift. “If you talk to anybody who’s in retail, they’re suffering at the high end,” Soane says. “The lower-end retailers seem to be doing well. And that seems to indicate that our visitor has changed. We’re going to more of, maybe, a day tripper and a budget-conscious traveller than what we had years ago, [which was] more of an affluent traveller.” Tourism Victoria president and CEO Lorne Whyte says the hit to Victoria’s tourism sector from the downturn in U.S. visits could total in the millions, even though domestic traffic continues to increase. That’s because visitors from faraway places such as California, Texas, New York and Florida tend to stay longer and spend more than their Canadian counterparts. “The U.S. market has never been the highest number of overnight visitors. But in the summertime it has an extremely high yield,” Whyte explains. The decline in Victoria is especially dramatic because of the importance of U.S. traffic. In Vancouver, U.S. visitors account for approximately a quarter of overnight guests, a percentage that has remained virtually unchanged despite the shift in Victoria. While Victoria logged an eight-per-cent drop in U.S. visitors in the first half of this year, two times the average percentage drop recorded across the province, Vancouver posted a decline of just 2.2 per cent. The shift doesn’t make sense, Soane says, given the wealth of activities Victoria has to offer. “We are very much a great place for soft adventure – cycling, kayaking, whale-watching, golfing, all those types of things the 45-plus crowd are into these days,” he says. “We’re a world-class destination; we just need to get the word out.” That’s especially true if Victoria wants to support the Campbell government’s stated goal of doubling tourism revenues throughout the province by 2015. “I have yet to see how we’re going to get there. We need some direction,” Soane says. Unfortunately, Victoria is not unlike the rest of Canada when it comes to marketing itself as a destination. “We have not done a good job,” Soane says. “We are very conservative, we are very staid.” The staid conservative quality may add to Victoria’s quaint English charm, epitomized in the experience of high tea at the Empress or the Butchart Gardens, but it also prevents people from thinking of the potential for soft adventure when they come to the city. That annoys Randy Wright, who says many Lower Mainland residents are willing to travel hours to experience in Tofino, the Okanagan and destinations abroad offering the same fare that Victoria has to offer. But few of them think of venturing across the Strait of Georgia to visit Victoria. The scope of the problem hit home for Wright when he got a call from Vancouver entrepreneur Mark James, who was pulling together a tour for some friends and business associates. “He’s got [Sam] Belzberg on board, he’s got all the heavy hitters from town. And he asks me if there’s anything to do over here,” Wright says, his original sense of shock still strong. “As a Victoria guy, I was absolutely embarrassed by that.” Fortunately, Wright gave the story a happy ending: James and his associates saw the local sights, had a great dinner at the city’s quietly famous Il Terrazzo restaurant and went home satisfied. But the ignorance still stings. “The Old World charm thing and all that stuff, we can still have a little bit of that flavour, but we are not promoting what we really do have here,” Wright says. Whether a $160,000 rebranding initiative Tourism Victoria launched earlier this year with the goal of improving perceptions of Victoria helps change perceptions is another question, however. A fresh logo, emphasis on the city’s walkability and natural setting play up the reasons Condé Nast Traveller and other publications regularly recognize the city, and Vancouver Island generally, as one of the best tourist destinations in the Americas. “It speaks to what we are today, rather than the double-decker buses,” Soane says. “It’s starting to go down the right path, but it needs to go somewhere. We’ve now got it; now we have to go out and put it on the market.” Market exposure alone won’t do the trick, however. Frank Bourree, a long-time observer of the B.C. tourism industry and principal of Victoria-based Chemistry Consulting Group Inc., says Victoria has to educate people about what it can offer if it hopes to make the most of its opportunities. This is especially true in the run-up to the 2010 Winter Olympics. “Tourism Victoria needs a strategy,” Bourree says, noting that people are always surprised at what they discover in the city, but most never budget enough time to enjoy it all. The surprise costs Victoria businesses, because day trippers don’t stay the night. The result is that overnight guest numbers have been stagnant for a decade. Bouree’s advice is straightforward: “Get those people over here for extended stays.” Unfortunately, no level of government is increasing its support for tourism marketing. Ottawa’s annual contributions to the Vancouver-based Canadian Tourism Commission have fallen from more than $90 million a few years ago to an average of $78.8 million today. The province’s funding for Tourism BC is even less, while Tourism Victoria has a budget of just $3.2 million. “We haven’t been significantly increasing the spending that we do in Victoria to promote this as a destination. Nor have we been doing anything different. And when we compete against other destinations, we don’t have a lot of money to put into that arena,” says Dale Dyck, general manager of the Delta Victoria Ocean Pointe Resort & Spa and president of the Hotel Association of Greater Victoria. The Delta has seen 10 to 15 per cent of its summer business evaporate as U.S. travellers have disappeared. Cutbacks to marketing budgets have meant that businesses are working harder to get the business they do have. Yet the lower degree of exposure means that the business that does come in is likely to be less lucrative, delivering a smaller bang for the marketing dollars spent. [pagebreak] Dyck believes a well-funded, industry-driven marketing campaign is one way to win back the lost business. Certainly, it’s a more viable solution than operators mounting independent campaigns promoting their own properties. “I can’t make an impact in the United States by myself,” Dyck says. “It has to be in a pooled resource base where we can promote the destination, and worry about who gets the customer once they get here. ------------------------------------- UPTICK NOT ENOUGH

  • Record numbers of arrivals by air and cruise ship are adding up to record visitors for Victoria, but the main gains aren’t adding to the coffers of local businesses.
  • The capital welcomed approximately 4.15 million visitors last year, and numbers stand to rise two to three per cent this year on the strength of a trial service to Victoria from Salt Lake City, Utah, by Delta Airlines, and a rise in cruise ship traffic to 186 vessels from just 45 in 2000.
  • But the biggest gains were seen in domestic travellers, which are not traditionally the biggest spenders. Though Victoria’s hotel sector has been a beneficiary of the higher visitor volumes, with an average of 88 per cent of visitors to the city staying overnight, room rates have increased just $3 over the same period. In 2005, average room rates stood at $122 a night, up from $119 a night in 2000. The increase is barely equal to the rate of inflation, squeezing hotel operators in an increasingly competitive market.
---------------------------------------- SPRUCING UP DOWNTOWN If you ask Andrew Paine, co-owner with René Gauthier of Victoria-based Sitka Surfboards, downtown Victoria is a lot less kitschy than it was a few years ago, thanks to a growing number of cool shops in the core. The change has been enough to prompt Sitka, a successful surfboard and clothing retailer, to open a 3,000-square-foot store on Yates, a half block from tourist-friendly Government, in November. The move will see Sitka move from its current location three blocks north of the vacant Bay building on Douglas Street on the fringe of downtown into the heart of the city’s tourist district. “Down there we’re definitely going to have your everyday tourist walking around, just looking for stores to go into,” Paine says. The new location will give Sitka access to both local shoppers and tourists, giving them a genuine West Coast shop rather than another souvenir T-shirt shop. “People love to go back with a shirt that says ‘I love Victoria’ or ‘I love Vancouver,’” Tourism Victoria head Lorne Whyte says. “But that’s what I call the lower-end market.” Distinctive locally run shops that cater to tourists, as Sitka plans to do, support a more diverse, dynamic mix of retail that gives a destination character, Whyte says. --------------------------------------------- SKILLS SHORTAGE HITS HOME A shortage of skilled tourism workers could also hamper the performance of Victoria’s tourism sector, especially in the area of guest services. Province-wide, the tourism sector employs 117,500 people and current projections indicate the industry could require 84,000 new employees by 2015. Among the most acute shortages are in the area of front-line guest accommodation staff and management. “Victoria’s feeling it,” said Arlene Keis, CEO of the go2 Tourism HR Society in Vancouver. “Some hotels, we know, are going without their full complement of staff for their summer season but they’re able to make do.” The affordability of housing is compounding the labour shortage. “People in the service sector will find it very hard to live here long-term because of the cost of living,” the Empress GM Roger Soane says. “They’ll never be able to afford their own houses.” The situation is particularly hard for hotels trying to recruit and cultivate knowledgeable staff to provide a top-notch guest experience. “We have seen very little turnover because it was a very affordable place to live. Now I’m hearing from my young staff, ‘I want to move to a location where I can afford to live,’” Soane says.