When you run a business, a drop in Canadian currency value can sound alarming. If you’re in the travel industry, however, you can actually benefit when the Canadian dollar loses value against other currencies — especially the U.S. dollar. Surprisingly, a weak Canadian dollar actually has the potential to boost your income and profits.
Canadian Dollar Valuation and Tourism
When someone decides to travel internationally, they often choose countries where their home currency is strong. Why? They get more for their money.
Imagine that an American lives in Detroit. He has $100 USD to spend on a shopping trip. If he spends the money in Detroit, he can buy $100 worth of goods. If he pops across the border to Windsor, things are a little bit different. If the Canadian/U.S.dollar exchange rate is $1 USD to $1.25 CAD, the person’s $100 USD is now worth $125 CAD — which means that he can buy more in Windsor than he could in Detroit. If you’re running a business near the Canadian/United States border, this means that you have the potential to bring in more customers. What’s more, when they do arrive, they’re ready to spend.
Not located near a border? A lower Canadian dollar value also has benefits for the domestic tourism industry as a whole. In fact, it makes Canada more competitive in comparison to countries with higher-valued currencies. Let’s say a traveller from London is considering a trip to either Banff or Las Vegas. If 1 GBP is worth $2 CAD or $1.5 USD, Canada automatically becomes more attractive — after all, 1,000 GBP would buy $2000 CAD, as opposed to just $1500 USD. That means that the traveller would be able stay in nicer hotels, take more elaborate tours, and visit better restaurants in Canada than in the U.S.
Domestic Canadian Tourism
The value of the Canadian loonie also affects Canadian travellers. When the value is down, Canadians have less motivation to visit countries with higher-valued currencies — after all, their money doesn’t go as far there. According to Statistics Canada, the number of Canadians leaving the country tends to parallel the performance of the Canadian dollar. When it dips, fewer people travel internationally. Instead, they’re more likely to travel within the country.
What does that mean for your business? When the Canadian dollar is low, it creates an opportunity for you to bring in more domestic business. You can do so by amping up your regional promotions to remind Canadians of the beautiful destinations in their home country. If you run a business in Banff, for example, you might take out ads in local Vancouver or Toronto magazines.
Marketing to International Tourists
As long as the Canadian dollar is low in relation to other major world currencies, your tourism-related business is likely to see a boost. According to the Tourism Industry Association of Canada (TIAC), marketing is a crucial way that you can capitalize on the currency devaluation.
The American market is a natural place to start. The United States is close by, making it easy for Americans to reach your business in Canada. What’s more, Americans can travel to Canada without a visa for up to 180 days. That, plus the strength of the U.S. dollar, gives American travellers good reason to head north. So, whether you run a bed and breakfast in Prince Edward Island or a helicopter tour company in Niagara Falls, it’s probably worthwhile to advertise to U.S. audiences.
If you’re on a tight budget, you can start with social media. Facebook ads are one great option. With the platform’s highly specific targeting, you can show your ads only to American users who have expressed an interest in Canadian travel. Need a free option? You might try creating a presence for your business where travellers go to research destinations, such as Instagram and Pinterest.
Have you ever considered working with social media influencers to reach potential international customers? Consider following the lead of the Four Seasons hotel in Whistler, which hosted popular bloggers Amber Fillerup Clark and Rachel Parcell for a 2018 trip. In return for the trip, the women posted about their experience on their Instagram accounts and blogs, promoting Canadian vacations to their followers. As a small business, you might not have the budget of the Four Seasons, but you can use the same strategy on a smaller scale. To start, find popular Canadian bloggers and Instagrammers in your area. You can also follow travel influencers to find when they’re coming to your area. Then, you can reach out and offer a free product or experience in exchange for a review or an Instagram post.
Once you’ve built awareness among U.S. travellers, it’s time to market your company to a wider international audience. If you own a business in Vancouver, which is popular with tourists from China, you might take out ads in Chinese publications. Travel agencies can also be a valuable resource — you can try sending your brochures and marketing materials to Chinese travel agencies to make them aware of your services. That way, if the company is running a tour through your area, they’re aware of your business. This can give you an advantage over competitors in your area.
As long as the Canadian dollar stays in a period of devaluation, it creates exciting opportunities for your tourism business. By taking advantage of the exchange rate, you can bring in more customers and improve your bottom line. To keep track of your finances while you step up your marketing efforts, it’s a good idea to track your finances and run regular financial reports. Using an accounting system, such as QuickBooks Online, you can generate a Profit and Loss statement automatically. Learn how today.