As a Canadian business, you can actually benefit when the value of the Canadian dollar drops against other currencies — especially the U.S. dollar. It may sound negative to hear that the Canadian dollar is dropping, but if your company depends on tourism in any way, that low dollar value can boost your income and profits.
Devaluation and Tourism
Tourists love to go to countries where their own home currency is strong, because they get more for their money. When an American comes to Canada while the Canadian dollar’s value has dropped, the American can buy more Canadian money with their American money. Take an American living in Detroit with $100 USD to spend on shopping. They can shop near home and get $100 worth of goods. But say the exchange rate is $1 USD to $1.25 CAD. Suddenly that $100 is worth more in Canada than in the United States. Now that American can pop across the border to Windsor and buy $125 worth of goods for the same money. As more Americans realize the shopping advantage, more will start to make plans to visit Canada — and when they visit your shop, they’re ready to spend money.
A lower currency value also makes Canada more competitive in comparison to other places with higher-valued currency. Say a traveller from London was 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, or visit better restaurants in Banff than in Las Vegas.
A low 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, which can cause a rise in business for your tourism company.
Putting Information Into Action: Marketing to Tourists
As long as the United States dollar is valued higher than the Canadian dollar, your business is likely to see a boost. During the summer of 2017, the Tourism Industry Association of Canada found that Americans were responsible for 52.4% of the spending from international visitors. Of those tourists, people from California, New York, and Washington spent the most. Chinese tourists were the second-biggest group, making up 11.83% of summer travel spending.
What does this mean for your business? 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. Use Facebook ad targeting to reach out to American users who have expressed an interest in Canadian travel, or take out print ads in U.S.-based publications such as "Budget Travel" or "National Geographic Traveler". If you own a business in Vancouver, which is popular with tourists from China, you might do the same for Chinese publications.
As long as the Canadian dollar stays in a period of devaluation, the country’s travel industry continues to benefit. By taking advantage of the currency rate discrepancies, you can bring in more customers and improve your bottom line.