Where Does a Dollar Spent on Canadian Business Travel Go?
Travel equals spending—that much we know. And, for Canada, for every dollar spent on business travel or meeting operations, about $1.12 is returned to their national GDP. But it’s not like going to the bank with a buck and leaving with 12 extra cents. It’s an economic contribution that results in growth for Canada in the form of more jobs, a notable share of local and federal tax revenue, as well as more reasons for the supply chain to evolve or even expand to meet business travel demand.
GBTA and Rockport Analytics surveyed the Canadian business travel market, compiling facts and figures for travel across Canada in 2016, both for individual business purposes and for meetings and conventions. The Economic Impact of the Canadian Business Travel Industry report shows that although the journey of a dollar may end in positive returns, there are patterns to be revealed. Here are some highlights from the report that help paint the picture of the well-travelled Canadian business trip dollar.
The Buck Starts Here
The number of business trips taken in Canada is pretty close to the population of Canada itself—35.1 million journeys in 2016 alone. That’s a 5.7 percent increase from the year prior. And with nine out of 10 of those being taken domestically, it seems like everyone in Canada is traveling. And when they do, they spent an average of $839 CAD per trip. Add a full hundred dollars to that to get total economic impact of the average business trip—that’s $939 back into the Canadian economy per traveller.
Total expenditures in Canada during 2016 were $35.8 billion, for a $40.1 billion overall economic impact—domestic travel, inbound international travel and meetings operations all comprise that figure. Of the aforementioned 31.8 million domestic jaunts, most travellers (almost 15%) come from professional, scientific and technical industries. Construction and healthcare were also at the top of the list. Most travellers were male, and almost half were over the age of 55.
Revenue is coming from non-Canadian travellers, too. U.S. travellers make up the largest share of international inbound business volume; seven out of 10 international travellers in 2016 were from Canada’s neighbor to the south. Overall, almost $4 billion in goods and services – or 14% of total business travel for the year – was spent by international travellers. Long-term, Canada has seen the radius grow, however. In the five years prior to 2016, travellers from Asia and Latin America have increased significantly. While there is no doubt recent trade strife between the US and Canada will pose a risk to Canada’s travel economy, this shift to a more diverse global travel market will provide a lasting boost since the farther away the traveller hails from, the more time and more money they’ll spend in Canada.
Small Bucks, Big Impact
The dollar tends to land in certain geographical concentrations, with nearly two-thirds of travel activity in both Ontario and Quebec. The top five business traveller spots in Canada—Toronto, Montreal, Edmonton, Ottawa and Vancouver—amounted to more than a third of travel volume and almost half of countrywide spending. But, while the dollar might be following a predictable GPS route, the economic benefits transcend these boundaries.
Meetings and conventions made up 37 percent of overall travel, which spurs a major indirect economic impact in addition to the obvious direct-travel related expenditures like transportation, accommodations and food. Conventions mean there are added economic benefits because money is being spent on the venue, A/V capabilities, registration fees and other tangential industries. This type of travel surpassed $6 billion in operations expenditures in 2016, seeing 14 percent growth from the year prior.
A dollar could also mean a job – be it through industry growth to meet traveller demands, higher wages because of increased GDP and more. Business travel supported 573,000 jobs and nearly $25 billion in wages in 2016. An obvious industry that will be positively affected by growth in business travel is hospitality. Air travel and ground transportation will also increase, affecting jobs in those markets, too. The supply chains of these industries see many benefits and boosts as well; in fact, $10.2 billion of the overall GDP impact (about one quarter) comes from this stream. Food distributors, business services, insurance and information technology all grow along with the more directly-tied industries. And tax revenue counts, too. These indirect and induced expenditures total nearly half of the impact on GDP. So, the dollar has the ability to essentially multiply as it makes its way through the lifespan of a business trip.
Industry Trends and Expectations
Canadian business travel will only continue to grow, but it’s important to understand the patterns. On top of the trends mentioned above, seasonal ebbs and flows do exist, and trip volume drops in the summer months as well as December. January, April, October and November were 2016’s busiest travel months. Domestic trips were dominated by “short-haul” trips, or those within 160 kilometers from home, and almost eight in 10 trips by Canadians were done so by car.
These data points only scratch the surface of the survey’s findings. To dive deeper into Canadian business travel waters, download a copy of the report. The full report includes data visualization (charts and graphs), numbers and dollars to further color this story and a comprehensive outlook on Canada’s potential for growth in the area of business travel.