Five years after COVID upended tourism, the industry's revival is still up in the air

Tourists pose for photos near the Banff sign in Banff, Alta., on Oct. 17, 2024. (Jeff McIntosh / The Canadian Press)

MONTREAL — Michael Hale still recalls the moment COVID-19 upended his world.

“I can feel this pit in my stomach even as I recount that day,” said the CEO of Northern Vision Development, which owns seven hotels and eight restaurants and bars in the Yukon.

Hale and a half-dozen colleagues were gathered around a conference table at the company’s Whitehorse headquarters on March 7, 2020. They were discussing the Arctic Winter Games, set to draw thousands of visitors a week later.

“We were trying to figure out what to do with oversold rooms,” Hale said. In the middle of the meeting, a press release was sent out. The games had been cancelled.

“It was shock in the room.”

Two days later, hotel bookings had plunged from 100 per cent to 20 per cent. Northern Vision shut down one of its major hotels. It leased out another for use as a government-run isolation facility.

“Our restaurants were empty. Our revenues had dropped from on track for a record year to just gasping for air,” Hale said.

The tourism industry, which employs Hale and two million other Canadians, was hit harder by COVID-19 than nearly any other sector.

Pandemic-related travel bans, social distancing and assorted health measures shut down operations almost overnight at tens of thousands of hotels, restaurants and entertainment venues, while airlines grounded flights. About 881,700 industry workers lost their jobs in the first 10 weeks, according to Tourism HR Canada.

When borders reopened, labour shortages and lurching demand created chaos and unpredictability — indoor food service switched on and off based on government restrictions, bookings erupted then halted and endless lines snaked through airports.

Five years on, parts of the industry are still grasping for customers. After COVID-19 forced many companies to shift their business model to match a renewed social awareness that took root during the pandemic, many are doubling down on the strategy of catering to local visitors seeking sustainability and “immersive” experiences. Whether that change in tone can lure tourists back remains unclear.

A different strategy

In the early days of the global crisis, businesses struggled through an unprecedented drop in demand. Cruise ships docked indefinitely and restaurants reverted to takeout-only.

When health restrictions lifted and domestic travel roared back to life in 2022, a dearth of employees — many had moved on to other lines of work — made for new problems, unleashing havoc at airports and in the hospitality sector.

“We had half the number of staff in some cases that we needed,” Hale said.

Other businesses fell back on government support. Ottawa set up a $500-million tourism relief fund that allowed them to borrow up to $500,000 or receive a grant of up to $100,000.

Many had to overhaul their business model.

“A lot of them focused on local tourism and really encouraging Canadians to get out and explore their own backyards,” said Beth Potter, CEO of the Tourism Industry Association of Canada. “Cycling, camping, RV-ing.”

Some of those habits of regional roaming and environmental awareness stuck.

Bereft of customers, seven small-ship tour operators in British Columbia banded together to clean up debris along the coast in 2020, funded by the province. As visitors returned to the companies’ schooners and converted tug boats in subsequent summers, many guests began to take part in beach cleanups at Haida Gwaii, Vancouver Island and the Great Bear Rainforest.

“More people want to travel more sustainably because the pandemic made them aware of the impact of their actions on other places and people,” said Maureen Gordon, co-owner of Maple Leaf Adventures, one of the participating operators.

“People are looking for smaller-scale options or not travelling during crowded times or into crowded places, feeling that they’re dealing with local companies in a more sustainable manner, feeling connected.”

Nearly half of respondents to a recent travel study said they had changed their plans due to concern about the downside of tourism for local communities such as cost-of-living increases and “social pressures,” a Blue Cross online survey of 2,047 Canadian adults found.

So-called immersive experiences are also prized, perhaps for their perceived ability to bring customers closer to the site’s culture and environment after the social isolation of the pandemic.

“Guests can smell a phoney,” said David Barry, CEO of Pursuit Attractions and Hospitality, which runs 15 attractions across Canada, the U.S. and Iceland, including the Banff Gondola. It ferries visitors to the top of Alberta’s Sulphur Mountain for interactive art displays created in partnership with the Stoney Nakoda Nation.

Quality versus quantity

The local, green shift has only radiated so far.

Indigenous Tourism Association of Canada CEO Keith Henry is all for sustainability. But his members need volume, too.

“What we were seeing was tremendous growth up until 2019,” he said.

Most association members, which offer experiences ranging from walking tours to cultural events, still have not recovered from the pandemic. International visitors are particularly sparse.

Demand is there, but tour package vendors and other partners are failing to include as many First Nations, Inuit and Métis sites in their deals, Henry argued.

“It was a real gut punch. We’ve lost 10 years of economic growth.”

Revenues for Indigenous-owned tourism outfits reached $1.6 billion in 2023 — roughly the same as 2014 levels, Henry said.

Nonetheless, some are prioritizing the “wellness of the community” itself, said Kimberly Kanichténhawe Cross of Kahnawake Mohawk Territory south of Montreal.

“We’re focusing on the local right now,” she said. “We don’t want it to be too harsh on our environment.”

That attempt to balance visitor volumes with community wellness has filtered up to the federal level, where Crown corporation Destination Canada last year launched a “wealth and well-being index” to measure tourism sustainability along economic, social and environmental lines.

“It was really a gesture to say that communities need to come first. A destination that is a good place to live is also a good place to visit,” said Rachel Dodds, professor of tourism management at Toronto Metropolitan University.

She cited Ontario’s Bruce Peninsula and Tofino, B.C., as spots where “over-tourism” has raised the ire of residents by straining local resources, filling parking spaces and driving up rental costs.

“Everyone all of a sudden decided that they wanted to be an outdoorsperson, because there was nothing else to do,” Dodds said.

“People were camping on the beaches, doing whatever. People were parking on other people’s front lawns.” Now, the desire to explore regionally remains, minus the disregard for the region.

International tourism remains a laggard, despite the relatively high U.S. dollar and exceptions such as the West Coast cruise industry.

Last year, international arrivals to Canada hit 90 per cent of pre-pandemic levels, according to Destination Canada. Tourism’s recovery “continued to be driven by record domestic tourism revenue” in the third quarter of 2024, the Crown corporation said.

However, while domestic tourism spending of $40.5 billion in those three months outpaced the figure from five years earlier by 12 per cent, it actually fell short by 12 per cent once inflation is factored in.

Back in Whitehorse, Michael Hale has high hopes nonetheless. His company plans to open its third branded hotel, Hyatt Place, on Main Street this summer.

As Canadians turn away from the U.S. amid tariffs and threats of annexation from its president, domestic visitor volumes keep ticking up.

“We’re not quite there, but we’re confident enough that we’re spending $50 million to build that Hyatt. So we do believe it’s coming.”

This report by The Canadian Press was first published Mach 5, 2025.

Article written by Christopher Reynolds, The Canadian Press