Ontario’s Progressive Conservative government is doing little to help the province’s tourism sector modernize and recover from the pandemic: that was the conclusion of the auditor general’s annual report. The report, released Wednesday, included value-for-money analyses of the province’s tourism-support programs, its two publicly held convention centres (located in Toronto and Ottawa), and the Travel Industry Council of Ontario, a self-funding consumer-protection authority.
“We’re coming out of the pandemic, so we wanted to take a look at the travel and tourism industry,” acting AG Nick Stavropoulos told reporters. Overall, his office found that a lack of oversight and strategic vision is holding Ontario’s tourism and travel industry back, costing taxpayers, and resulting in tens of millions in lost potential revenue — money that could help power local economies and the post-lockdown economic recovery in this sector. It also identified “significant concerns” with the agency tasked with overseeing some, but far from all, consumer travel protection in the province.
“Our audit of the province’s tourism support programs, including Destination Ontario, found that the ministry has not developed a clear plan to help tourism and the tourism sector recover from COVID 19 pandemics,” Stavropoulos said, adding that the result was “lost opportunity” for a “huge economic benefit to the province.”
In 2019, the value-for-money audit notes, Ontario’s tourism sector contributed about $37 billion, or 4 per cent, to the province’s GDP. About 90 per cent of the businesses in that industry are small businesses with 20 or fewer employees. The province’s last tourism strategy was released in 2016 and failed to hit its target of 3.3 per cent growth per year, even before the pandemic.
During the lockdown years of 2020 and 2021, industry stakeholders and the Ministry of Tourism, Culture and Sport produced reports aimed at helping the deeply affected industry navigate travel and other restrictions. But, the AG report notes, the government has not yet produced a comprehensive strategy to help the industry rebuild.
Such a strategy could help rationalize the way funds are being spent and assist with a return to pre-pandemic levels of travel. For example, Stavropoulos said, if some of the advertising dollars spent on marketing travel within Ontario to Ontarians were reallocated to marketing to Americans, “the province could have potentially seen an increase in U.S. visitors … that would have added more to Ontario’s economy.”
According to Statistics Canada data, the level of arrivals in Ontario from the U.S. from January to September 2023 is 77 per cent of what it was in the comparable period of 2019. The number of arrivals from overseas is 73 per cent of what it was in the same period of comparison. Expenditure by visitors was 4.6 per cent higher in the second quarter of 2023 than it was in the same period in 2019, according to preliminary data, but StatCan analyst Cindy Gagné believes this can be accounted for by “just inflation.” Those are just three of the indicators that suggest the province’s tourism and travel industry has neither recovered to pre-pandemic levels nor fully adapted to a new normal.
What’s more, the audit found that at least $1.1 million in funds intended to help with COVID-19 losses through the Tourism Recovery Program went to entities that didn’t qualify and might have been fraudulent. Those funds were paid to six applicants out of the 90 reviewed as part of the AG’s sample. Since the program made a total of 570 disbursements, there’s a chance that more was misspent, Stavropoulos said.
Minister of Tourism, Culture and Sport Neil Lumsden (Hamilton East–Stoney Creek) did not hold a media availability after the AG’s press conference. “The Minister was in transit yesterday and is out of town today for a number of events and meetings so we won’t be able to oblige,” a ministry spokesperson told TVO Today by email in response to an interview request.
Lost opportunity was also the theme of the AG’s value-for-money audit of Ontario’s two publicly held convention centres. The Metro Toronto Convention Centre and the Ottawa Convention Centre (also known as the Shaw Centre) are both Crown agencies with a mandate to bring events and visitors to their region “in a manner that will promote and develop tourism in Ontario.” The audit found that the two were focusing on profit over purpose by pricing their event space too high to attract the best bidders.
According to the AG, the two centres together lost the opportunity to bring as much as $52 million in “economic impact for the province” (leaving aside events lost because of the pandemic). “By focusing on their own profitability, the centres missed the opportunity to host additional events that would have added millions of dollars to Ontario's economy, a key part of the centres’ mandate,” Stavropoulos said at the Wednesday press conference.
The convention centres are also struggling to recover from COVID-19. Convention bookings have decreased by about 50 per cent, the audit concluded, and further action from the Ministry of Tourism, Culture and Sport is needed to support their recovery and address other outstanding issues identified by the audit, such as aging infrastructure and a lack of local hotel rooms.
“The Shaw Centre welcomes the Ontario Auditor General report,” a spokesperson told TVO Today by email. “We support the recommendations of the report and will work with industry partners to address them.” The Metro Toronto Convention Centre referred TVO Today to the Ministry of Tourism, Culture and Sport.
The AG's report also highlights “significant concerns” with how the Travel Industry Council of Ontario is run and with its mandate. “TICO was developed back in 1997, and there hasn’t been a change since then with respect to how they operate,” Stavropoulos told reporters at Queen’s Park on Wednesday.
When it was established, most people still booked their travel with local operators who had a physical presence in the province of Ontario. That was still true when, in 2002, the province introduced the Travel Industry Act, which gives TICO its current mandate. Those entities are what TICO regulates: a share of the Ontario travel market that has shrunk significantly in the two decades since.
“The internet has changed the way Ontarians travel and do their travel plans,” Stavropoulos said. “Yet consumers are only protected by [TICO] when they purchase travel from those with a physical location in Ontario.”
TICO CEO Richard Smart estimates that, today, his organization regulates around 30 per cent of travel in the provincial market. Anything booked through an online provider who doesn’t have a physical presence in Ontario is unregulated by the province’s tourism consumer-protection agency — which means that consumers who book with online providers have no recourse to TICO’s Travel Industry Compensation Fund if the provider goes out of business.
In the past few decades, the overall tourism market in Ontario has grown, meaning TICO’s funds have also grown. Despite this, the AG’s investigation found that TICO hasn't made its required inspections of registrants. Some of its registrants, the AG finds, hadn’t been inspected in more than 20 years, and a full 30 per cent hadn’t been inspected in the past decade.
“It's true that we haven't inspected some of those licensees for many years,” Smart tells TVO Today. But he argues that those that haven’t been inspected are low risk: “From a value-for money-standpoint, we've got to be very careful how we allocate our inspection resources.”
The AG’s report also finds that TICO has held onto the $10,000 security deposit that registrants are required to make well beyond the legal limit of two years. TICO was unable to justify to the AG $2 million in security deposits that it held at the beginning of the investigation.
During the pandemic, Smart says, his organization made the decision to hold onto deposits because there was a higher chance that tourism businesses would go belly-up, leaving consumers on the hook for their cancelled trips: “I think, and I still stand by it, that was the right decision to make.”
Agenda segment, June 7, 2022: Can tourism make a comeback in Ontario?
But, the reports notes, the practice had been going on well before 2020. “Have we held onto deposits even before the pandemic? Yes,” Smart says. The AG report found that deposits were held, on average, for seven years.
(Durham MPP Todd J. McCarthy, the minister of public and business service delivery, also didn’t hold a media availability after the AG’s press conference. “Unfortunately the Minister’s schedule is very busy, and he is unavailable,” a spokesperson told TVO Today.)
The Association of Canadian Travel Agencies and Travel Advisors, a national trade organization, released a preliminary statement on Wednesday lauding the report. It "clearly reflects the fact that the Travel Industry Act and current oversight of the industry do not properly reflect the environment of today’s travel industry," the statement reads. “ACTA has been advocating for a thorough review and rewrite of the Travel Industry Act and that consumers and industry deserve much more than band aids on a broken system.”
ACTA will have more to say on the report early next week, a spokeperson told TVO Today on Thursday.
Stavropoulos’s time as acting attorney general, which began in September with the resignation of Bonnie Lysyk, will soon be coming to an end. Not long after the press conference in which he presented his first annual report, Queen’s Park announced that Shelley Spence will assume the role on January 8, 2024.
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