Canada’s Travel and Tourism Industry The NRTT represents the full value chain of Canada's $82 billion travel and tourism sector TRAVELERS Outside Goods and Services Local Goods and Services Employment + Sales + Taxes + Wages Air Cruise Lines Train Auto Leisure Food Retail Resorts Conventions Lodging Agriculture Pensions Education Touring Business Outdoor 2

Committed to Travel Economy Growth “Canada’s spectacular beauty attracts visitors from across the globe to every region of our country. These visitors create jobs and sustain local economies. Our Government will continue to work with industry partners to promote Canada as a top destination for tourism.” Speech from the Throne, 2nd Session 41st Parliament, October 17 , 2013 3

Shared Objectives Grow export revenues and diversity the Canadian economy Drive the broader prosperity agenda creating private sector investment opportunities in Canada & jobs in every region of the country

Canada Europe Free Trade Agreement Travel between countries is a precursor to trade and investment. Canada is engaged in Free trade agreements with over 60 countries, and Air Transport Agreements with 65 countries. Canada will not enjoy the full economic benefits of these agreements until public policy impediments concerning aviation cost structure are addressed. 5

An Unparalleled Economic Opportunity Tourism is the world’s 4th fastest growing industry 1 billion international travellers $1 trillion in revenues 4% growth globally per year Tourism’s footprint in Canada alone: $84.8 B in economic activity $17.3 B in export revenue (#1 service export sector) $9.6 B in federal government revenue 614,600 jobs Canada is performing well domestically – but falling behind internationally continued barrier deductions will improve Canada’s competitive advantage

Visitor Mix Key To Growth Incremental Growth Additional Visitors Average Room Rate Average Room Nights Generated p.p. Total Add’l Room Nights Generated Additional Hotel Revenue (Canada) 4% 652,000 $129.00* 3.5** 2,282,000 $294M 4% incremental growth would drive over $3B in valuations for the accommodation sector alone. *2011 Average (rounded). Source: Hotels Association of Canada. **Source: Estimates from TIAC and HLT Advisory 7

International Visitation - A Long Climb Back International Tourist Arrivals - (Top 20 Countries – in millions) Rank 2002 2011 2012 1 France 77.0 France (2010) 77.1 83.0 2 Spain 52.3 U.S. 62.3 U.S. (2011) 3 43.6 China 57.6 57.7 4 Italy 39.8 56.7 5 36.8 46.1 46.4 6 U.K. 24.2 Turkey 29.3 35.7 7 Canada 20.1 U.K. (2010) 28.3 Germany 30.4 8 Mexico 19.7 28.4 9 Austria 18.6 Malaysia 24.7 Russian Fed. 25.7 10 18.0 23.0 25.0 11 Hong Kong 16.6 22.7 12 Hungary 15.9 23.8 13 Greece 14.2 22.3 23.1 14 Poland 14.0 Ukraine 21.4 15 13.3 Thailand 19.1 22.4 16 12.8 Saudi Arabia 17.3 16.3 17 Portugal 11.6 16.4 15.5 18 10.9 16.0 14.8 19 10.5 13.4 13.7 20 Netherlands 9.6 Macau 12.9 Macao (China) 13.6 In 2012, Canada improved to 16th in international arrivals (from 18th) Despite this modest improvement, we’re still short of 2002 levels by about 3.8 million visitors Source: UN World Tourism Organization

Competitiveness Challenges : Policy Measures A competitively funded marketing effort that drives alignment and can balance key and emerging markets – including US. A modern aviation and visitor facilitation structure enabling the “mobility economy”. Addressing infrastructure, programming and labour market issues. MARKETING ACCESS PRODUCT & PEOPLE

Competitive Challenge Marketing : Investment & Alignment Major competitors have increased international tourism marketing investments – i.e. Brand USA into Canada Timing is right to re-evaluate approach to the US market

Connecting America: A Partnership For Prosperity Connecting America is an industry sponsored proposal for a new three-year coordinated, targeted and measurable tourism marketing co-investment initiative to re-energize the US consumer, utilizing existing air and ground access: Proposed 3 year federal marketing investment of $35M/yr matched 1:1 by Provincial, Local and Private sector investment Generating $210M in federal tax revenue alone Providing or sustaining over 6,000 direct jobs 11

Connecting America – Visitor Impact

Connecting America - Economic Impact CANADA’S TOURISM POTENTIAL YEAR 1 YEAR 2 YEAR 3 TOTAL Converted Travellers (,000s) 440 850 1,360 2,650 Tourism Receipts ($M) 250 500 810 1,560 Federal Government Revenue ($M) 30 70 110 210 Jobs Supported 1,900 3,700 6,000 ---

Conservatives Agree “iii) We support the reduction or elimination of federal government fees, levies, taxes and rents, hidden and otherwise, associated with Canada’s national transportation system” Transportation Principles, Policy Declaration of Conservative Party of Canada 2011 14

Competitiveness Challenge: Aviation Canada is a “fly-to” destination, but our cost structure is a barrier to success Canada is ranked 5th with regards to access, but 136th based on aviation cost structure* Increasing competition requires: Aviation cost structure (Transport & Finance) Passenger Facilitation (CIC & CBSA) Air Access Agreements (Transport & Trade) *Source: World Economic Forum Travel and Tourism Competitiveness Report

Competitive Challenge Facilitation: Visa and Border Issues Significant progress made - more to do! Current Recommendations: Reducing red tape using technology (ETA) – leading to Visa Waiver for markets like Mexico & Brazil Optimizing Existing Security Infrastructure (Beyond the Borders) Reinvest in Visa Processing

Conservatives Agree “vii) refrain from using the term ‘resident’ or ‘residence’ in temporary, student and visitor visas to ensure greater certainty for those temporarily visiting Canada.`` Entry Applications, Permits and Landing fees. Policy Declaration of Conservative Party of Canada 2011 17

Recommendations to Achieve 4% Annual Growth Partner with the travel and tourism industry in Connecting America, an unprecedented strategically-aligned marketing initiative to drive US leisure demand for tourism vacation product across Canada Reduce the government-imposed aviation cost burden in order to maximize economic benefits for Canadians of international Open Skies and Free Trade agreements. Modernize our visitor visa system by differentiating between travellers and residents Increase on line processing of traveller visa applications from key source markets; Build on our information-sharing and security partnership with the US to establish a reciprocal trusted-traveller visa waiver system for travellers from key markets; Grant visa waiver status for Brazil and Mexico leisure and business travellers. 18