In last week’s E-Blast, I talked about how much the arts and culture sector does for our city, including acting as a major draw for tourists and conferences. This week, I want to take a deep dive into the other factors that impact Toronto’s “visitor economy”. This is a vital part of our city’s success—it drove over $12 billion in economic activity last year. Much like arts and culture, there is a two-way relationship between Toronto and tourism: People come to Toronto from all around the world because of our city’s vibrancy and unique identity, and those very tourists help make our city vibrant and unique. Let’s look at the work going on behind the scenes to keep drawing visitors to Toronto and what it means for the future of our city.
I can’t talk to you about the visitor economy without talking about Destination Toronto, the arms-length non-profit that drives our tourism industry. As the Mayor’s Economic Development & Culture Champion, I sit on the Destination Toronto Board and get to weigh in on the deeply impactful work they do to shine a spotlight on Toronto internationally and support the tens of thousands of workers employed in the hospitality business.
Last week, I welcomed a few hundred of those hospitality industry members to Destination Toronto’s Annual General Meeting (AGM). At the AGM, Destination Toronto’s CEO Andrew Weir unveiled a new study that analyzed the impact of the visitor economy on Toronto and the GTA from 2019 – 2023. This study was able to trace the full economic impacts of every dollar spent by tourists visiting Toronto. The three main types of impacts they measured to highlight the importance of tourism are:
Direct Impacts: Tourists spend money directly on things like hotels, dining, recreation, and transportation.
Indirect Impacts: The sectors that serve tourists also purchase good and services, (wholesale food, utilities, cleaning supplies, etc.), impacting other industries. These are called supply chain effects.
Induced Impacts: Employees in tourism-related industries go out and spend their wages in the local economy.
Together, the impacts of the visitor economy are huge. In 2023, 26.5 million people visited Toronto and spent $8.4 billion. All of that visiting supported 67,000 jobs and generated over $12 billion in total economic activity. It also generated $2.1 billion in various tax revenues.
These number are within 5% of 2019 tourism levels, showing a strong recovery for the sector. The one facet of the visitor economy that’s still lagging at about 70% of pre-pandemic levels is the conference and special events business. Imagine the economic benefits Toronto and the GTA could reap if we fully recover the conference and events sector, or even grow it beyond 2019 levels. Conference goers have a proven tendency to return to Toronto as leisure travellers with their families. They also tend to be more hotel-focused while travelling on company expenses, which means Toronto is more likely to fully collect its Municipal Accommodation Tax (MAT).
Because you live in Toronto, you may not be aware of the MAT. It’s the only real way the City is able to collect tax dollars from tourists. The MAT pays for the operations of Destination Toronto and returns a small amount to the City, which helps offset what we spend to support tourism and major events. Last year, Council raised our MAT from 4% to 6%. While it’s not unusual to pay some form of visitor tax when you visit any world-class city, Toronto is now at the higher end of the range amongst the cities we compete with for tourist and conference business.
In terms of tax benefits overall, the Federal and Provincial governments benefit the most from a healthy tourism industry, which is why there is also a Destination Canada and a Destination Ontario. The other orders of government know they will see solid tax revenue from both sales tax and the income tax that flows from tourism jobs. Toronto, on the other hand, makes just enough to cover the expenses we incur promoting our tourism industry through Destination Toronto and other City initiatives by collecting the MAT.
Of course, the visitor economy has more benefits to our city than just the taxes we collect. A city needs the vitality and vibrancy that comes from tourists buzzing around the downtown core. We also need the wide range of employment opportunities that come from the sector, including excellent entry-level jobs. Perhaps most importantly, tourism helps boost our international profile and attract investors, entrepreneurs, and businesses from around the globe.
So how do we make sure leisure and business tourists leave Toronto with a smile on their face? It starts with their journey to Toronto. It has to be easy to get here and enjoyable at the arrival point. As an example, I was at Pearson Airport recently and heard a group of visitors from the UK chatting about how to get over to the UP Express and head downtown. A dedicated, reliable train service running between our major airport and downtown core ensures that visitors start their trip to Toronto on the right foot.
Speaking of downtown, Billy Bishop Airport continues to offer one of the best small airport experiences around and visitors are noticing. They recently announced passport pre-clearance, which will make quick business trips to places like Boston and Chicago almost effortless. Nieuport Aviation, the owners of the Billy Bishop terminal, have also started to add visual art installations and live music to the airport to give visitors a taste of what’s in store for them in Toronto. They’ve also made great strides improving the pick-up and drop-off in front of the terminal for shuttle buses, taxis, and family chauffeurs.
Very soon, we will need to grapple with the future of Billy Bishop Airport. New federal aviation rules mean that adjustments will need to be made for planes to continue landing. To make these critical investments, the airport needs certainty that it will be able to continue operating its great service. For instance, it’s currently limited in the types of planes it can land. Imagine if instead of the outdated turboprop planes, it could accommodate modern aircraft that are greener and quieter. This would dramatically improve sustainability and livability near the airport while enhancing a key asset of our local visitor economy.
Billy Bishop is the perfect tie-in to the last point I wanted to dive into: business travel & conferences. Our Destination organizations at every level advertise our city globally to promote what a great place we are for a conference. We’ve already locked in a couple of major tech conferences for the next calendar year. Next week, Toronto will once again host Collision, a super-sized tech conference where tens of thousands of attendees from around the world showcase their tech concepts to top investors. Next year, we’ll host Consensus, another tech showcase specializing in Web3, blockchain, and cryptocurrency. All three levels of government and their tourism corporations will make sure the conference attendees have a great time, bringing new investments to Toronto and flooding the hospitality industry with revenue along the way.
Whether visitors come here for business or pleasure, we want to make sure they see the very best of Toronto. A strong visitor economy directly translates into a strong local economy, creating jobs and income across sectors. Rest assured that we are working around the clock to grow our visitor economy and create more opportunities for Torontonians in every corner of the city. And if you have friends or family visiting soon and aren’t sure what to show them, Destination Toronto’s website is never short on ideas. Let’s show visitors from near and far just how much Toronto has to offer.
