Does a weak loonie put a dent in Canadian tourism to Maine?

The Canadian dollar is at its weakest since December 2005. But the loonie’s current slump, to about 77 cents to the U.S. dollar Wednesday, comes at an unusual time of year: the peak season for Canadian tourism to Maine.

That has some in the hospitality industry concerned that Canadian tourists will forego trips or curtail spending on their vacations, as the Canadian dollar is a full ten cents lower than it’s been during the past 10 summers.

Those are extraordinary circumstances, but a look back at border crossing data and the exchange rate shows a tenuous correlation between the two, lending credence to campground operators who told BDN reporter Chris Burns they’re not too worried about the exchange rate. Hotel and tourism officials expressed concern, but there’s little evidence from past summers that the exchange rate itself stands to put a dent in total passengers.

First, let’s take a look at the overall traffic trends — an amalgamation of DOT data on bus, car and airplane passengers coming from Canada into Maine (not including connections for plane travel).

Summertime crossings from Canada to Maine have been waning in recent years, down sharply from 2006, before the recession. Since, trips into Maine from Canada have not really recovered. And the same was seen in spending.

A 2010 report in The Journal of Travel Research found Canadian spending in the United States decreased by 15 percent from 2007 to 2008 and U.S. spending in Canada fell by 6 percent for that period.

That’s part of what concerns Maine’s hospitality industry, that the lower exchange rate leads to lower tourism-related spending from Canadian visitors — a question I don’t address here and that is harder to track.

The disruptions of the recession make it hard to isolate and assess many things, including the relationship between the exchange rate and summertime tourism.

This next chart makes that point. The annual average exchange rate is on the x-axis, with total car, bus and airplane passengers from Canada into Maine for the peak months of July and August — an effort to isolate impact just on tourism — on the y-axis.

Pay particular attention to what’s happening around the 88 cent mark (and in 2007).

The plot above shows little correlation from 1995 to 2014 between the exchange rate and total traffic from Canada into Maine, though the story is different after the recession.

Traffic is basically flat as the exchange rate has varied, but there’s a slight trend upward in tourist traffic as the exchange rate becomes more favorable for Maine’s northern neighbors.

Still, it appears broader economic conditions have a greater influence on summer traffic from Canada into Maine.

That’s clearest looking at 2006 and 2009, when the exchange rate was about even but traffic most certainly was not for the two years straddling the recession. The summer months in 2006 brought nearly 50 percent more Canadian tourists to Maine than those same two months in 2009.

While there’s little correlation between the exchange rate and traffic, it could be a concern that the Canadian dollar has fallen to a new low during the peak summer season.

Last summer, the loonie was around 90 cents to the dollar and expected to continue falling, prompting a trip to Quebecois summertime retreat of Old Orchard Beach to see what business owners made of the projections.

At least one hotel operator in Old Orchard Beach told me was not a concern, but an exchange rate below 80 cents, he said, would lead to lost bookings and other changes in behavior.

“Canadians will still come. But instead of coming for a week, they’ll come for five days,” said Dan Donovan, co-owner of Friendship Oceanfront Suites on Grand Avenue, noting that then requires more bookings.

And that could be an economic headwind, if there are not real weather events to worry about.

Shay Dichter at the store the Zanzibar Seaside, told me last year the weather remains the biggest factor in tourist traffic, which is born out by the travel pattern from Canada to Maine.

“This is the beach life,” Dichter said of Old Orchard Beach. “No sun, no fun, right?”


Darren Fishell

About Darren Fishell

Darren is a Portland-based reporter for the Bangor Daily News writing about the Maine economy and business. He's interested in putting economic data in context and finding the stories behind the numbers.