TIABC Voice of Tourism Newsletter – August 30, 2024

You may not recognize the name Tim Williams but you’ve likely seen him in TV commercials countless times in recent years. Primarily known as a soap opera actor in Germany, the confident, casual, smooth-talking American was once the leading pitchman for trivago, a search engine that offers consumers the ability to find and compare prices for hotel rooms across all online travel agency platforms.

Although Williams was pilloried by social media bullies for his open neck shirts, scruffy look, and even for not wearing a belt, he helped vault trivago from its modest start as a small, private Dusseldorf-based business into a huge, publicly traded company with Expedia as its managing shareholder.

Aside from trivago, the Expedia Group (EG) owns a number of other brands like Travelocity and Vrbo, that combined, annually generate several billion dollars in visitor spending on hotels and airfares in this country alone. Canada is EG’s second most booked destination globally with as many as 20% of American visitors using one of its sites to book a trip north of the border.

Rest assured, my intention with this message is not to plug the services of Expedia, but rather to expose the unintended consequences of a well-intentioned federal tax on technology services that could have repercussions for Canada’s visitor economy.

Without getting too granular, as part of Bill C-59 (passed in May), the feds imposed a retroactive 3% tax on Canadian-source digital service revenues that for Expedia, which is purported to be a high-volume, low-margin business, it means they’ll have little choice but to pass the added costs on to consumers. Hypothetically, in a scenario whereby OTA prices go up and correspondingly international visitor volume drops by 5%, Expedia estimates a loss in tourism expenditures and tax revenues of close to $1 billion.

I’m not naïve to the fact that many decision-makers in government and leaders in our industry maintain that technology companies like offshore online travel agencies should pay their share of taxes for business generated in Canada. In reality, it’s imperative to ensure a competitive and balanced playing field, regardless of economic sector.

And while tourism operators would prefer that travellers book directly via their own corporate sites to bypass costly commissions paid to OTAs, and/or to avoid other issues that arise, one also can’t ignore that large OTAs provide tremendous reach into international markets, remain popular with travellers, and often guarantee prices lower than those advertised on corporate websites.

In a meeting with my colleagues across the country recently, we debated whether we should advocate for a ‘safe-harbour provision’ that would exempt Expedia and other digital companies from the tax if their profitability is less than 10%. No decisions have been made by TIABC or any of my provincial and territorial tourism industry association counterparts (PTTIA) vis-à-vis lobbying for regulatory changes to the digital services tax pending further research into the issue, and not before soliciting our respective members’ input. Nonetheless, it’s on our collective radar given the potential ramifications for Canada’s visitor economy.

The new trivago TV commercials seem to be on at all hours, only this time it isn’t Tim Williams but rather British actor James Sheldon, who with the help of AI, delivers the ‘sell’ in different languages for multiple markets. I have nothing against Sheldon but the AI generated voiceover is so bad I suspect many internet trolls wish trivago would go back to the original, ex-soap opera actor, scruffy bearded, smooth talking, dishevelled pitchman from Texas.

Walt Judas
CEO, TIABC