TIABC Voice of Tourism Newsletter – May 26, 2023

CEO MESSAGE

When I set up my own tourism consulting business after my time at Tourism Vancouver came to an abrupt end in 2015, I started with a couple of small projects and ultimately took on a larger contract with TIABC.

As a new small business operator, I learned very quickly that aside from fulfilling my commitments to clients, I also needed to focus on running a business which included financial obligations such as taxes, insurance, accounting, legal fees, and other operating expenses. To be fair, the cost to run my little shop was nothing compared to the many tourism operators I consulted with in those early days who were faced with additional fixed cost expenses such as rent, utilities, staff, supplies, and more.

After two years as a sole proprietor, I recognized that virtually all of my time was devoted to TIABC. So I folded Parkside Tourism Consulting and joined the organization as a permanent staff member, shifting some of my focus to running an association which included financial responsibilities such as raising revenues to keep the organization afloat.

After eight years of careful management of resources, TIABC is in a relatively stable financial position. However, the same can’t be said for some of our members…partially due to the pandemic…but also because the cost of doing business in our province has risen exponentially and shows no signs of tapering off.

Earlier this week, the Greater Vancouver Board of Trade (GVBoT) released a new policy report, titled “Counting the Costs: Assessing Economic Challenges for Businesses in British Columbia”.

The brief suggests that while BC fared well during the pandemic compared to other provinces in growth and employment, forecasters project that we’ll trail most provinces in real GDP growth this year and next. In fact, over half of businesses (56%) surveyed in Metro Vancouver anticipate an increase in operating expenses in the coming quarter, while more than a third expect a considerable decline in profitability (34%) and cash reserves (26%). It’s likely the same story all over BC.

GVBoT notes that between 2022 and 2024, businesses will have paid a cumulative $6.5 billion in additional costs through a new payroll tax (EHT), carbon tax, corporate income tax, and paid sick leave. This also takes into account two broad-based, positive measures which include removing the PST on non-residential electricity and the reduction of the small business tax rate that cumulatively save businesses money ($873m).

GVBoT also cites other challenges including a 17% increase in the minimum wage (2019– 2023), a new statutory holiday costing $200 million, and a nearly 10% increase in the top personal tax rate. Layer on rising interest rates and inflation, it’s no wonder many businesses are having a difficult time, especially those in tourism that rely on revenue from international visitors, which has fallen short of pre-pandemic numbers.

The Greater Vancouver Board of Trade offers several recommendations to government to ease the financial burden on businesses including reducing the provincial portion of commercial property taxes and increasing the EHT threshold for small and medium-sized businesses. I encourage you to read the report for yourself (included below) to digest and subsequently discuss with TIABC so we can advocate on your behalf for policy changes like the GVBoT is proposing to help businesses survive and thrive.

It should be pointed out that, despite the harsh reality of today’s business climate, tourism remains ripe for opportunities to grow existing businesses or for entrepreneurs to launch new products and services to meet the needs and demands of visitors. Moreover, many tourism operators (depending on the sector) are doing reasonably well in spite of high operating costs. For that matter, I would even consider launching a small tourism business again somewhere down the road but not before careful evaluation on whether the benefits outweigh the challenges. In the meantime, I’ve got an association to run for the foreseeable future.

Walt Judas,
CEO, TIABC