Canadians Avoid Vegas while Americans flock to Canada’s Casinos

The casino industry has always been a volatile one, reliant upon the economic strength of global regions. If the US economy sinks, Las Vegas can still draw customers from abroad. That seems to be the case for Canada’s casinos, where locals are tightening their travel budgets due to the low value of the Loonie, but Americans are crossing the border to take advantage of the stellar exchange rate.

Canadian DollarThe Canadian Dollar has reached a 13-year low compared to the US Dollar, valued at just CAD $0.72. The result is a much more expensive excursion to the US for Canadians, but a relatively cheap rendezvous for Americans who head north.

According to Ben Smith, Head of Passenger Airlines for Air Canada, locals aren’t booking nearly as many flights to popular US destinations as they used to, and those who are flying south aren’t staying as long.

“An interesting thing I’ve noticed is the actual length of trip to places like Vegas [and] New York,” said Smith during a recent company conference call. “People are still going to places like Disney but they’re maybe shortening [the trip] by a day or two.”

Smith reasoned that while, “a lot of people are still making the trip… they want to make sure it’s within their budget.”

Both Air Canada and rival airline WestJet have been forced to discount their fares on to/from flights to the country’s hardest hit areas. Many flights to/from Alberta have actually been cancelled due to the substantial reduction in traffic.

Transportation stock analyst Walter Spracklin of RBC Capital Markets noted a remarkable “weakness in Alberta, [and] possibly other areas”. Instead of relying on Canadians to travel abroad, the airlines are hoping for a surge in foreign travelers who want to take advantage of the loonie’s high exchange rate.

Upon arrival, Americans can exchange $0.72 USD for $1.00 CAD, Europeans will pay €0.65 for $1.00 CAD, and UK travelers just £0.51 for $1.00 CAD. The incentives are very high for foreigners to hit Canada’s casinos and other attractions, and that’s what airlines are banking on as the spring and summer months approach.

Canada not a ‘Desirable’ Destination

Although tourism from Americans was up 8% last year, and is projected to receive another 6% boost this year, the biggest problem could simply be a lack of interest.

Last week, TD Economics released a study on trends in cross-border travel, and the news wasn’t great for Canada. “Americans surveyed in recent years have placed Canada relatively low on the list in terms of desirability of vacation spots,” read the report.

It seems the majority of Americans who journey north are those that already live in northern US states, negating the need for air travel. Residents of Michigan and New York cross the border into Ontario to visit places like Thousand Islands and Niagara Fallsview Casino Resort. A quick drive across the St. Lawrence Rivers brings Mainers to Casino de Charlevoix or Hippodrome de Quebec.

While those frequent gambling trips are bringing money into the lower provinces, it won’t be enough to offset the drowning economy if Canada can’t find a way to bring in more travelers in from abroad.

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