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Seeking help for the tourism sector

 

An open letter to Ministers Bill Morneau and Melanie Joly,

 

We are writing today as Members of Parliament from across Northern Ontario regarding the need for additional financial support for small and medium sized tourism businesses in our region during the COVID-19 pandemic.

 

Over the past several weeks, we have heard from many small business owners and employees working in the tourism sector regarding the desperate situation their businesses are in. Many of these businesses are dependent heavily – and in some cases, entirely – on an American customer base that cannot travel to Canada this season. Others have a more mixed customer base of domestic and international travelers, but are still struggling to get domestic tourists to their businesses – be it over fears of COVID-19 transmission, the economic challenges their customers are facing themselves, or the current lack of air travel.

 

Supports from the federal Government have provided initial relief for a number of businesses in the early stages of the pandemic. These include the Canada Emergency Wage Subsidy, the Regional Recovery and Relief Fund, and the Canada Emergency Business Account. However, this support has been unfortunately not enough for many businesses, particularly those that have experienced a complete collapse in revenue and yet still need to pay significant overhead costs in the form of insurance, upkeep and taxes. Businesses which are earning less than 25% of their normal revenue are also at a loss when accessing the Wage Subsidy as they often do not have financial resources to pay the remaining 25% of their employees’ wages, as required under the program.

 

In light of this situation, different efforts have been taken to shore up the industry in our region, most notably the promotion of domestic tourism. This is an initiative that has been taken on both by MPs, Destination Marketing Organizations, and the tourism businesses themselves. Unfortunately, the results so far have not been sufficient to indicate that the domestic tourism market will offer enough of a cushion to get the tourism sector through the remainder of this season.

 

With all of this in mind, we believe it is appropriate to request that the Government consider additional financial support for small and medium sized tourism businesses in our region in the form of some combination of the following:

 

1. Additional interest free loans from FedNor aimed exclusively at the tourism sector. Given the industry’s unique financial situation and seasonal nature, additional liquidity for its businesses is urgently needed.

2. Grants for tourism businesses dependent on foreign customers for a majority of their revenue. These businesses are looking at a near complete loss in income this season. Incurring debt in this situation, while facing the potential for a weak tourism season next year, has made many wary of taking on additional debt in the form of loans without knowing if they will ever pay it off.

3. The deferral of federal taxes and interest payments on existing federal loans for these businesses until Fall 2021.

4. A change to the Canadian Emergency Commercial Rental Assistance Program that would allow tourism businesses to opt-in as tenants.

    1. 5. Additional financial support for seasonal tourism businesses through the Canada Emergency Wage Subsidy, including: a. Support for businesses that were ineligible to claim portions of their employees’ wages for Claim Periods 1, 2 and/or 3 due to their 2019 season starting in the final quarter of these periods. For example, seasonal businesses that normally open in the first week of May would have been ineligible for the subsidy as this period constitutes the final quarter of Claim Period 2, which used April 2019 as its baseline revenue comparison. The overlap between eligibility periods and comparison months has left certain seasonal tourism businesses without weeks of the subsidy they would have received if they were not seasonal.

    2. b. Changes to the rule barring family members from receiving the subsidy if they are legitimate employees of these business.

    3. c. Allowance

    1. for dividends to be considered eligible payroll for the purposes of the subsidy.

    2.  

The situation facing this sector is dire and has the potential to have ramifications across our region. According to Nature and Outdoor Tourism Ontario, tourism businesses in Northern Ontario help sustain 13,304 jobs, pay $ 38 million in regional municipal taxes, and spend an estimated $ 200 million on products and services to run their businesses, much of which goes to local businesses. For a rural region that is challenged by population loss and the highs and lows of the resource economy, the closure of even a few Northern tourism businesses will likely have deep and lasting effects on communities and businesses outside of the tourism sector.

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