Representatives warn of mass layoffs, bankruptcies without government-backed loans, wage subsidies
Representatives of Canada’s COVID-19-crippled travel and tourism industry are warning of mass layoffs and large-scale bankruptcies if the federal government fails to step up with aid for the sector.
MPs on the House of Commons industry committee heard grim stories on Monday about the devastating toll the pandemic is taking on the travel and hospitality sector. Industry leaders said existing federal programs either don’t help their members, or aren’t enough to keep businesses afloat.
Charlotte Bell, president of the Travel Industry Association of Canada, said while other businesses have been allowed to gradually reopen, the tourism sector continues to take a beating due to travel restrictions and border closures. “The visitor economy is unlike other sectors. We can’t provide curb-side products and services nor can we sell experiences online to keep the lights on,” she said.
Bell called for a government-backed loan program, which she said is critical because banks will not extend loans to those businesses deemed too risky. She also pushed for an extension of the federal wage subsidy program until May 2021 to avoid mass layoffs and bankruptcies.
The federal wage subsidy program covers 75 per cent of wages, up to $847 a week per employee. Bell said the government should also consider tax credits or grants for the hotels, conference centres, airports and others that are spending millions to make their locations safe through signage and infrastructure.
“These are maybe stop gaps, but they’re not going to save the industry. The industry needs liquidity and it needs it very urgently,” she said.
Hotels on the brink
Susie Grynol of the Hotel Association of Canada warned that more than a quarter of hotels in Canada would be forced to close if the federal government does not inject more immediate financial aid.
She said there is a misconception that most chain brand properties are operated by big non-Canadian corporations, when in fact they are independently run by franchise owners, many of them local entrepreneurs or families.
Mass gathering and distancing restrictions have left many hotels hanging by a thread, with most grappling with a revenue loss of 70-90 per cent, Grynol told MPs.
“If there is nothing done, we anticipate that at least 25 per cent, likely more than that, of our sector will go under,” she said.
The hotel industry represents more than 8,000 hotels, motels and resorts in Canada, which employ more than 300,000 Canadians and contribute about $10 billion in taxes to all three levels of government.
Grynol agreed that a government-backed loan program is crucial for hotels to survive. She also called for a program that is equivalent to a commercial rent assistance program to cover three months of mortgage payments.
Noting the wage subsidy program has been a lifeline for many hotel operators, she asked that it be extended beyond September to keep employees on the payroll and businesses alive.
“Our future is in your hands. The government will be making life and death decisions for many hotels. We hope that you will recognize that not every sector is alike. It is time to transition into sector-specific support measures in order to bridge hard-hit industries like ours, to the other side,” she said.
John Power, spokesperson for Industry Minister Navdeep Bains, said the government brought in various programs to support the tourism sector, including close to a billion dollars to boost funding for regional development agencies. That funding has already provided aid to many tourism businesses that didn’t qualify for other programs, he said.
The government also announced $110 million to support Canadian tourism, which includes $30 million for domestic marketing and $80 million for local tourism agencies and tourism-related projects. A new industry strategy council will help assess other needs for various sectors, including tourism, Power added.
“We have always stood up for Canadian tourism and transportation workers, and we will continue to do so,” he said in an email.
Conservative MP and committee member Blake Richards said COVID-19 is having a “profound” effect on tourism operators and businesses, and many of them worry the government has not provided enough support.
He pointed to a Tourism Industry Association of Canada Report which predicted that without further government action, 61,000 tourism businesses in Canada, or 57 per cent, are projected to fail. That could mean the loss of employment for 1.66 million Canadians, he said.
“The tourism sector was the first hit at the start of the pandemic and it is amongst the hardest hit industries. Job losses and business closures in this sector will also disproportionately affect women, youth, visible minorities, new Canadians and Indigenous people,” he said.
“The Liberal government needs to be taking a proactive approach to consulting with the tourism industry and to understanding the profound impact the pandemic has had on them.”
NDP MP and committee member Brian Masse said today’s testimony revealed that the tourism industry has been “abandoned” by existing federal aid programs.
“Businesses are shut out, don’t qualify or can’t use what the Liberals created. The government has either chosen not to fix it or can not be bothered since they have been caught up in distractions of their own making,” he said.
“What is needed immediately is a sector-specific package. Tens of thousands of jobs and hundreds of communities are at significant risk without action now.”