Cross-border shopping loses appeal


Cross-border shopping seems to have lost its allure, as more Canadians stayed home in the first quarter of 2008, knocking back Canada’s international travel deficit from record highs at the end of last year.

At the same time, foreign traveller spending in Canada dropped to the lowest level in two years.

The international travel deficit was $3.1-billion for the first three months of 2008, about $295-million less than the record reached in the fourth quarter of 2007, Statistics Canada said.

Canadians spent $7.2-billion outside the country in the first quarter, down 4.6 per cent from the fourth-quarter record. Meanwhile, foreign travellers spent $4.1-billion in Canada in the first quarter, down 1.2 per cent from the fourth quarter and the lowest level in two years, as Americans stayed home in droves to nurse their recession.

Spending by U.S. residents in Canada dropped to a 10-year low, falling 2.9 per cent in the quarter, to $1.9-billion.

The last half of 2007 saw a major increase in cross-border shopping by Canadians taking advantage of their currency reaching par with the U.S. dollar, Statscan said. But now that many shopkeepers in Canada have adjusted their prices to be more competitive with Americans, cross-border shopping has subsided.

Canadians were spending more money beyond the U.S., however. Spending in overseas countries reached $3-billion in the first quarter, up 3 per cent from the previous quarter, as Canadians made two million trips to non-U.S. destinations.

Overseas visitors to Canada also climbed by 1.1 million overnight trips, up 0.3 per cent. They spent $2.2-billion, also up 0.3 per cent from the previous quarter.

The decline in Canadian travel was in stark contrast to travel patterns in 2007. Canadians made a record-high number of overnight trips abroad last year, surpassing 25 million for the first time and spending a record $22.5-billion.

Analysts have warned that the U.S. recession, the persistently strong Canadian dollar and soaring gasoline prices could ravage the tourism industry in Canada this year.