Hot Vacation Spot for New Yorkers Comes Courtesy of Dollar Rallyby
Niagara Falls bustling again as weak Loonie lures Americans
`I can’t remember the last time we were doing so well'
On a cold January afternoon in Niagara Falls, on the border between the U.S. and Canada, the traffic is mostly flowing one way: northward.
Cars from New York and Pennsylvania are backed up for 30 minutes on the Rainbow Bridge into Canada, while the southbound lanes are clear.
A 34 percent plunge in the Canadian dollar since 2011 is spurring a reversal of traffic along the longest undefended border in the world. Americans are heading north for bargains with a U.S. dollar that stretches to about C$1.42, and Canadians are staying home. Border towns such as Niagara Falls, Ontario, where honeymooners have been taking in the sights next to North America’s biggest waterfall since the early 1800s, are getting a boost.
“I can’t remember the last time we were doing so well,” said Charlie Burland, president of family-owned Niagara Clifton Group, which operates about 22 tourism-related businesses around the city’s strip of kitschy wax museums, souvenir shops and motels advertising heart-shaped Jacuzzis. “I’m going to say it was long before September 11, 2001. Back in the early 1990s was the last time we saw this kind of activity.”
Sales at the Niagara Clifton Group were up 20 percent in 2015, Burland, 49, said in an interview in his office, where mementos from his family’s 90 years in tourism dot the walls. Visits of U.S. residents to Canada reached 3.24 million in July 2015, the highest for the month since July 2008. Tourism meanwhile, contributed C$7.84 billion ($5.5 billion) to Canadian gross domestic product in the third quarter of 2015, up 5.6 percent from the third quarter of 2013.
The industry is one of the few bright spots in a Canadian economy that has been dragged down by the slump in commodity prices and slowing global growth. While holding interest rates steady at its policy announcement Wednesday after cutting twice last year, the Bank of Canada highlighted tourism as one of the domestic industries starting to feel the positive effects of a weaker currency.
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, hit a 13-year low of C$1.4690 per U.S. dollar this week and traded at C$1.4161 as of 11:27 a.m. in Toronto. That move is seen as overdone by analysts who forecast a rise to C$1.39 by the first quarter of 2016 and to C$1.37 by the end of the year, according to the median of estimates compiled by Bloomberg.
The forecasts may be optimistic if the central bank is prompted to cut interest rates again. Derivatives traders see about a 40 percent chance that the bank will cut its benchmark rate by April, and about a 50 percent probability of a move by May, according to data compiled by Bloomberg.
Brad Brennand and his girlfriend, Krissy Breeden, were taking advantage of the low loonie last week. They flew from Bethlehem, Georgia, for a six-day romantic getaway, gambled in the casino and ate in upscale restaurants. He proposed on a horse-and-carriage ride through Niagara-on-the-Lake, a nearby wine region.
“It made it a little cheaper on us to be able to come over and enjoy ourselves a little more,” Breeden said. They hadn’t planned on doing much gambling but the exchange rate made it easier so they went almost every night.
During years when the Canadian dollar is strong, such as when it peaked in 2007 at 91 Canadian cents per U.S. dollar, Canadians flow into New York to take advantage of the bargain prices at fashion-outlet malls in Niagara Falls and Buffalo. That they’re keeping their loonies close to home hasn’t escaped the attention of U.S. tourism authorities.
“All of the destinations along the Canadian border on the U.S. side, we should all be worried,” said Julie Gilbert, director of marketing and communications at Niagara Tourism and Convention Corp., in her office in Niagara Falls, New York.
The organization doesn’t have any concrete numbers on how much Canadian visits declined in 2015, but it expect them to continue to be soft this year, she said. The board is encouraging hotels to offer their room rates at par until the exchange rate improves, Gilbert said. “We just have to keep making sure that we’re staying in the market because it’s very cyclical.”
Back on the Canadian side, the weaker loonie poses risks for even those winning the exchange-rate battle. The interior of a new C$3 million mirror and laser-maze attraction is being built in the U.S. and partially paid for in U.S. dollars, Clifton Group’s Burland said. Food costs in his restaurants are also skyrocketing.
“We don’t know where the price of lettuce is going to be in July,” he said. “We may have to reprint the menus two or three times this summer, which we’ve really never done before, to compensate.” The “perfect world” is an 80 U.S. cent Canadian dollar, he said.
Burland is capitalizing on the prospect of another strong summer by planning to hire 15 to 20 percent more staff, as well as launching the new attraction and rebuilding two more damaged in a fire last summer. For a business that has made a profit only a third of the time over the last 14 years, he’s optimistic.
“I’m relaxed,” he said with a grin. “A good feeling, for a change, it’s nice to see the company make money.”