Everett, Wash.
Published: Sunday, October 7, 2007

Strong Canadian dollar has seesaw effect on tourism, business

By Yoshiaki Nohara
Herald Writer

 VANCOUVER, B.C. -- Fall typically means a drop in the number of American tourists visiting this cosmopolitan city that takes pride in its closeness to nature. Fewer families in Washington and Oregon cross the border as schools start and the weather turns gloomy.

This fall has brought another challenge for tourism in British Columbia: Americans no longer enjoy a built-in discount when they visit Canada.

The Canadian dollar reached parity with its U.S. counterpart on Sept. 20 for the first time since November 1976. Its newfound strength coincides with a steady decline of the greenback.

That means American travelers in Canada pay more for shopping, dining and visiting places such as the Vancouver Aquarium, a popular tourism attraction that attracts about 900,000 visitors each year.

"It's already turning away visitors from the U.S.," said Greg Holmes, the aquarium's director of sales. Holmes said the long-term effect of currency change is unknown. "But it's something we are concerned about," he added.

The Canadian dollar, known as the loonie for of the diving bird with the haunting call that is pictured on the one-dollar coin, rose sharply against the U.S. dollar after the U.S. Federal Reserve announced a half-point cut in its interest rates. That's creating a seesaw effect for consumers and businesses in Washington and British Columbia.

The loonie's rise encourages Canadians to cross the border and to shop at car dealers and shopping malls, which benefits retailers and tourism in Washington. At the same time, the weaker greenback discourages Washingtonians from exploring their northern neighbor and spending money in Vancouver, B.C., the host city for the 2010 Olympic Winter Games.

The equality of the two currencies is also affecting trade, making U.S. exports to Canada more competitive and U.S. imports from Canada more expensive. It remains to be seen how that will affect the economies on both sides of the border and on Olympic travel.

"It's something we don't have control over," Holmes said.

While the currency fluctuation is raising more questions than answers, the rising loonie is clearly a source of joy and pride for Canadians. The word, "equal," brought beaming smiles to Ed and Jane Coolen and their son's girlfriend, Nicole Ohrlein.

"It's fantastic for us," Jane Coolen said.

The Coolens flew from Nova Scotia to Vancouver, B.C., to visit their son last week. At the Vancouver Aquarium, the couple and Ohrlein talked about driving down to Seattle for early Christmas shopping.

"Bargains! Giveaways!" Ed Coolen said.

Coolen added that he hopes the strong Canadian currency will eventually lower the prices of U.S. products in Canada. Magazines and books that circulate in both countries, for example, traditionally have had higher fixed prices in Canada.

After reaching parity with the greenback, the Canadian buck has remained strong. On Sept. 28, the loonie hit a new 31-year high of almost $1.01. In early 2002, it was worth about 62 cents. Major newspapers in Canada and the U.S. have reported that Canadian shoppers are heading south across the continent in search of better deals despite hassles at customs.

About 11.8 million people crossed into Washington through five border stations between Aug. 1, 2006 and Aug. 1, 2007, said Mike Milne, spokesman for the U.S. Bureau of Customs and Border Protection. That's up from 11.4 million people during the same period a year earlier.

A spike of border-crossing travelers results in longer waits at the border. Frequent travelers can use express lanes after paying fees and passing a background check and an interview with border officials, Milne said.

The Peace Arch border station near Blaine, the busiest entry point in the state, is being rebuilt to increase the number of southbound lanes from seven to 10 by 2010. Canadian officials are also doubling northbound lanes from five to 10.

"It works hand in hand with the coming of the Olympic Games," Milne said.

Vancouver, the third-largest Canadian city with about 600,000 people, is getting ready for the games. The world event is expected to draw a million visitors to the region and boost tourism on this side of the border.

Organizers can't control the currency, but they hope that the rising Canadian dollar won't get in the way of the Olympics, said Raymond Chan, spokesman for Tourism British Columbia.

"We are monitoring the dollar rate closely," Chan said.

In downtown Vancouver, digital boards at currency exchange shops clearly show the U.S. dollar's fall against the loonie, the euro, the Japanese yen and other currencies. How that affects consumers is less visible and less obvious in the downtown area, which is filled with restaurants from a variety of nationalities and ethnic groups and includes European apparel shops and U.S. stores.

The rising loonie may be hitting local tourism, but not retailers, said Jovin Shen, head of sales at CMC Markets.

"There isn't anything in America that you can't buy here, right?" Shen said.

Joe Kainer, manager of Spokes Bicycle Rentals in downtown, expressed a mixed feeling last week about the sliding U.S. currency. The shop counts on travelers who want to ride a bike to nearby Stanley Park.

"It's not good for tourism," the Vancouver native said. "People used to come from the states and have a discount."

As he spoke, Kainer was getting ready to fly to the states for a Las Vegas bike show and was appreciative of his increased buying power.

Many Americans also visit Vancouver on business trips throughout the year. They often extend their stay for a few days to explore the region.

That helps local tourism during the slow months, Kainer said.

Andrew Keyso flew from Washington, D.C., to Vancouver last week to attend an American Bar Association conference at Vancouver Convention Center, which is being expanded on the waterfront to serve as the main media center for the Olympics. He said he plans to take a few days off to spend time with his fiance, Kim Koch.

That the greenback has become equal to the Canadian dollar right before their trip made the couple chuckle, but it didn't dampen their excitement.

"It's very good so far," said Keyso, 40. "We are planning to do some kayaking."

Border-crossing tourists gain or lose money depending on the exchange rate. The idea doesn't apply to Daniel Jones and Elene Haley-Jones, a Seattle couple who split time in Seattle and Vancouver.

They are enjoying the loonie's rise and the greenback's fall. The former has helped the value of their condominium in Vancouver soar. The latter sends Canadian shoppers to Seattle, generating tax revenue for the city where they own another condominium.

"It's good for both countries. I think people from the United States will still go to Canada because it's so beautiful," Haley-Jones said.

The government can improve traffic flow at border stations, the couple said, as they waited in a long line at the Peace Arch border station last week.

Security measures at the border are nearing overkill, the couple said. All drivers will have to present their passports to cross into Washington, starting in summer 2008. A driver's license now suffices.

"I think it's too much secured," Haley-Jones said. "If someone is going to do something, it's going to happen."

Reporter Yoshiaki Nohara: 425-339-3029 or ynohara@heraldnet.com.
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