Market Insights

Canada's economy is continuing to recover as its major export markets - the US and Europe - slowly return to growth. However, the economic recovery remains weak and consumers continue to rein in spending. Long-haul travel has suffered, with Canadians looking for affordable holidays, often closer to home.

Economy

The Canadian economy, despite performing strongly for a decade, sank into recession in late 2008 and 2009. Fortunately the downturn was shorter and less severe than in many other major economies.

GDP growth in the second quarter of 2010 was 3.4 per cent and 3.1 per cent growth was forecast for 2010 by the Economist Intelligence Unit.

Improvements in the housing sector, consumer spending, wage rates and commodity prices are all helping drive a return to confidence, but the strong Canadian dollar is slowing export growth.

The US and Europe represent the two biggest markets for Canadian goods, so recovery in these two major economies is helping revive Canada's economic situation. However, with the global economy still fragile, Canada is relying on the continued strength of these markets in order to maintain its improved outlook.

While the economy as a whole is on the mend, for the average Canadian there are still concerns about the unemployment rate - sitting at 7.9 per cent as of October 2010. However, this has fallen from 8.2 per cent in March 2010.

Key Indicators

Sources:
www.economist.com (GDP Growth)
www.xe.com (Exchange rates)

Outbound Travel

Canada hosted the Winter Olympics in February 2010, encouraging Canadians to stay home during the New Zealand summer.

Feedback from travel sellers indicates that consumers are booking later and discounted pricing is heavily impacting yield. Travellers are in a "deal seeking" mode, so vacations that are all inclusive or include multiple destinations are most popular.

The cruise industry is reporting good sales. Operators are reporting generally positive feedback. A trend is for cruise passengers to look for ways to stay longer in New Zealand, and travel sellers are responding with three- to four-day, post-cruise itineraries.

Airline Update

Airfare deals to Australia however are continuing to drive traffic to the South Pacific overall and dual-destination New Zealand/Australia travel has increased noticeably with increased competition on the Australian route. Seventy per cent of traffic to New Zealand, as at December 2009, was flying via Australia, or via Australia and the South Pacific.

Competitor Activity

Long-haul competitors for New Zealand include Australia, UK, Caribbean, Ireland, Italy, and Greece. Canadians tend to be sun-seekers as their own summers are frequently short.