CHPC Committee Meeting

     On this Tuesday, November 16, 2010, I would like to welcome you all to this 29th meeting of the Standing Committee on Canadian Heritage.

     Welcome to this 29th meeting of the Standing Committee on Canadian Heritage on Tuesday, November 16, 2010.

    We are here pursuant to Standing Order 108(2) for a study of the eligibility criteria of the marquee tourism events program.

    We have in front of us today representatives from the Canadian Tourism Commission, Mr. Klassen, the senior vice-president, marketing strategy and communications; and Madame Beauchamp, executive director of corporate communications and government relations.

    We'll begin with an opening statement.

    Thank you very much.

    Mr. Chairman, honourable members of the Committee, I am very pleased to be here today. I am delighted to be able to present an overview of our work at the Canadian Tourism Commission. While I am unable to address questions that exceed our mandate, I would nevertheless like to provide the Committee with any and all information that will be helpful to it in carrying out its mandate.

    The CTC is Canada's national marketing agency. Its head office is located in Vancouver. We work in partnership with all the provinces and territories, as well as with the private sector. We have two regional offices, one in London and one in Vancouver. We carry out our activities in 12 countries.

    The CTC is a federal Crown corporation wholly owned by the Government of Canada. It is overseen by a board of directors. It is accountable to Parliament through the Department of Industry. The CTC is a Crown corporation established under Schedule III of the Financial Administration Act which is evolving in a highly competitive international trade environment.

     We are results driven. For every dollar invested in CTC core marketing campaigns in 2009, $101 was generated in tourism export revenues. This is new money brought into Canada's economy as a direct result of CTC's marketing investments.

    Leading partnerships, we work with the whole tourism sector to raise Canada's competitiveness and showcase the country as a destination where travellers can create extraordinary personal experiences unique in the world. That's what our brand is all about.

    The Canadian Tourism Commission revitalized Canada's tourism brand in 2006. It's the foundation for CTC's overall marketing strategy: to increase tourism visitation to Canada.

    Canada now ranks, just this past week, as the number one country brand in the world, under a key study by FutureBrand, outperforming marketers from New Zealand and Australia. Results under this survey demonstrate that tourism is the strongest feature of the Canada brand.

    Canada Keep Exploring is the tourism component of this strong brand and a powerful asset for Canada's tourism industry. That's important because 1 in 10 Canadians work in this industry.

    CTC's leadership and partnerships are very much sought after in international markets, where the Canada tourism brand holds the greatest impact. Our vision is to inspire the world to explore Canada. CTC, our partners, and industry watchers, agree that sustainability of Canada's tourism industry requires an increasing number of international travellers.

    CTC's third-party administered advertising tracking and conversion studies revealed that our measured campaigns in 2009 had the following attributable results. They generated an estimated $1.66 billion in tourism revenue for Canada's economy and contributed to the maintenance and/or creation of an estimated 15,284 jobs for the Canadian tourism industry.

    CTC's 2011-2015 objectives are the following. The first is to increase demand for Canada's visitor economy. The second is to generate wealth for Canadians by focusing on both short-term and long-term potential for maximizing return on investments as our markets mature and evolve.

    Third is to engage in effective tourism marketing, promotions, and market development activities supported by market research as we aim to support the achievement of Canada's national tourism revenue goal of $100 billion by 2015, and to focus on markets where Canada's tourism brand leads and yields the highest return on investment.

    We're also focusing on concentrating on those geographic markets or consumer market segments where marketing at the national level--and that's Canada's tourism brand--leads to the highest potential for return on investment. Our focus is to convert high-yield customers by investing in appropriate communication channels based on those insights from customer segmentation research and a model we call the “path to purchase”, so we understand how customers purchase travel in Canada in particular.

    Since the launch of Canada's revitalized tourism brand, Canada Keep Exploring, we've worked to build a bridge between the world's nature-based perceptions of Canada and the need to preserve a more diverse and real Canadian travel experience in a personal, emotional, relevant, and interactive way. We want to prove to prospective travellers that time spent in Canada will enrich their lives.

    The CTC achieved significant success during the first two phases of our 2010 Winter Games strategy. The first phase was brand building before the games. The second was media relations and web content during the games. In many cases, our efforts far exceeded the initial targets set out in the 2007 Treasury Board submission. We are now in the final phase, which we call “harvesting the afterglow”, converting travel intentions into actual bookings in support of the ultimate goal of increasing export tourism revenues for Canada.

    To provide additional support for Canada's tourism industry, through the Canadian Tourism Commission, the Government of Canada announced an investment in May 2010 of up to $8 million in marketing initiatives and programs to promote key Canadian tourism events internationally and to build upon investments in priority international markets.

    In the afterglow of the most successful Winter Olympics and Paralympic Games to date, to keep the tourism momentum building internationally, and with our marketing strategy now in that conversion phase, it's acknowledged that CTC is well positioned to use this investment to generate increased tourism revenues for Canada. That is our objective.

    This marketing investment will allow the CTC to better take advantage of the increased awareness of Canada as a tourism destination resulting from the 2010 Winter Games by seizing the opportunity presented under the approved destination status with China and accelerating Canada's tourism development in emerging economies of India and Brazil, economies that are leading the global economic recovery. There is no greater opportunity before the Canadian tourism industry now than that opportunity in China.

    The breakdown of our expenditures is as follows. Of the $8 million, $3 million has been invested in China. This $3 million allows us to invest into a direct consumer marketing campaign for the first time. Prior to ADS, neither the CTC nor Canada was allowed to do any consumer marketing. So this investment will help us position Canada as a premier tourism destination for that country for the first time.

    Approximately $5 million will be invested in increasing phase three of our Olympic Games strategy itself. The majority of this is to convert the customer interest the games created into actual conversion, by which we mean getting people from the interest level in Canada that the games produced to actually come and visit Canada. Of that, $3.3 million is for leisure conversion, a direct consumer marketing campaign with partners from across Canada, and $500,000 is in the global meetings and convention industry to help position Canada as a leading global meeting and convention destination.

    The final $1.2 million will be invested in India and Brazil. These are two emerging markets for us. With this investment from Canada's economic action plan, we'll be able to enter these markets for the first time. They're showing some tremendous promise and some double-digit gains in travellers from those countries. So this will allow us to increase the investment there and to create and stimulate demand from those countries.

    I would like to stop now and open the floor to some questions, Mr. Chair. Thank you.

    Thank you, Mr. Klassen.

    We'll have about an hour and 20 minutes of questions and comments from members of this committee, beginning with Mr. Rodriguez.

    Thank you very much, Mr. Chairman.

    Ms. Beauchamp, Mr. Klassen, welcome and thank you for being here. I would like to thank you for your presentation, which was highly informative with respect to your organization. In one sense, it was interesting, but at the same time, it in no way explains how you would qualify for the Marquee Tourism Events Program.

    Can you enlighten me in that regard? What qualifies you to receive $8 million under that program?

    The Government of Canada invested the $8 million in the Canadian Tourism Commission post the Olympic Games. Their focus was really on leveraging the games themselves and investing in the Canadian Tourism Commission, with $8 million to help us support what I call the “harvest the afterglow” program.

    We'd demonstrated a fairly good return on investment with our Canada economic action plan investment dollars prior to that, and the government invested in that, hoping for the same types of gains.

    I understand, but the money was paid out under a specific program earmarked for marquee tourism events. In this case, we discovered to our surprise, through witnesses—because this was not announced—that nowhere in the criteria or plans is there any mention made of the $8 million you received. I would therefore like to know what qualifies you to receive $8 million under this specific program.

    Again, the Government of Canada invested $8 million in the tourism industry itself. I think the understanding was that there was great potential. I think the Government of Canada was focused and understood the potential that an investment with the Canadian Tourism Commission would create for marketing Canada as a whole, with the understanding that our investments in China, in new markets like India and Brazil, in the meetings and incentive and the availability for us to convert travellers to come to Canada would raise the tide for all products, all destinations in Canada.

    Did you ask for the money, or did the government come to you, at one point, saying that it had $8 million for you under this program?

    We've received a variety of types of funding from the government itself. We have, of course, our base funding. We had some Olympic money.

    But did you ask for that $8 million?

    It was an investment in the Canadian Tourism Commission itself. We have lots of ideas for the government to invest in the Canadian Tourism Commission--

    I understand that, but did you--

    --and that idea must have come from that investment.

    I'm just curious to know, will you present that project? Did you request the money? Do you have something to prove that you applied to the program? Did you ask for that money, or did it just come and the government said they'd give you that $8 million and not give it to other festivals, for example?

     We didn't apply for any pool of funding, but we do often present the government with opportunities to invest in the Canadian tourism industry.

    Okay. In this case you didn't request this; it was given to you. But you knew other festivals, like FrancoFolies in Montreal or other events in Toronto, were cancelled for no basic reason. They were cancelled and $8 million of that money was transferred to you instead of being used in events that qualified--that qualified the year before and would have qualified the second year.

    Did you ever think of trying to help those events that lost the money? Did you feel there was a link between you and them, the fact that they didn't get the money, but the money was transferred to you, or was there no link there for you?

     The specific funding for us of any particular event in Canada or any particular destination is outside of our mandate. So that wouldn't have come to our heads to do that.

    Is it common that you receive money unexpectedly from somewhere? At the beginning of the program...I don't think you planned to receive $8 million from this program. Does that happen regularly, that you get money from different programs because they don't use it all?

     The stimulus investments the government made we received in advance. In 2009 we received some investment from Canada's economic action plan. In 2010 we received some of that funding. We're delighted when we do receive the funding, and we're delighted that the government feels it worthy of investment with the Canadian Tourism Commission.

    When did you receive government approval? When did it tell you that you would be receiving this money?

    I believe it was June of this year. And then we submitted a Treasury Board submission to support the investment for those funds.

    To your knowledge, had it already announced the fact that other festivals would not be receiving money?

    I'm not sure at all where or the timelines of that.

    Thank you very much, Mr. Rodriguez. Thank you very much, Mr. Klassen.

    Madame Lavallée.

    Thank you very much, Mr. Chairman.

    First of all, Mr. Klassen, I am particularly pleased to see you here today. We often tell witnesses who appear that we're happy to see them, but I must say that when officials are defending an $8 million grant, such as the one you received, they should at least appear in person to do so. So, thank you very much, both of you, for being here.

    I would like to discuss eligibility criteria. In fact, what I really want to address to say is that I don't want to address this with you because it is clear to me that you are not eligible. In the program information, it clearly states that Crown corporations are not eligible. And yet you are a Crown corporation. Also, as you said yourself, you did not send in a written application to the program. Furthermore, you do not have 250,000 participants, nor do you have a program that lasts three days. So, it seems to me we can pretty well ignore the eligibility criteria and move directly to your budget.

     When I look at your budget, I see that you actually received quite a lot of money. In 2009-2010, for example, you received $77.4 million for operating expenses; $7.7 million of additional funding for the 2010 Olympic Games; $20 million through the Economic Action Plan in Budget 2009, and then you requested an additional grant from the Minister of Industry for I don't know what amount of money, in response to which you received $8 million. Furthermore, in your 2009 annual report, you say, on page 12, and I quote: “This annual report tells the story of an innovative marketing organization working in partnership with Canada's tourism industry [...]”.

    When you found out that the Minister would be giving you $8 million under the Marquee Tourism Events Program, even though you knew full well that you that you had no right to participate in that program, that you were not eligible, and that cultural organizations like the FrancoFolies or the Festival Montreal en lumière would be losing a lot of money, and that the FrancoFolies might not even be in a position to balance their budget, did you not have the sense that, rather than working in partnership with Canada's tourism industry, you were in fact competing with Canada's tourism industry? Did you not have the impression that you were actually competing with that industry and that some of your partners might abandon you at some point?

    We weren't aware of the.... The $8 million was an investment the Government of Canada chose to make in the Canadian Tourism Commission in support of tourism. That's the business we're in. We're in the business of marketing Canada as a tourism destination around the world.

     I think the government knew, based on the previous returns on investment that we'd been able to deliver back from previous investments through the stimulus program, that it was a good investment for Canada's tourism industry. And I believe we worked very hard at delivering against that.

    I am going to stop right there. I am still referring to the 2009 annual report. On page 11, there are eight tourism industry indicators, including total tourism revenue, total tourism export revenue, total tourism domestic demand, and so on, and in every case, with one exception—the average per person spend per night, which increased by $4—the numbers went down. In every other case, all your indicators decreased. For example, the total number of Canadians employed in the tourism industry was 652,000, but it dropped by 1.6%. In terms of total tourism revenue, there was a drop of 5% in relation to revenues of $71 billion.

     In my opinion, the Minister of Industry did not give you $8 million because you were performing well; rather, he gave you that money for other reasons. Deputy Minister Richard Dicerni was here yesterday and told us that you had been given that money to leverage the positive spinoffs of the Olympic Games. But you had already received $7.7 million for the Olympics in 2009; $6.6 million in 2008, and $2.7 million in 2007. You had already received a great deal of money. One has reason to wonder what more you could do in the tourism industry with $8 million that you had taken from the Marquee Tourism Events Program.

    What more did you think you could do compared to cultural organizations or marquee tourism events already in place whose budgets were cut?

    For sure, 2009 was a very difficult year for Canada's tourism industry. As you quite accurately pointed out, we lost a lot of ground in many, many areas, including, you're correct, employment in the tourism industry itself. That's why I think we're thankful that the Olympics came along when they did. The opportunity for us to be on the world stage came along when it happened, and we had an opportunity to invest in the afterglow of those Olympics by taking all of that awareness and converting that into actual customers into Canada.

    We don't have our 2010 year plan out right now, but I think you will see a very markedly different annual report this time next year, and you will see a lot of double-digit growth in many of our markets, including markets like China, India, and Brazil that are in the high 30% level. We hit bottom, and we're climbing in the United States, and in other markets as well.

    Thank you very much, Mr. Klassen.

    Merci, Madame Lavallée.

    Mr. Del Mastro.

    Thank you very much, and thank you to the witnesses for appearing here today.

    I have to tell you, I'm surprised by the opposition's questions. I don't think they're fair to the Tourism Commission. I don't think anybody has ever asked a witness before if they're aware that the money they received could have been used for another worthy cause and tried to make the witness feel guilty with respect to that. I don't think we'd bring in Les Grands Ballets and ask them if they're aware that the money could be used for scientific research, or we'd bring in Formula One representatives and tell them the money could be used to build affordable housing. That's in fact what they're doing. They're trying to suggest that the money the Canadian Tourism Commission has received to promote Canada could have been given to someone else. Of course, it could have. That's what governments do: they make decisions; they make investments. They make those decisions based on where they think the money is best spent, and we expect the people we are giving that money to, to spend it wisely and to get results.

    Has the Canadian Tourism Commission been able to quantify any results, broadly, from any of the investments you've been making? I know we had some successes in China. Has that led to any Chinese tourism, etc.? Can you speak to any quantifications you can make on the investments the Government of Canada has made?

    Yes. Thank you.

    As a matter of fact, we do conversion studies in all our markets. Conversion studies are really, when we do a marketing campaign, third-party audited results. We would go back, say, and ask a sample of the questions, ask whether people saw our advertising and whether it created any impact for them. When they say yes, we give them four months to visit Canada, spend some money, spend some time here, and come back. Then we ask them the same questions about how much money they spent and whether they went, so that we can do an evaluation of what kinds of returns we get as a direct result of our marketing campaigns.

    In fact this just came out today, so the timing is good: we have four markets for which we have the conversion results out now. These are the U.K., France, Germany, and Australia.

    Out of the U.K. itself we have almost 300,000 incremental tourists coming to Canada as a result of the investment we made this year alone. Apart from the increased investment and the Olympics, there were no other changes to the strategy itself; the messaging was more or less the same and the advertising was the same. Though it's very early for us to say, we think this is highly attributable to the investment the government made in marketing investment for Canada, and of course something huge called the Olympics, which of course would have had the expected impact that it had.

    Over 70,000 Australians—incremental visitors to Canada—came over and above 2009, and 128,000 German travellers came over and above 2009. The numbers from the U.K. went from $255 million to $379 million, thus delivering roughly $100 million or so in increased investments.

    So we have quantitative proof. We don't have the U.S., which of course we're waiting for—by a long shot our largest market—to see how we've moved the meter in those areas. But we feel as though we have some very strong early returns.

    That's great.

    Just very quickly, I would assume the Canada Tourism Commission works to promote the province of Quebec as well as other regions of Canada.

    Of course. In fact, we have a nuance in terms of our saying that “we leverage”. We leverage Quebec, all the provinces, the cities we work with, and the experiences and products across Canada to promote Canada, and not necessarily the other way around.

    I liked your “locals know” promotional campaign. I thought it was fantastic.

    I have a great idea for you. There's a 63-foot hydraulic lift lock in the heart of Peterborough. Actually, it's the tallest lift lock in the world; it's an engineering marvel. I think it would be a fantastic centrepiece for the “locals know” Canada Tourism Commission campaign, and I know the “Electric City”, home of the Trent-Severn Waterway, would love to be featured in one of your ads.

     Thank you.

    Thank you very much, Mr. Del Mastro.

    Mr. Simms.

    Mr. Chair, in the community of Glover's Harbour, I have this large squid.

    Voices: Oh, oh!

     It's true; it's a giant squid.

    Actually, he has a point about the lift lock. It's quite good, quite stunning.

    You moved a little while ago. You moved from Ottawa to Vancouver. How's that going?

    It's almost five years to the day. In fact, I was one of those who did move from Ottawa to Vancouver, so I'm back in my old hometown.

    When you made that transition from here to there, what money was used to do it? Was any of the money that we see out of this used in that transition?

    No. I believe we got incremental funding to support the move at that time. That's going back about five and a half years.

     Ms. Beauchamp, do you have a...?

    I was just going to say we didn't spend it all.

    Well, there you go. That's okay, because the marquee tourism program didn't spend it all either.

    When it comes to the Olympics, when it comes to funding something this large, obviously it's a line item, it's something that's entirely different. What is the total amount that went into the Olympics from the Government of Canada alone? Do you know that?

    I'm afraid I only know the amount of investment that we put in. The incremental investment that we received was $26 million over a five-year period of time.

    So it's $26 million over five.... And is that under the supplementary funding for 2010?

    It would have started in 2007, through 2012.

    Yes, okay. That's right.

    But you didn't apply for this $8 million that we seem to be focusing on here. Is that correct?

    It's not that we didn't apply for it. We have lots of opportunity for investment with the Canadian Tourism Commission, and this was part of it.

    What was the genesis of this supplementary funding, then? Did you go to them and say “We really need some extra money here for the Olympics”? Did you put a bid in for it?

    No. But we always have a back pocket idea that, if we had incremental investment, this is where we believe Canada's tourism industry could most benefit, and were there extra funds available to support it, we believe we could show a strong return on investment.

    You have to explain the “back pocket” fund. I'm sorry, but could you just explain that?

    We have our base funding, we have Olympic funding, and we have the other funds we have. We invest those as wisely and smartly as we know how to do. But if there is incremental investment, especially during a challenging year like 2009, we have opportunities for ideas for future investment in other marketing programs. That allows us to open up new markets, such as India and Brazil, for instance, or to leverage China.

    I'm assuming that the genesis of the money you received from the marquee tourism program was probably in more or less the same fashion, was it?

    It wasn't looking for a source of funds; it was that we have an opportunity that is currently unfunded.

    Was there a decision, say an executive...? Was it a cabinet decision, where they said, okay, we need extra money for the Olympics, and obviously the CTC is a good place to go forward?

    I don't know. I don't know how that decision came about.

    Okay.

    How much time do we have?

    We have lots of time today.

    Would you like to ask a question, Mr. Rodriguez?

    As I understand it, the government spent approximately $5 million on administrative costs to determine how the money would be managed. There is some $5 million in administrative costs for the entire process, in order to determine which festival would or would not receive money, and yet you received $8 million, $5 million of which was not included.

    In the $8 million that you were given, was there a portion set aside for administrative costs?

    With that $8 million we did not incur any additional administrative costs in investing the money. We invested it out of the administration of our regular program.

    So, you received the $8 million and spent the entire amount on programs or for different priorities. That is what you did with 100% of the money; there were no administrative costs. Is that correct?

    We had the infrastructure in place to invest that incremental budget. I imagine there were some small administrative costs; I don't have those details. But they're probably too insignificant—maybe to the tune of up to $10,000 or so.

    Thank you very much, Mr. Klassen.

    Madame Lavallée.

    I would like to come back to the sequence of events. On May 10, newspapers in Quebec announced that the budget for the FrancoFolies had been cut by $1.5 million. In fact, we learned at that time that the FrancoFolies had not received the grant they were perfectly eligible to receive. They met all the criteria and more so. For example, the first criterion is to have at least 250,000 participants; there were 823,400 festival participants in 2009. So, as we all know, the FrancoFolies met all the criteria. There was no reason to exclude that event. The organizers found out less than a month before the event was to begin that they would not be receiving the $1.5 million they were counting on and had expected to receive, given that they met all the criteria and it was normal to operate along those lines under the circumstances.

    You said earlier that you found out in June and that you subsequently went to Treasury Board to defend your plan. I'd like to know when you had initial discussions with the Department or officials with respect to this program. What was the sequence of events? How is it that you were able to secure this funding?

     We submitted to Treasury Board shortly after we knew of the availability of the funds--

    When? What was the date?

    I don't know the date exactly. We certainly could find out.

    Could you find out and send us the information?

    Yes, of course.

    When did you appear before the Treasury Board? That is extremely important, and I am going to tell you why. It's important to know if you presented your project to Treasury Board after finding out, like everyone else, that at least two major organizations in Quebec—and other organizations in other provinces—which were benefitting from the Marquee Tourism Events Program—had not received a grant, because their grant had been given to you. So, it is extremely important to know that, because when you, the Canadian Tourism Commission, realized that the share of money you had been given had been taken away from your partners—if you still consider them to be partners—at the very least, you should have told someone in the Department that you should not benefit from the program because that would cause special problems which would result in your having extra-ordinary experiences, such as is the case now.

    I imagine that you must have been thinking of them this morning when you were on an airplane coming from Vancouver to Ottawa, and that you probably were thinking that there was no reason for you to have to come here to defend your right to that grant. And you would have been absolutely right. Except that this grant did not meet the criteria set for the Marquee Tourism Events Program. That money was taken away from marquee events which deserved to receive it.

    I said earlier that the FrancoFolies had attracted 823,400 participants in 2009, that this event lasts for 10 days—that was the case in 2010—that it has been around for at least three years and that it has an international marketing and packaging strategy.

    So, when you realized that you were diverting program money from your tourism partners who needed it, did you not ever think for one second that you should tell the Minister that you could not accept that money because of a need to maintain harmony within the Canadian and Quebec tourism industry? It's a matter of professional ethics.

    We work in partnership with the entire tourism industry in Canada. We work with all levels of government, with provincial governments, with the city destinations like Tourisme Montréal, and Tourism Vancouver. We work with the regions, and we work with a multitude of experiences and events that go on across the country. We do not often hear that an investment in this area doesn't support an investment in that area. So we didn't hear any of those kinds of ideas or stories, in fact. We didn't. We simply took the confidence that the government had—

    Yes, you knew. I'm sorry, but you did know, because on May 10, the first question about this issue, and about the fact that the FrancoFolies had not been given any money, was raised in the House. You knew at that point that marquee event organizations were literally losing their grant under the Marquee Tourism Events Program. So, you did know. You said earlier that you made your submission to Treasury Board in June.

    So, looking at the sequence of events, it is clear that you knew, when you accepted or requested the $8 million, that you would be taking money away from organizations which were severely in need of it. Indeed, they needed it so much that they were forced to cancel several shows.

    There wasn't a question in there, but, Mr. Klassen, do you have anything to add? If not, I'll go to Mr. Armstrong.

    Do you have anything to add?

    I don't. I'm sorry.

    Okay, thank you.

    Merci, Madame Lavallée.

    Mr. Armstrong.

    First of all, thank you for your presentation. It's great to have you here.

    Do you administer the MTEP program?

    Do we administer the program?

    Yes, do you administer the program?

    We don't, no.

    So you have no input as to where those funds are allocated, what programs receive funds, what events receive funds?

    We don't.

    That's not in your mandate whatsoever?

    That's not in our mandate.

    Were you aware that the FrancoFolies received $175,000 from the Canada Arts Presentation Fund last year?

    I'm afraid I didn't know that.

    Were you aware that they received $175,000 in 2008-09 from the Canada Arts Presentation Fund?

    No.

    So, in fact, they were getting some funding from the federal government. In fact, it was $100,000 more than in the previous five years, in which they received $75,000. Were you aware of that?

    No, I was not.

     Well, that wouldn't surprise me. You wouldn't know that information because it's not under your administration or your mandate. Is that correct?

    Correct.

    It's not in your mandate to know what every federal department is giving to every event across the country, even though you work with the Canadian Tourism Commission.

    Correct.

    You talked about China and your investments in China, post the Olympics. Why is China so important as an emerging market that we want to tap into?

    Chair, that's a great question. China is really a burgeoning economy. We have taken awhile to get approved destination status. Now that we have it, we definitely don't want to squander it.

    We have been invested in China for five years, but not marketing in China. We have focused on working with the travel media to get them to come to Canada and tell our stories. We have focused on working with the travel trade--tour operators and travel agents themselves--to help them get ready to sell Canada when the day would come.

    That day came this summer, and the opportunity really is great. Many other countries have had ADS in advance of us. We know the Chinese are very interested in Canada itself. After getting ADS, the China National Tourism Administration, which administers the ADS program, brought their inaugural tour to China this summer, and it was by far the largest inaugural tour they've ever brought. These are great indicators that the Chinese are really interested in Canada and that an investment in marketing to sort of create the demand for Canada as a destination is timely, and the time is now. We're very excited about that opportunity.

    You mentioned that 2009 was sort of a down year for tourism across Canada, probably in a down decade. Probably since 9/11 things have been very tough. You say that starting this year, with the Olympics as a catalyst, we might be seeing a rebound.

    Could you elaborate on that with a couple of points about what you meant by that?

    Sure. We have seen a rebound in our Statistics Canada data. September's numbers will be coming out in the next week or so, again a demonstration of double-digit increases in almost all of our markets. There are a couple of markets that are still faring poorly, but they are not necessarily economy related.

    We do see some great opportunities and we do believe we are getting greater than our share of those opportunities. We invest in marketing programs. We've already demonstrated the return on investment that we're getting, and those returns are for all of Canada, for all of Canada's experiences, for all of Canada's destinations--cities and provinces--and they are reasonably well distributed across the country, so we're pleased with that.

    I have one further question. We looked into domestic tourism, and we have funded a lot of events for domestic tourism across the country. What percentage of tourist dollars come from external tourists coming to Canada from other countries? What percentage of that industry is provided by people from outside Canada?

    It's about 20% of the industry, and probably lower than it should or could be. We're a little concerned because the reliance on the domestic tourism industry is greater than it was even 10 years ago. Of course, that's money moving around Canada. What we're really interested in is new money coming into Canada that is coming through exports of tourism products or people coming in to visit Canada. Our focus is really on the international market and trying to drive as many visits here and to bring other people's money into Canada.

    So what you're saying is that any money we invest that's productive, where we bring tourists from outside Canada...we get more bang for our buck, let's say, if they actually travel here, than we would by having people moving around inside the country. Those tourist dollars are better invested.

    Yes, it's really an export industry. It's like any export. It's really new money into the country to create jobs and to create opportunities and support Canada's tourism economy, and the overall economy itself. Again, one in ten Canadians is employed in the tourism sector, relying on both the domestic and the international. The return to government in terms of revenue at all levels of government is significant and it far exceeds the amount of investment that the governments collectively make into tourism. So we think it's an overall very good investment. But we're in a very competitive space and the money is always, we believe and hope, well invested for a return for Canadians.

    Thank you very much, Mr. Armstrong and Mr. Klassen.

    Madam Neville.

    Thank you very much.

    I'm substituting on this committee today and have not been following the issue as closely as others, but in listening to the discussion, there are clearly some issues around where the funding is going as it relates to tourism and community or marquee events.

    What I would like to know from you is, in trying to promote tourism from other countries, how effective and how important are the marquee events that colleagues have been talking about? How would you prioritize them in terms of attracting foreign visitors to Canada?

     They're very important. Events create a sense of urgency to come to Canada. There are lots of experiences you can have in Canada that are all summer or all year round, but events are really time limited. So some of the great events that we have across this country are really week-long events, weekend-style events, and they do create that sense of urgency for us.

    In fact, we're very focused on leveraging events to help us sell Canada in general, and there are a number of very significant events. The Montreal International Jazz Festival, of course, is internationally renowned. The Calgary Stampede is internationally renowned. There are a number of similar kinds of events. Most of us could name ten of them with an international reputation. What we hope to do is to leverage those particular events to help us sell Canada in general. It's part of our experience mix, it's part of our product mix, by which we help to sell Canada in general.

    I'm assuming, as I'm listening to you, that their needs for support from government are equal to the needs you have.

    I'm not sure of what their needs are for support of government—

    But they're important.

     I don't know the details of where their funding comes from or how they invest their dollars. I know we're thankful that those events are vibrant and that we can leverage them for selling Canada.

    Thank you.

    Thank you, Madam Neville.

    Mr. Rodriguez.

    Rather than asking a question, I would like to make a comment. You found yourself in a delicate situation and, based on my understanding, that was not necessarily your fault, since you did not in fact ask for the funding you received. In spite of that, however, you found yourself in direct competition with organizations which are highly credible and respected and which have an impact on tourism. They attract people from around the world. Without wanting to, you ended up in a situation where you were competing with organizations which had received funding in the past and which also attracted tourists to this country. That is unfortunate but, personally, I do not consider that to be your fault.

    It is my view that, through its actions, the government created this situation. It deprived organizations of this money that they were expecting to receive, it took money away from organizations which—this bears repeating—attract tourists in order to give it to your organization, which has a specific mandate in terms of tourism development. In my opinion, that is a real shame, particularly since this is part of a highly political program. Most of the projects were chosen by the Minister himself; the Deputy Minister told us that at a recent meeting. I think lessons should be learned from this experience so that we know how to behave in future. He should not be repeating the same mistakes, including changing the rules halfway through the process.

    When the organizations made their application, they were never told that there would be a maximum of two projects funded for every large city. They applied in good faith, and several of them, including the FrancoFolies, were rejected because of a new rule pulled out of a hat and applied at the last minute. The government is really the one responsible, rather than you. I wanted to say that.

    I have no questions. Thank you.

    Thank you very much, Mr. Rodriguez.

    Madame Lavallée.

    Thank you very much.

    I would like to come back to what you did with the $8 million.

    Again, $3 million was invested in China.

    You say that you invested that money in China. How did you invest it?

    In fact, we're right in the middle of developing a marketing campaign, an advertising campaign, in China that will be invested in towards mid- to late-December and into January, February, and March.

    What kind of marketing campaign are you engaged in? Does it involve television ads?

    Well, in fact, we don't know what the media mix is going to be right now. It will be a combination, likely, of some print advertising—

    It is starting in December?

    Yes, in December.

    I see. And will it be print or television ads?

    It could be both. We don't know what the media mix will be. Our advertising agency that we're working with in China right now is giving us the final specifications for our review. So it's likely going to be a combination of social media, television, print advertising--including newspapers and perhaps magazines--and working in cooperation with tour operators in China who are selling Canadian product right now.

    What is your target clientele in China?

     Our focus is really on a couple of markets--Beijing and Shanghai. These are what the Chinese themselves call tier-one markets, with the most amount of revenue. There are direct flights to Canada. People in those specific cities have the highest propensity to travel to Canada.

    That's for China.

    Correct.

    And what did you do with the remaining $5 million?

    That will be distributed through what we call our core markets. These are the traditional markets that we've been marketing to for 75 years, in some cases. They include the U.K., France, Germany, and Australia, in particular. It will leverage the awareness of the Olympic Games and the impact the games had on people's understanding or knowledge of Canada.

    The Olympic Games, of course, were a huge commercial for not just Vancouver and British Columbia, but for all of Canada. It will leverage the awareness and interest in Canada they saw from the games and turn it into actual customers to Canada.

    There again, what is your target clientele?

    We have a very sophisticated model to help us understand which customers to go after. We look at travel values, which really focus on why people travel and not necessarily where they travel. Roughly speaking, these customers are higher educated, have higher levels of income, have a penchant to travel internationally around the world, and are very intrigued by Canada.

    What are your targets?

    Our objective is really conversion of these customers. In our post-games strategy, our objective is to get these people on planes and into Canada in particular.

    It's as simple as that. It's conversion.

    I don't know whether this is what you said, but the translation was that your objective is to bring people to Canada.

    Correct.

    Yes, I know and hope that to be the case. That is the bare minimum.

    It's not an unreasonable question, because prior to the Olympics one of our objectives was to really leverage the broadcasters who were here covering the games to tell the Canada story. So our objective was really about relationships with all of those broadcasters, like NBC, TV5, and BBC, to help them distribute our content and information to tell the story of Canada. But really, it's post-games that's bringing them here.

    But when you talk about extraordinary experiences, you have to identify them. Which ones do you choose?

    We choose a variety of experiences. It depends on how we market them. We do a lot of marketing through media. Our media website has hundreds and hundreds of story ideas. It has what we call B-roll, with images that reflect what the story is trying to tell. It has other images that we can get media to pick up, create a story, and broadcast for their viewers.

    We use social media very extensively. So we use a variety of experiences from across Canada, but in particular those that best reflect our brand and the kinds of customers we're going after.

    You say that you choose them. When you tell people about the experiences they can have in Canada, what experiences do you describe?

     It really depends on the target audience we're going after.

    Give me an example.

    We've had some great success out of Churchill, for instance. Polar bear viewing in Churchill really captured the imagination of many of our broadcasters. We had a number of stories about Churchill. NBC came up and shot their own story about Churchill and broadcast it all across the United States.

    We have a website with polar bears on our website. We thought one of those experiences would be very intriguing to our international customer base, and it turned out to be true. In fact, after the stories were broadcast, all the websites crashed that had anything to do with polar bear viewing in Churchill.

    That's a great example, but we have lots of examples like that from other experiences across Canada.

    Do you primarily talk about the outdoors? Is your focus the outdoors?

     No. That's part of the focus, of course, because Canada is famous for its great outdoors. But we try to add some context to those outdoor experiences, because they can appear to be intimidating at times to some of our travellers.

    We have a very sophisticated culture, and we have very sophisticated cities. We have other kinds of journeys and experiences. So while we are famous for our outdoors, as we're all quite aware, we live in a society that is far more sophisticated than the average traveller might think.

    I don't know whether you have looked at the Marquee Tourism Events Program, but when you see the results province by province, it is clear that all the provinces lost money except British Columbia, or Vancouver, really, since you were given $8 million. Furthermore, the CTC moved to Vancouver.

    Is there a desire to focus more on promoting Vancouver to Asian populations? Is that the direction the CTC is moving in?

    No. We are the Canadian Tourism Commission. We happen to be located in Vancouver, British Columbia, but our focus is very much on Canada.

    Why did you move?

    Thank you, Ms. Lavallée.

    Mr. Klassen, would you care to answer Madame Lavallée's question as to why the Canadian Tourism Commission moved from Ottawa to Vancouver?

    I don't know.

    Okay. Thank you very much.

    Mr. Richards.

     Thank you, Mr. Chairman.

    Thank you for being here today to discuss the tourism industry with us, although I will say it's lamentable what you've been subjected to here today, which I would say is not much short of a witch hunt or a misguided attempt at partisanship on behalf of the official opposition parties, which is very unfortunate. I think it's based largely on ignorance. It's an ignorance in terms of the good work that you do promoting our tourism industry in this country and I think an ignorance of the fact that the tourism industry is a very important industry for this country. It's very unfortunate that they haven't done a little more homework and tried to understand how important the tourism industry is in this country.

    It's a very important industry. Fortunately, we do have a government in our Conservative government that does understand the importance of the tourism industry to this country, the value it brings to our economy, the value it brings to our people, and that also understands that when we go through a time such as we've just gone through—a recessionary time across the world—the tourism industry can often be one that's deeply impacted by that kind of an impact.

    So obviously we've chosen, in our economic action plan, to make some investments in tourism to try to help our tourism operators through a very difficult time. Obviously leading up to the recession there have been some other factors at play that have been harmful in regard to the tourism industry. So to be able to make some investments in our economic action plan, things like $75 million for improvements and enhancements at our national parks; $75 million for upgrades to national historic sites; and obviously something that you're a little more involved with directly, $20 million for tourism marketing, which obviously included the “locals know” campaign mentioned earlier by Mr. Del Mastro, which was very successful.... I want to commend you on the work done on that. Certainly I've heard a lot of good things. A large part of my riding depends almost exclusively on tourism, in the Banff and Canmore areas, and I've heard a lot of good comments about the work done by that campaign there. And there is another $20 million to expand marketing in some emerging priority international markets.

    We understand that as a government, unlike the opposition on the other side, which seems to not value the tourism industry and its importance to our economy, which is very unfortunate..... We do value that, so we've done that.

    Certainly how that manifests itself.... I look only at my own riding and see the value it's produced for tourism operators in my riding, things like the Icefields Parkway, which is the link from Banff to Jasper. There was $2 million put into improvements for that. There were a number of other improvements on roadways and visitor facilities all over Banff National Park. There was almost $10 million put in there...$6.7 million for the Banff Legacy Trail, which is a trail connecting Canmore through to Lake Louise, essentially, which has received rave reviews by people throughout the region and all across Canada, who have used that trail to be able to get a further look at our park, beautiful Banff National Park.

     I could go on and on with that list. There's the Cave and Basin—$13.8 million to revamp—the very birthplace of Canada's national parks, which will obviously be a huge tourism boost. Certainly, to top it all off, $130 million to continue and finish the work being done to twin the Trans-Canada Highway all the way from Castle Junction, near Banff, to the B.C. border, including improvements to the Lake Louise interchange....

    So obviously there is an understanding there.

    As part of that as well, the work that was done—and I'm sure you were a part of this—by our government in order to gain approved destination status with China obviously is going to have a huge impact on the tourism industry. I know it's been discussed a bit today already, but I would like to hear from you a bit more in terms of what you see the impacts of that being for our economy here and for our tourism industry in Canada, the fact that we've been able to gain approved destination status. How do you see it impacting us over the next few years? And what are you doing to position us to maximize our benefits as a country from approved destination status?

    Thank you, Mr. Richards.

    Mr. Klassen.

     Thank you.

    As I said earlier, we follow the trajectory of other countries, some of our competitors out there—like Australia and New Zealand—who have, post-ADS granting status, seen strong growth in their visitors from China.

    The Chinese visitor will start off in what we call “lower yield”, spending a little less money than some of the customers we get from other markets. They'll go predominantly to where Canada's icons are—B.C., Alberta, Ontario, and Quebec. But the Chinese consumer is changing rapidly. The Chinese economy is changing rapidly. There is a lot more confidence in that consumer, and those consumers will eventually start to get off the beaten track into other parts of Canada. We think it will be a very short period of time before the growth rate will be significant, and they will go to all provinces in Canada, including Canada's northern territories.

    That's the focus. That's why I think an investment now is integral and the timing is good. We're on the heels of ADS, marketing and advertising to the Chinese consumer for the first time, creating an impression of what Canada is all about.

    Thank you, Mr. Klassen, Mr. Richards.

    We're going to finish here, since members have indicated to the chair that they have exhausted their questions.

    I want to thank Madame Beauchamp and Mr. Klassen for appearing in front of our committee today to answer questions about the $8 million you were given by Industry Canada. I also want to thank both of you for coming here in person on such short notice. Members of the committee should know they were originally to appear on video conference, but yesterday Madame Lavallée requested that they appear in person. They were very gracious in rearranging their schedules to come from Vancouver to Ottawa, and we appreciate that very much.

    We'll suspend now for five minutes to allow the witnesses to depart, along with members of the public. When we come back out of suspension, we'll be in camera.

    This meeting is suspended for five minutes.

    [Proceedings continue in camera]