Canadian tourism in the Ninth District still hasn’t recovered to pre-pandemic levels. Why?

In September, 23,000 Canadians crossed the border near International Falls, Minnesota. That’s roughly 120 percent of the entire population of the Rainy River District on Canada’s side of the border.

But it was rather low compared with the 36,700 Canadians who crossed in the same month in 2019, before the COVID-19 pandemic.

International Falls is just across the Rainy River from Fort Frances, Ontario. Border crossings between the two communities are routine, according to Delaney Roshell, executive director of the International Falls, Rainy Lake and Ranier Convention and Visitors Bureau.

People work, visit friends and family, participate in activities, and shop on the other side of the border, she said. “A lot of them come over here to buy gas, their groceries, lumber, all that stuff,” she said.

But fewer Canadians have been coming over despite the lifting of most pandemic-era border restrictions. Travel by land across the U.S. border is still below 2019 levels even though domestic travel within Canada had fully recovered by mid-2023 (Figure 1).

One reason for that could be inflation, according to Roshell. A comparison of consumer price indexes shows that the cost of many goods and services favored by Canadian travelers increased faster in the U.S. than in Canada over the past four years. Shopping in the U.S. has become more expensive for Canadians.

Canadians are a big part of the consumer market in border communities. Fewer border crossings impact border economies. Canadians are also the largest group of foreign tourists in the U.S., and tourism is one of America’s top exports.

The missing shoppers

According to border statistics collected by Statistics Canada, over the 12 months ending in November 2023, 2.8 million Canadians reentered Canada at land ports of entry bordering the Ninth District. While that’s a post-pandemic record, it’s just 72 percent of 2019 levels (Figure 2). It’s also further from full recovery relative to the rest of the nation. The number of Canadian visitors using land ports across the northern border was 77 percent of 2019 levels. Recovery only began in late 2021 when the border was reopened to nonessential travel. Canada didn’t fully lift quarantine and testing requirements until a year later.

Many of the missing visitors in the Ninth District may just be shoppers, as Roshell suggested.

According to Statistics Canada’s national travel survey, shopping is the third most common reason Canadians give for visiting the U.S. Leisure, meaning weekend getaways and vacations, is first, followed by visiting friends and family. But shopping has been the slowest to recover. In the four quarters ending in June 2023, the number of shopping visits across the U.S. was 67 percent of 2019 levels. Visiting for leisure was 90 percent and visiting friends and family was 83 percent of 2019 levels.

Surveys and anecdotes suggest that shoppers make up a larger share of Canadian visitors to the Ninth District than visitors from the rest of the nation. For example, a 2019 survey by Explore Minnesota, the state’s tourism agency, found that shopping is the main reason 48 percent of Canadians visit the state. Nationwide, it was only 15 percent. Montana, the Ninth District state most reliant on leisure travelers, had the same share of shoppers as the nation, according to a survey by the University of Montana’s Institute for Tourism and Recreation Research (ITRR).

One silver lining is that Canadian visitors, including shoppers, are spending more on each trip to the U.S. compared with pre-pandemic times, even after amounts are adjusted for inflation. In 2023, shoppers spent 40 percent more while leisure travelers spent 17 percent more, according to Statistics Canada. As a result, the total amount spent by shoppers in 2023 was 94 percent of 2019 levels. The total amount spent by leisure travelers was 104 percent.

A shrinking price advantage

Tourism officials in border regions have long cited the foreign exchange rate as a key driver of Canadian visits. Historically, that does seem to be true. However, there was another possibly more important driver: Shoppers in the U.S. often paid less than shoppers in Canada for the same or similar goods.

This became very clear in the early 2010s when the U.S. and Canadian dollars were “at par,” meaning they traded on a 1-for-1 basis.

By 2019, the price gap had narrowed. It essentially disappeared in late 2021 and 2022 when inflation spiked in the United States. Inflation also spiked in Canada but not as much. Based on consumer price indexes in both countries, prices have increased overall by 19 percent in the U.S. and by 16 percent in Canada since 2019.

But for many goods and services that appeal to Canadian travelers, U.S. prices have increased by even more.

Take, for example, chicken breast, which Canadian travelers are known to stock up on in the U.S. before returning home. In November 2019, average prices gathered by Statistics Canada and the U.S. Census Bureau show that, accounting for exchange rates, Manitoban shoppers would save 38 percent on chicken breast in the American Midwest. Between 2019 and 2023, however, the price of chicken breast grew by 79 percent in the Midwest. It grew just 24 percent in Manitoba. That reduced the savings to just 7 percent. Perhaps still worth an occasional trip, but not as many as before.

Many other categories of goods and services have become more expensive for Canadians. For example, between December 2019 and November 2023, the price of apparel increased 8 percent in the U.S. and 3 percent in Canada. When adjusting for changes to the exchange rate, the price of U.S. apparel increased 12 percent for Canadians (Figure 3).

Canadian travelers have taken notice. On numerous Internet forums, they warned fellow Canadians not to expect bargains as before.

“I went to the U.S. for the first time in four years recently not realizing how much it had changed. Sticker price is the same or worse than here, and then, either way, more expensive when you factor in the terrible exchange rate,” said a traveler on Reddit’s forum for Winnipeg residents in May. “The other interesting thing I noticed is that the selection of products isn’t that much greater than in Canada anymore.”

Traveling farther afield

But costs aren’t the only consideration. Habits may have changed also during the pandemic.

Air travel to the U.S. by Canadians has increased significantly compared with land travel. The number of Canadians flying home was 109 percent of 2019 levels, according to Statistics Canada. The number returning at land ports was at 77 percent.

That difference shows Canadians are willing to pay more for travel to more diverse and distant destinations. They’re less interested in short jaunts over the border. This aligns with the strong rebound in the number of leisure trips and spending on those trips shown by the national travel survey.

The preference for distant destinations may be a gain for Canadian hotspots such as Florida and Nevada but a loss for border states like Montana.

Of the Ninth District states, Montana stands to benefit the most from the rebound in Canadian leisure travel. With access to two national parks and mountain vistas that attract celebrities, the state has long been a favorite destination for Canadians. ITRR surveys show that sightseeing is the main reason most Canadians visit.

But the number of Canadian visitors returning from Montana by land was just 77 percent of 2019 levels, comparable to the national average.

ITRR Director Melissa Weddell suspects there’s a perception that Montana vacations carry some risk. Visitors are concerned that overcrowding in national parks and natural disasters, such as wildfires and floods, will ruin their visit.

Both Yellowstone and Glacier national parks have reported historically high visits since the pandemic. The year 2021 was the busiest ever for Yellowstone and the second busiest for Glacier; 2021 was also the year wildfires burned nearly a million acres in Montana. In 2022, the Yellowstone River flooded.

“People have to spend a lot of money to come to Montana,” Weddell said. If they fear it won’t work out as they hoped, she said, they won’t come.

Recovery

It’s unclear when Canadian visits to the U.S. will fully recover.

The U.S. Travel Association, an industry group, estimates it has already happened. Total visits in 2023 were at 101 percent of 2019 levels, according to spokesperson Tori Emerson Barnes. But that estimate, like those from other tourism organizations, includes air travel, which is less common in border areas, and excludes day trips, which are very common.

Day trips remain significantly lower than 2019 levels and won’t likely recover anytime soon. That decline likely means a slow recovery for shopper numbers. Surveys show that nearly all shopping trips are day trips.

As Canadians show less interest in shopping in the U.S., border communities need to appeal to leisure travelers, according to Julie Rygg, executive director of Visit Greater Grand Forks. Retailers in her North Dakota city still attract busloads of shoppers from nearby Manitoba. But for those not interested in retail, the area offers special events as well.

A good example is a recent pork and beer festival that draws dedicated Manitobans each year, Rygg said. “They’re coming specifically for that event. I think it’s really important that we continue to feature the other activities happening here so they still look to coming here for that long weekend getaway, even if shopping isn’t their primary reason.”