Winnipeg Free Press - PRINT EDITION

Lower buck may push up vacation prices

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TORONTO -- A lower loonie may be good news for many Canadian businesses but, over time, consumers may see prices creep up for popular vacations to warmer climates, and fewer reasons to shop online or in the U.S.

The Canadian dollar lost another 0.27 of a cent Wednesday, to close at 92.56 US, a price not seen since October 2009. On Tuesday, it fell more than a penny to 92.83 cents US.

David McCaig, president of the Association of Canadian Travel Agencies, said a weakened Canadian dollar has had little to no effect on Canadians booking vacations down south but, if the trend continues, history may repeat itself. Back in 2009, McCaig said travel agencies saw declines in the number of vacations Canadians were booking.

Instead of packing their bags and heading south or to the Mediterranean, many opted to stay at home or travel in the country to stretch their dollar.

The travel industry may see this again if prices for vacations creep up on a lower Canadian dollar, he said.

For now, agencies continue to see pent-up demand to get away to the Caribbean, the U.S. and Europe, an urge exacerbated by the frigid temperatures in Canada.

"It's cold enough in Canada that everyone wants to get away," said McCaig, whose group represents 2,000 agencies. "There's been very little differences with purchases of holidays like doing a week in Mexico, going to Las Vegas or Miami, Florida. That's because most Canadians feel they have the right to have a holiday and they're going to take it."

Most vacations are listed at last summer's prices, when the Canadian dollar was stronger. Those prices are likely to stick for the next few months but will rise if the loonie continues to fall.

McCaig said a lower loonie over the long term will boost travel to Canada.

"That's part of what happened when our loonie was so high. Americans had been used to coming to Canada before that, having a big discount or value for their dollar and didn't mind paying the taxes," he said. "A dropping loonie is frankly good for Canadian business."

Business professor Ambarish Chandra said U.S. retailers who depend on Canadians crossing the border to do their shopping will also feel the pinch.

Online shopping will also see declines, as items such as books, clothing and electronics will no longer be cheaper if purchased in the U.S.

Most experts forecast the dollar will continue to decline, perhaps falling to as low as 90 cents US this year.


-- The Canadian Press

Republished from the Winnipeg Free Press print edition January 9, 2014 B8

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