OPPORTUNITY ANALYSIS Recreational Tourism

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2 Definition Personal vacations provide the opportunity for much needed rest and relaxation, and the chance to remove oneself from the daily stresses of life. In addition, the proliferation of retirees represents a significant new market opportunity for the recreational tourism industry, with retired persons possessing both an active spirit and disposable retirement funds. This report identifies opportunities in a number of recreational specific areas, such as: Adventure trips Hunting, white water rafting, canoeing, kayaking, boating, diving, rock climbing, dirt biking, snowmobiling, or quadding; Eco-tourism trips Bird/wildlife watching, hiking, cross-country skiing, biking, horseback riding, or horticultural tourism; Leisure trips Spa vacations, fishing, garden viewing or golfing; Agricultural tourism Bed and breakfasts, ranch visits, farm tours, vegetable and berry picking or petting zoos. There is an opportunity for the GROWTH Alberta region to develop a recreational tourism cluster, incorporating adventure, eco-tourism, leisure, and agricultural tourism. Industry Overview Alberta s tourism sector has become a thriving, diverse industry as people regard leisure time with great importance. The traditional travel activity of spending hours in a vehicle for sightseeing trips to a distant location is being challenged with the emergence of educational or experiential tourism. For example, those seeking a more hands-on experience in nature now look to eco and adventure tourism to satisfy their sense of learning and discovery. Scenery and a unique experience are the primary vacation drivers, with tourists desiring clean, modest lodging with basic amenities. People may desire excitement, risk or a genuine outdoors experience. As the world s largest economic sector, 1 tourism has appeal to both local and global citizens. Online marketing is expanding the reach of marketing activities and allows for information dissemination in a timely and efficient manner. Travellers today desire new and fulfilling experiences such as those provided by eco tourism and adventure trips. 1 People are learning to appreciate the environment that they live in, increasing their awareness in sustainable tourism development. Using natural areas already damaged by industry, such as cut lines and logging roads, instead of creating new roads, can reduce environmental impact. For those with a passion for the outdoors, nature-based tourism provides a wealth of options that can be customized to suit their focus and interests. 1 Human Resources Development Canada website. Page 1

3 Involvement in the eco and adventure tourism business can include guiding tour groups, facilitating self-guided tours, or hosting travellers. The operators level of involvement will depend on the nature of the activity. Offering the service through tour packages is common, as packages are convenient for both the operator and the tourist. Depending on the nature of the experience, tourism can be anything from a one to four-season business, offering entrepreneurs the option of developing a primary or secondary line of business. Leisure tourism encompasses outdoor and natural activities that typically require less physical strain. It is usually more about regeneration than exertion. Day spas and golf are currently very trendy and both cater to a wide demographic market. Agricultural tourism is a way for businesses in the industry to diversify and increase revenues. Since urbanization has drawn so many people to the city, people are becoming more interested in what takes place in rural regions. A recent survey established that 99 percent of Albertan s are very or somewhat likely to take part in an agri-tourism experience within the next year. 2 There are many different activities that can be associated with agricultural tourism, some physically demanding and others aimed at relaxation. To learn more about operating an agricultural tourism business see: Market Overview Tourism is Alberta s fourth largest industry, accounting for $4.9 billion dollars in revenue in Including internal travelers and visitors from outside the province, 19.7 million trips (a trip is one person travelling more than 80 kilometres away for home) were taken in Alberta in Alberta draws people nationally and internationally because of its natural diversity. The province s landscape includes lakes, streams, rivers, mountains, prairies, boreal forests, and foothills. The GROWTH Alberta region has lakes, streams, rivers, prairies and boreal forest. The Alberta tourism landscape is robust and growing. The following statistics have been observed: 4 Tourism is Alberta s fourth largest industry and is expected to gross $6 billion in revenues by 2005; There are over 6,000 tourism related businesses in Alberta which account for 104,328 fulltime jobs; Albertans travelling within Alberta comprised 50 percent of the market. Other Canadians and American travellers made up another 36 percent of the market. The GROWTH Alberta region borders two Tourism Destination Regions (TDRs). Barrhead, Westlock, Woodlands and Thorhild counties are part of the Alberta Central Tourism Region. Swan Hills is part of the Alberta North Tourism Destination Region. 2 AAFRD. 3 Alberta Economic Development. 4 Alberta Economic Development website. Page 2

4 Central Alberta TDR accounts for more than 25 percent of Alberta s tourism visits, equating to 5.1 million visits in This also created $400.0 million in revenue for the region. Eighty-six percent of the overnight visitors travelled for pleasure or to see family and friends. This group could be seen as the target market for recreational tourism operators. The Northern TDR drew 1.5 million visitors in 2001, which accounted for 7.4 percent of all visitors in Alberta that year. 5 Tourism created $251.0 million in revenue for the region. Fifty-seven percent of its overnight visitors visited the region for pleasure or to visit friends and relatives. Some of the consumer attitudes towards tourism are summarized as follows: 4 More frequent, shorter vacations are becoming prevalent; Eighty-two percent of Albertans plan to take at least one intraprovincial leisure trip in 2004 and, on average, they are planning 4.5 trips within Alberta this year; 6 Special interest tourism, such as educational, cultural, and adventure as well as for professional development, is emerging as a potential market; People seek value when considering package vacations, and they desire some independence along with any organized activity. For the Alberta market, short duration packages (day trips or one to three nights) with lots of variety seem ideal; The Alberta Government has a new campaign endorsing healthier, active lifestyles; Albertans are very outdoors oriented. Industry associations are a valuable resource for tourism operators. They can offer everything from start-up advice and assistance to providing networking opportunities between business owners. The tourism branch of Alberta Economic Development (AED, and the Canadian Tourism Commission (CTC, are two such government organizations. Both AED and CTC have identified tourism strategies for the future, which include focusing on packaging of tours, management training, marketing initiatives, and strengthening of industry partnerships. By building on the base of assets the GROWTH Alberta region already has, there is the potential to develop an excellent recreational tourism cluster that meets the needs of its target market, Albertans. The region s close proximity to Edmonton will help it leverage the amount of tourism dollars it can attract from Edmontonians eager to escape for short excursions. 5 Tourism in Alberta Central: A summary of Visitor Numbers, Revenue & Charateristics March Alberta Economic Development website. Page 3

5 Current Assessment Political: Destination Marketing Organization (DMO): There are 23 of these organizations in Alberta. DMO s are self-sufficient organizations, financially supported by membership fees and revenues from members' participation in marketing projects that promote a travel destination. None of GROWTH Alberta s member communities are affiliated with a DMO. Regulatory approval: Land zoning issues must be addressed in an eco and adventure tourism business plan. Any tourism venture proposed on public lands must be submitted by application to Alberta Tourism Recreational Leasing for review and approval. Information is available from AED on the specific requirements and procedures. Information may also be obtained online at Liability protection: Insurance coverage must be obtained and risk management procedures must be firmly established. To learn more about insurance for adventure and eco-tourism see Environmental: Provincial parks: The GROWTH Alberta region is home to four provincial parks and six provincial recreation areas. There is also an area of land in Westlock County zoned as a provincial park; however, it is yet to be developed. These have the potential to form points of interest or regions of development for certain tourism ventures. Natural beauty: The GROWTH Alberta region is situated in the middle of Alberta, which boasts immense diversity and scenery. From the prairie fields in the south to the wilderness and rolling hills in the north, and lakes in all corners of the region, GROWTH Alberta offers tremendous choice for people seeking recreational holidays. Sustainability: Environmental sustainability is a consideration when proposing a tourism operation. Though government regulates tourism development, it is the responsibility of the operators of tourism businesses to recognize their role in preserving the beauty of the region and they must commit to best practices in environmentally friendly operation. Societal: Individuals: Tourists are seeking unique, challenging or relaxing, quality vacation options. Impressions & beliefs: In the last year, Canada has faced some challenges that have received negative world attention. SARS and blackouts in eastern Canada have affected the entire nation s tourism industry. The recent discovery of BSE has had a detrimental impact on Canada as a whole, but in particular the economy and image of Alberta. Page 4

6 Education & culture: Cultural experiences provide an opportunity for tourists to interact with other ethnic backgrounds so as to expand their understanding of and appreciation for our diverse and varied heritage. The GROWTH Alberta region is rich in its cultural history and has much to offer in this regard. Variety: Multiple experiences are also in demand. For example, combining an agricultural learning experience with a horseback riding excursions may satisfy a variety of interests within a family or group. Technological: Online marketing: Internet marketing is a valuable resource, as many local and international travellers now seek their information online. It is estimated that 50 percent of Albertans use the Internet as one of their resources to plan leisure trips. 6 The Internet has surpassed conventional marketing tools, such as newspapers, travel magazines and brochures as the most effective and primary means to inform potential tourists of vacation opportunities. Outside marketing: Awareness can be increased through provincial tourism bodies, such as Travel Alberta. The Canadian Automobile Association (CAA) and American Automobile Association (AAA) are effective marketing outlets, particularly for attracting North American travellers. Accessibility: The GROWTH Alberta region is well served through an extensive network of paved roads that provide direct access throughout the region. Below is a map illustrating the GROWTH Alberta region. Page 5

7 Critical Success Factors Environmental and regulatory approval: A tourism venture cannot operate on crown land without government approval. By approaching Alberta Sustainable Development, a business can mitigate the risks of bureaucratic stoppages later. Marketing & advertising: To gain acceptance as an authentic recreational tourism region, marketing and advertising must capture the interest of the target market. This will be the challenge of the tourism operator and of a DMO. Working together in partnerships will reduce the cost to the individual operators and increase the effectiveness of the regional message. Partnerships & alliances: Effective partnerships create synergies and increase the scale of operation, enhancing the quality of the tourism experience. For example, common partnerships include those with accommodation or specialized food service businesses, where each party can cater to its strengths. Innovation & responsiveness: After entering a niche market, it is necessary to remain flexible within it. Keeping abreast of consumer trends and ensuring the appropriate product mix can provide competitive advantages. Quality service standards: In an industry where customer satisfaction is the primary measure of success, it is imperative that entrepreneurs work to offer a service that meets and exceeds the expectations of customers. Hiring high quality, knowledgeable, and entertaining interpreters and staff will provide additional value to the experience. Staff must be credible, patient and friendly with guests. Qualitative Assessment Initial analysis shows that recreational tourism provides promising opportunities that would be supported by the region. Two specific opportunities that have been identified are an outdoor retreat and a recreational development adjacent to a Wildland Provincial Park. The GROWTH Alberta region has much to offer for people seeking a vacation or retreat destination. There are a number of lakes in the region, most notable are Thunder Lake, Long Lake and Lac La Nonne. Many of the lakes in the region have cabin developments and summer villages and are excellent for all types of water recreation. Three rivers wind through the GROWTH Alberta region: Paddle, Pembina and Athabasca. There are also thousands of square kilometres of forest to explore. The Swan Hills area is one of the only big game destinations in North America to allow the hunting of grizzly bears, and there are other large game animals in the area such as moose and deer. For winter enthusiasts, there are cross country and downhill ski trails and a growing map of snowmobile trails. People interested in farming and ranching can enjoy visiting some of the agricultural attractions in the GROWTH Alberta region, such as the Canadian Tractor Museum. Although the GROWTH Alberta region has no major attractions or events, it has many smaller events and attractions, such as Swan Hills Annual Snowmobile Rally, Barrhead Wildrose Rodeo Finals, and Westlock District Class C Agricultural Fair. Page 6

8 The Swan Hills area is focusing on developing an extensive trail system for ATV and snowmobile enthusiasts. By matching this with the area s already diverse geography that attracts fishers, hunters and other adventure and eco-tourists, Swan Hills is becoming a popular location to plan a recreational holiday. To service the region, a properly marketed resort could be built to accommodate tourists. The resort could include: golf, a spa, hunting, fishing, hiking, boating, skiing, canoeing, snowmobiling, ATVing, rock climbing and horseback riding. It could include a hotel, cabins and an RV park. Its target market would primarily be Albertans looking for a recreational retreat and Americans interested in sports fishing and hunting. There are two Wildland Provincial Parks that have been zoned in the GROWTH Alberta region but are currently undeveloped. The two parks are Fort Assiniboine Sandhills and Hubert Lake. These were designated Special Places Areas by the Alberta government in 1998 and 2000 respectively. Although these parks cannot be developed by not governmental organizations, the opportunity exists for private and public development nearby. This would help bring awareness to these areas and draw people in search of an adventure or eco-tourism experience. Wildland Provincial Parks are still somewhat accessible to ATVs, snowmobiles, hunters and fishers, with restrictions specific to each location. Tourism provides numerous potential spin-off businesses for complementary services, such as souvenir shops, restaurants, tour companies, conference centres, and other retail services. The result of these additional economic activities would enhance the communities of the GROWTH Alberta region and increase the revenue generated by each tourism venture. Economic Overview Financial planning for the business is crucial. As any tourism business is exempt from receiving provincial government grants, start-up funding typically is received through private lending agreements or equity investors. Insufficient contingency funding for the unexpected is a common error; therefore, careful calculation of the inherent financial risk of a tourism venture must be considered. Business Development Bank of Canada (BDC), in partnership with the CTC, has developed a special loan program for existing and potential tourism businesses, called the Tourism Investment Fund. Application information is available from BDC or online at The document entitled A Roadmap to Tourism Financing: Guide for small and medium size businesses published in 1999 by the CTC is available to order by calling (613) It is also available online at: As a primary tourism operator, overall project costs could range from $250,000 to over $5 million, depending on the scope of the project and the extent of the partnerships developed to promote the destination. Initial expenditures such as environmental protection studies, approvals, licenses, construction feasibility studies, business plans, and landscaping costs could range between $150,000 and $500,000. Page 7

9 Costs associated with secondary operators could be reduced substantially (estimated range of $50,000 to $1,000,000) depending on the nature of the business. Returns on investment will also vary with the presence of risks, such as weather, influencing the ability to conduct some activities. There are a number of tactics that can be employed in an effort to mitigate business risk, such as service or product diversification for seasonal operations. Examples of this include a lodge that offers a range of recreational activities and accommodation, or a fishing outfit that offers summer and ice fishing retreats. Quantitative Assessment The criteria ranking on the following page is assessed on the development of the recreational tourism cluster as a whole. Specific business opportunities may have different rankings. Page 8

10 Criteria Rank Description of Rank 1. Number of jobs created Low 0-5 jobs created How many jobs will be created by this Medium 6-10 jobs created opportunity? High 11+ jobs created 2. Quality of jobs created Low Besides on-the-job training, additional education not required Will the jobs created require additional education? Medium Technical school/college diploma/trades training required High University degree required 3. Impact on the environment Low Extensive environmental impact, requires provincial and/or federal assessment Will environmental assessments be required? Minimal environmental impact Medium Some environmental impact, requires provincial assessment is desired. High Minimal or no environmental impact 4. Potential for spin-off businesses Low Spin-off businesses unlikely Spin-off businesses create additional jobs Medium Spin-off businesses possible and provide additional services. High Spin-off businesses likely 5. Impact on existing community Low Limited effect on community A positive impact on the existing Medium Community will be slightly enhanced community is desired. High Community will be much enhanced 6. Amount of financing required Low Greater than $250,000 required From a community standpoint, the less Medium Between $100,000 and $250,000 required financing required, the better. High Less than $100,000 required 7. Community support Low Community is indifferent to the idea A large amount of community support may Medium Community is verbally supporting the idea be required for some opportunities. High Community is actively supporting the idea 8. Project risk Low Opportunity carries great risks Opportunities with little or no risk are Medium Opportunity carries moderate risks more desirable. High Opportunity carries minimum risks 9. Timing of project Low Opportunity will take > 2 years to implement Opportunities that can be implemented in Medium Opportunity will take 1-2 years to implement a shorter time frame are more desirable. High Opportunity can be implemented in < 1 year 10. Infrastructure Low Extensive new infrastructure required to implement opportunity Opportunities that require little or existing Medium Some new infrastructure required to implement infrastructure are more desirable. opportunity High Minimal, existing, or no infrastructure required to implement opportunity 11. Resources Low Imported resources required to implement opportunity Opportunities that require fewer or local resources are more desirable. Medium Local resources required to implement opportunity High Minimal or no resources required to implement opportunity Page 9

11 Glossary AAA AED ATV BDC BSE CAA CTC DMO RV SARS TDR * American Automobile Association Alberta Economic Development All Terrain Vehicle Business Development Bank of Canada Bovine Spongiform Encephalopathy Canadian Automobile Association Canadian Tourism Commission Destination Marketing Organization Recreational Vehicle Severe Acute Respiratory Syndrome Tourism Destination Region * The data contained within this report is not intended to be used as a sole source of information. Growth Alberta, Meyers Norris Penny and other contributors to this report do not accept responsibility for the accuracy of the information provided or for the decisions or actions taken with respect thereto. Page 10