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					             Trend 
             Analysis 




Canadian Visitation to 
           California




             DataPath Systems
             www.datapathsystems.net
              867.660-4600
             7/16/2007
                          Canadian Visitation to California 

1 BACKGROUND

While reviewing the past several years of data on travel from Canada to the State of California,
California Tourism identified several areas of inconsistencies. The data was primarily provided
from Statistics Canada, who then reviewed the data for errors or issues and deemed it valid. In
an attempt to explain these data anomalies, California Tourism contracted DataPath Systems
to review that data and other data sources. The final objectives of the project include
responding to the following questions:

          • What might be driving differences between the key markets (provinces)?

          • What might be resulting in California not following U.S. national trends?

          • What actions might California take to validate these findings?

          • What other recommendations might be useful to better position California in the
            Canadian market place?

To prepare this document, DataPath Systems reviewed the data provided to California by
Statistics Canada, as well as numerous other sources including the 2001 Census, Institut de la
statistique de Quebec, Travelocity.com, etravelblackboard.com, gasbuddy.com, Bank of
Canada, National Climate Data Centre, U.S. Department of Commerce, Canadian Education
Association, Wikapedia.com, and the National Hockey League. Combined, that information
forms the theories presented in this document. Certainly, it is not possible to definitively
correlate external events with travel behaviour. However, it is our intent to identify events
that coincided with data shifts which help to explain why the travellers may have behaved in
that manner at that time.

The data focuses on four areas:
   • Total travel from Canada to California vs. to all other U.S. states
   • Travel from Ontario
   • Travel from Alberta
   • Travel from British Columbia

Those provinces were selected based on advice from California, Statistics Canada and the data.
They represent the largest volume of visitors, with the most stable sample size.




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2 TOTAL CANADIAN VISITATION TO THE UNITED
  STATES


2.1 ANNUAL DATA

From 2000 to 2005, travel from Canada to the United States has remained fairly stable. In
2000, the U.S. Office of Travel and Tourism Industries (OTTI) estimated 14,666,000 visitors to
the United States from Canada (based on data provided by Statistics Canada). This dropped
8% after September 11, 2001, to 13,527,000 visitors, and continued to drop through 2003. It
has since recovered to pre-911 levels, at 14,865,000.

Travel to California from Canada followed much the same pattern. After September 11/01
visitation from Canada to California dropped from 1,036,000 to 910,000 (down 12%). Since
then it has recovered along the same lines as travel from Canada to all of the United States
and ended 2005 with 1,007,900 Canadian visitors.

This data shows very little variation from national trends for the State of California – based on
year-end data.




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It therefore makes sense that California’s market share of Canadians has also remained stable.
In 2000, California attracted 7.1% of the overnight Canadian visitors who travelled to the
United States. This dropped slightly in 2001, and grew only slightly over the next two years,
and ended 2005 at 6.8% of these visitors.

The chart below shows how the volume of Canadian visitors to California has followed the
same variations as travel from Canada to the United States in total. As with the rest to the
industry, recovery after 911 was slow but steady and has taken four years to rebound.




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2.2 VARIATIONS BY QUARTER

Where the differences become evident is when comparing year-to-year changes per quarter.
While part of these shifts may be related to small sample sizes, Statistics Canada has
confirmed they are confident in the findings reported.

Comparing 2005 to 2004 shows that while Canadian travel to the U.S. increased in the Second
Quarter by 4%, travel to California decreased by 17%. A similar discrepancy reoccurred in the
First Quarter of 2005, when travel to the United States increased by 2%, while travel to
California dropped by 14%. The reverse occurred in the Third Quarter of 2005, when travel to
California increased by 17%, while travel to the United States increased only 7%.




While the year-end figures all correspond, differences are seen and valid at the quarterly
periods. So, specifically, what other differences could attribute to this? To answer this, we
explored three areas:
   • Differences in purpose of the trips
   • Differences in travel party
   • Origin of the traveller




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2.2.1   PURPOSE OF TRIP

In 2005, 60% of trips to the United States were for holiday or vacation, while 19% were to
visit friends or family, and 12% were for business or conventions. For travel to California, 52%
were for holiday or vacation, 25% for visiting friends and family and 19% for business or
convention. The most significant figure there is the difference in visiting friends and family.
These trips tend to be shorter in length and supplemental to a longer trip. Therefore, they are
also more flexible in the timing of the trip, although many revolve around weddings and
reunions.



2.2.2   TRAVEL PARTY

Surprisingly, there is little difference in the party composition for California compared to other
states. In 2005, 6% of visitors from Canada to the United States were under the age of 12 –
compared to 5% for those visiting California specifically. 15% of all travel parties to California
had a child in it.



2.2.3   ORIGIN

Using 2005 as the base year, for all Canadian visitors to California, 37% were from British
Columbia, 30% were from Ontario and 17% from Alberta. For the combined United States, in
Quarter One 2006, 52% of the visitors were from Ontario, 15% from BC and only 9% from
Alberta. This shows the impact of Western Canada on California compared to the rest of the
United States, where travel by Ontario residents dominates.




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3 IMPACT OF EVENTS
There are several events that took place in 2004, 2005, and 2006 that may be having
significant impacts on the timing of Canadian travel to California.

1. As friends and family are an important component for California, as is travelling with
   children, the impact of Easter can have a greater influence on California travel compared to
   travel to other states. While it would also impact other states, the impact on California
   would be greater. In Canada, the Easter long weekend includes Good Friday, Saturday,
   Easter Sunday and Monday – 4 days. In many school districts the timing of Easter
   weekend and Spring Break coincide. The U.S. Office of Travel and Tourism Industries
   (OTTI) often cites this as a factor in quarterly travel volume shifts.

2. Gasoline prices: Gasoline prices made a steady increase since 2002. However, a significant
   peak in the Third Quarter of 2005 was well publicized and dominated the news. It is likely
   this impacted the drive market, which for California is more often from British Columbia.

      DRIVING – INCREASING COST OF GASOLINE
      (Source: GasBuddy.com)




3. Forest Fires in California: 2004 began the real focus on California fires, which continues to
   receive a large amount of press coverage. This type of headline could have influenced
   travel decisions.

4. Disneyland 50th Anniversary: This promotion began May 2005 and ran for 18 months to
   August 2006. It included heavy advertising in the TV viewing area for western Canada,
   including Seattle and Spokane television.




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5. Hockey playoffs: Canadians have a deep relationship with the game of hockey. The growth
   of sports-themed travel and package deals, largely via the Internet, has made it easy to
   follow one’s favourite team. Western Canada’s largest cities – Vancouver, Edmonton, and
   Calgary – all have professional hockey teams, playing in the National Hockey League (NHL).
   One theory to explain periodic fluctuations in travel to California from 2004 to 2006 might
   have something to do with Canadians following their teams to play rivals based in California
   (Los Angeles Kings, Anaheim Ducks, San Jose Sharks). In 2004 Calgary played San Jose for
   six playoff games, three in California. In 2005 the hockey season was cancelled. In 2006
   both Calgary and Edmonton had playoff games in California for a total of 18 playoff games.

6. Growth of Westjet, America West and Alaska Airlines. In 2004 all carriers added routes
   between California and western Canada. WestJet started scheduled transborder flights in
   September 2004 and by the end of the year served seven U.S. destinations (Los Angeles,
   San Francisco, Phoenix, Fort Lauderdale, Tampa, Orlando and New York) with non-stop
   flights from Calgary, Toronto and Vancouver. Westjet service to Palm Springs began in
   2005. Jetsgo continued to offer transborder flights and added three new U.S. destinations.
   Jetgo then closed in early 2005. On June 4, 2004 America West began flying new nonstop
   service between Los Angeles and Edmonton, Alberta.

7. Hurricane Wilma: Hurricane Wilma was the most intense hurricane ever recorded in the
   Atlantic basin. It devastated parts of the Yucatán Peninsula and southern Florida during
   October in the 2005 Atlantic hurricane season. Wilma set numerous records for both
   strength and seasonal activity. It is possible this modified travel plans from Mexico to
   California, especially from Alberta – a key Mexico travel market.

8. Exchange rates: For the month of May, the average currency exchange rate was $1 Cdn =
   $ .92 U.S. The Canadian dollar has steadily increased in value relative to the U.S. dollar,
   which theoretically should make travel to the U.S. less expensive. (This may have a bigger
   impact on BC travel)
              YEAR       $1 Cdn =
              2006       $ .89 U.S.
              2005       $ .83 U.S.
              2004       $ .77 U.S.
              2003       $ .71 U.S.
              2002       $ .63 U.S.
              2001       $ .64 U.S.

9. SARS rebound: In 2003 a serious SARS outbreak affected travel to California, and therefore
   the 2004 data could reflect some of this recovery.


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4 DIFFERENCES BY PROVINCE OF ORIGIN
This section demonstrates that the three significant provinces are quite different from each
other and impacted by different events.

4.1 TRAVEL FROM BRITISH COLUMBIA

British Columbia, the third most populous Canadian province, has seen a population increase of
5.3% from 3.91 million (2001) to 4.11 million (2006). In 2006, 16% of British Columbians
were under 15 years of age (down 1.8%); 70% were between the ages of 15 and 64 (up
4.6%); 14% were 65 and older (up 2.2%).

In both 2004 and 2005, 37% of Canadian visitors were from British Columbia. Over the year
from 2005 to 2004, the volume of these visitors increased 2%, compared to 9% from all
provinces. This lower growth rate could be due to higher fuel charges. In 2004, 33% of BC
residents visiting California arrived by car. This dropped to 29% in 2005. Still, Vancouver has
the most daily direct flights to California, and to the greatest variety of destinations in
California.

Gasoline prices climbed dramatically and peaked in the Second and Third Quarters of 2005,
reducing auto travel slightly.




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4.2 TRAVEL FROM ALBERTA

Alberta, the fourth most populous Canadian province, has seen a population increase of 10.6%
(greatest increase of all provinces) from 2.97 million (2001) to 3.29 million (2006). In 2006,
18.9% of Albertans were under 15 years of age (up 1.4%); 70.8% were between the ages of
15 and 64 (up 7.6%); 10.4% were 65 and older (up 2.6%). Alberta’s population grew at the
greatest rate, and is the only province where the population of children under 15 grew. More
than 73,000 Americans live in Calgary alone.

Alberta generated 19% of travel from Canada to California in 2004, down to 17% in 2005.
However, they experienced the greatest shifts in travel between Quarters. In 2005, visits were
down by 48% compared to 2004 in the Second Quarter. In 2004 the Spring Break in Alberta
was from April 2 – 19 (Calgary) or March 26 – April 5 (Edmonton), making it more likely that
families in Alberta travelled to California during the Second Quarter in 2004 than in the Second
Quarter 2005. However, in 2005 the breaks ran from March 24 to April 4, so that trips would
be considered as First Quarter travel. The drop of 48% in Q2 2005, recovers with a 40%
increase in Q2 2006 – when Spring Break later in some schools (April 12 in Calgary).




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The continued growth in the Third Quarter of 2005 and 2006 is likely attributed to strong
promotions by Disneyland for the 50th Anniversary Celebrations, a change from Mexico travel
as hurricane Wilma impacts there and the strong showing of Alberta teams in the NHL playoffs.
Alberta has the largest per capita personal disposable income – up 30% from 2001 to 2006.
They also have the lowest levels of unemployment across Canada. With the addition of
Westjet, they now have 10 direct flights to California, with easy connections in Vancouver if
needed. Those factors allow Albertans greater flexibility to travel.

ECONOMIC INDICATORS (Source: Institut de la statistique du Quebec)

Personal Disposable Income Per Capita ($Cdn) 2001-2006
YEAR        CANADA     BC         ALBERTA ONTARIO QUEBEC
2001        $21,572    $20,923    $24,711      $23,081    $19,671
2002        $22,122    $21,527    $25,133      $23,480    $20,397
2003        $22,790    $21,956    $25,921      $24,044    $21,249
2004        $23,631    $22,845    $27,742      $24,671    $21,934
2005        $24,382    $23,732    $29,523      $25,231    $22,454
2006        $25,624    $25,194    $32,109      $26,181    $23,274
Growth in personal disposal income per capita 2001-2006 (Canadian average – 19%)
30% - Alberta
20% - British Columbia
18% - Quebec

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                    Canadian Visitation to California 
13% - Ontario

Unemployment Rate 2001-2006
YEAR    CANADA    BC      ALBERTA   ONTARIO   QUEBEC
2001    7.2       7.7     4.6       6.3       8.8
2002    7.7       8.5     5.3       7.1       8.6
2003    7.6       8.0     5.1       6.9       9.1
2004    7.2       7.2     4.6       6.8       8.5
2005    6.8       5.9     3.9       6.6       8.3
2006    6.3       4.8     3.4       6.3       8.0




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4.3 TRAVEL FROM ONTARIO

Ontario, the most populous Canadian province, has seen a population increase of 6.6% from
11.41 million (2001) to 12.16 million (2006). In 2006, 17.8% of Ontarians were under 15 years
of age (down 1.1% from 2001); 69.3% were between the ages of 15 and 64 (up 5.3% from
2001); 12.9% were 65 and older (up 2%).

There are 12 daily flights from Ontario to California destinations as of summer 2007.

Ontario accounts for 30% of Canadian visitation to California. Comparing 2005 to 2004, and
2006 to 2005, shows significant changes in Q2 of 2005, and Q1 of 2006. The most likely
explanation for this is the change in Spring Break schedules based around the Easter long
weekend. While the Spring Break in Ontario did not change from year to year, the likelihood
of adding Spring Break to the Easter long weekend was much higher in 2005, than in either
2004 or 2006. This was likely to increase the opportunity to travel to California (a long-haul
destination), by adding Spring Break (March 12-22) to Easter long weekend (March 25 – 28) in
2005 – accounting for at least part of the 21% increase seen.




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5 CONCLUSION
There was not one single factor that influenced travel changes from 2004 to 2006. Instead,
there are numerous issues, differing by the province of origin. However, the most significant
changes can likely be explained by the following:

   -   Change in Q2 2005 – down 17%
       from Q2 2004: driven by Spring
       Break changes in Alberta, along
       with no hockey playoffs.

   -   Change in Q1 2005 – down 14%
       from Q1 2005: driven by the
       return of Spring Break to First
       Quarter.

   -   Change in Q3 2006 – up less
       than half the rate seen in the
       U.S.: this was largely driven by
       drops in BC, which may also be
       impacted by the continuing high price of gasoline and forest fire news, which would
       selectively impact the drive market at a greater rate than the air market.

5.1 WHAT ACTIONS MIGHT CALIFORNIA TAKE TO VALIDATE
    THESE FINDINGS?

   1. Request from Statistics Canada a full data run (cross tab for each province and filtered
      by:
          - All U.S. States
          - All Western States
          - California (currently available)

   2. Monitor shifts during Spring Break – continue to track travel changes (especially from
      Albert) against the Spring Break and Easter holiday schedule.

   3. Consider further research in BC, Alberta and Ontario to better understand motivations
      and barriers to visiting California.




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5.2 WHAT OTHER RECOMMENDATIONS MIGHT BE USEFUL TO
    BETTER POSITION CALIFORNIA IN THE CANADIAN MARKET
    PLACE?

   1. There is opportunity for growth in Alberta. This market is 10% of the Canadian
      population and 17% of California visitors, while BC. is 13% of Canada and 37% of
      California visitors. This shows that California is able to capture a much larger share in
      BC than in Alberta – yet Alberta has a greater ratio of households with children, higher
      employment and income, and easy connections with two air carriers. This is an
      untapped market for California.

   2. Ontario, while a greater volume of the population is more likely to travel south to
      destinations in the East, and California is a long-haul destination. This makes it more
      difficult to market in Ontario than BC or Alberta.

   3. Understand the impact of low cost air carriers such as Westjet on the market.

   4. Encourage pre/post sporting event tours and pre/post conference tours/packages.
      Canadians in general, have a greater propensity to purchaser packages compared to
      Americans.

   5. Monitor any new survey findings on attitudes on spring break, airfare, climate
      change/fire, the exchange rates, as well as increasing political issues impacting
      Canadian travel to the United States.

   6. Note that the exchange rate is more favorable for Canadians now.




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