To what degree has your local economy changed?
Vancouver is a port city. That gives it the advantage of having jobs through the shipping of goods that come to Canada. It is a gateway for airlines coming to Canada as it is the closest airport to Asia. Sometimes Vancouver is called Hollywood north as there is a strong expertise for the movie and TV industries now. Vancouver is also a tourist destination because of the beautiful mountains and abundant nature that surrounds it as well as having all the recreational activities that go with being located next to an ocean. Two hours north we have Whistler mountain which is a world class ski resort. In the summer we have a strong cruise ship to Alaska industry and all the spin off tourism from that.
Much of what I describe is where our economic growth has come from. Our water ways have become coveted for housing where they used to highly industrial. None of that industry exists any more, absolutely none, all having gone to other countries, like China. And the city struggles with how to reuse that land in a way that will provide employment, better employment than the minimum wage jobs that developing a retail sector with restaurants and housing would provide.
So, the question becomes, how to develop more high tech jobs, like those that the rest of the developed world is trying to develop. Fierce competition generally isn't good for wages.
As our resource, industry and manufacturing sectors declined, Vancouver development the movie and tourism industries.
The incredibly weak Canadian dollar made tourism easy to develop as Vancouver vacations gave vistors exceptional value for their money. Where there was a period where Americans paid 62 cents for a Canadian dollar, Canadians paid $1.60 for a US dollar. At par it means Canadian vacations have gotten about 60% more expensive for Americans just due to currency changes, never mind price increases. I have read some Americans reporting recent visits to Canada costing them twice as much as say 6 or 7 years ago. This can't be good for Vancouver's tourism industry.
Between 2002 and 2004 tourism declined 6% from Americans and then another 2% in 2005. And seeing how the custom enteries for 2006 are down 8%, that looks like another down year. Well, there is supply and demand economics based on price at its finest. US tourism is about 25% of Vancouver's tourism.
Vancouver's visitor volume indicators look disasterous, from 7 million in 2000 to 5.4 million in 2006. Interesting, room revenues have increased from $841 million to $981 million during that period. Here is an example of numbers not appearing to "add" up all that well. Revenues are up 17% but visitor volume indicators are down 23%. This got my attention enough to see if I could find what has happened to room rates during that period, but I was unable to find comparable data. It has the appearance that room rates are up 51% over that period, by comparing the $841 million figure to the 7 million visitors and the $981 million to the 5.4 million visitors.
Something that I noticed in my travels is that in places where the real estate bubble has been especially dramatic the cost of everything is outrageous, and I attribute this to businesses trying to cover the real estate costs. So, my driving trip earlier in the year that took me through Washington, Oregon, Idaho, Utah, Arizona, Nevada and California I found reasonable accommodation and food prices except for when I got to Las Vegas, where prices seemed to doubled and then there was also nickle and diming to pay for services that had been included in other places, like internet or local phone calls. It appears the same thing is happening in Vancouver and Whistler as business tries to cover their costs due to the high real estate costs. It looks to me that it will be especially bad for Vancouver as the problem is grossly compounded by the strengthening dollar.
How much do local beliefs and experiences play into an economy?
Vancouver hosted Expo in 86 and we had about 20 million visitors that year. After Expo we had a spectacular 7 year bull run on our housing from exceptional levels of wealthy immigration that approximately tripled the cost of housing and housing has been a big struggle for the local people ever since. Local beliefs are that by hosting the 2010 Olympics we will have another such boom.
When I look at the extreme differences in the economy, an under priced housing market, an under developed tourism industry, a weak dollar and a return of Hong Kong to China, well, that is a recipe for explosive growth in real estate. Now we have a well developed and declining tourism, we are the most expensive city in Canada, and we have a vastly stronger dollar. Our housing market is about 5-6 times more expensive to local people since 1986, but with the changes in the dollar, it is probably 8-10 times more expensive for foreigners.
I don't see it happening at all, other than a large blimp in tourism as the Olympics is a strong tourism draw. But those vistors will not see the same value in Vancouver as the visitors of 86 and the price of the vacation and experience will not bring them back any time soon as it did in 86.
So, what is your local economy like and how has it changed as you know it?