Toronto, Ontario, Canada – The slump in global tourism has hit Canadian banks which has substantial investments in countries such as Jamaica and the Bahamas that thrive on visitors.
As the number of tourists in those countries dwindle, resorts and other tourism-related establishments heavily dependent on tourism income are downsizing. Some of these establishments have even defaulting on their loans with Canadian banks.
Among the Canadian banks which reported an increase in delinquent loans from West Indies clients are the Bank of Nova Scotia, the Canadian Imperial Bank of Commerce and the Royal Bank of Canada.
New lending is also impacted because hotels have canceled expansion plans as operators experience low occupancy rates resulting from declining tourist arrivals, particularly those coming from the U.S. American tourists account for the bulk of tourism dollars in the Caribbean region.
Canadian bankers admitted they are expecting slow growth in their Caribbean lending business.
Fortunately for Canada, the country’s tourism industry benefited from British Columbia’s hosting of the 2010 Winter Olympic Games, which led to a 5 percent surge in tourist arrivals to Vancouver.
Even in 2009, prior to the winter games, tourism receipts contributed $1.66 billion to the Canadian economy. Part of the amount or $372.7 million came from Canadians who patronized local tourism. The tourism sector income created or protected 15,200 jobs across Canada.