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Canadian dollar parity a bonus for Australian visitors

Blog by Nick Swinburne | November 4th, 2010

The value of an Australian dollar stands neck and neck with the loonie, but opinions vary on whether that could have any impact on Australians visiting Canada.

On Tuesday the Bank of Canada listed the currencies at equal value, the first time since 2004 that they've reached parity over a month. Statistics gathered by UBC's Sauder School of Business show that the Canadian dollar was worth $1.0020 against the Australian dollar and has hovered around a similar value since late September.

Werner Antweiler, an associate professor in the school's Strategy and Business Economics Division who follows exchange rates and currency unions, said the value of the Australian dollar owes primarily to the country's export market.

"Often it's related to commodity prices," he said. "The Australian dollar is driven by commodity prices, like gold and other metals. Gold is a major factor. For Canada it's mostly oil, we have other resources, but oil is a very dominant factor in that commodity spectrum. So they're driven more by movements in commodity prices."

When a company invests in resources from another country, it has to buy the currency first. When there's a high demand for commodities, it drives up demand for currency from countries that produce them, according to Antweiler.

Australia benefits heavily from exports of iron ore and coal to China and its Gross Domestic Product has soared in recent years, from around $400 billion in 2000 to $1.015 trillion in 2008, according to the World Bank.

That activity has upped the value of the Australian dollar to a level equal to the Canadian currency.

Dollar parity could be a boon for Australian tourism to Canada, said Kim Hood, a leisure sales manager with Tourism Whistler who's responsible for Asia-Pacific and Mexico, as well as online travel agencies.

"I think it'll have a good impact," she said. "The Australian market has historically seen Whistler as good value anyway. And now with their dollar being at parity, they understand their dollar is going to go even further in our resort."

Hood went on to say that the value of the Australian dollar owes largely to the country's quick recovery from the recession. She said the country is globally acknowledged as having a solid banking system.

"They're a resource-based country that exports to China," she said. "Their trade is very strong and their economy has held up nicely."

Asked what impact the Australian dollar could have on tourism, Hood said that hotels in Whistler have already achieved sales targets for clients from Australia. She added that this time of year is usually when Tourism Whistler has a good idea of what the Australian market will look like. And at a certain point, seats on airplanes sell out.

"I think we've seen that," she said. "Obviously we hope for a few more additional sales, but I think we're pretty confident right now that it's going to be a good season from Australia."

Roger Soane, the general manager of the Fairmont Chateau Whistler and chair of the Tourism Whistler board, had another opinion. He said Australian visits peak in January, around the time of that country's summer, and are usually planned well in advance. He doesn't see the dollar parity as being a huge incentives for Australians to come to Whistler.

"We in the tourism industry all believe that the currency exchange is a big factor," he said. "Research has shown that it's not as impactful as we believe. I think the Australian dollar being at par will somewhat help us.

"It does impact people once they get here, but I don't think it's the driving factor for someone to come all that way."

Soane estimated that the Fairmont will accommodate approximately 1,000 visitors from Australia this year - a number just below what it saw in 2008 but better than 2009.

He added that many Australians like rooms with kitchenettes, which the Fairmont doesn't have.