NWT ‘flying through the abyss’ as it tries to save tour operators

It’s a sombre national tourism week in the Northwest Territories, where borders are closed due to the Covid-19 pandemic and the tourism sector is struggling to survive. 

NWT Tourism estimates the territory lost around $18 million in March that would have been spent by tourists visiting during the winter aurora season.

The industry body for the territory’s tour operators says an additional $170 million in tourism spending will be lost by the end of December.  

“I think it almost would be an understatement to say the impact has been devastating and looks devastating as we look ahead right now,’ said Cathie Bolstad, chief executive officer of NWT Tourism.

As many as 128,000 tourists had been expected to visit the Northwest Territories this year, according to the territorial government. 

In the 2018-2019 fiscal year, more than 120,000 visitors injected $210 million into the territory’s economy. Bolstad notes that doesn’t account for the value of things like visiting hunters providing meat to communities. 

Katrina Nokleby, the NWT’s minister of tourism, said the sector will be among the hardest hit by the pandemic and she has “a lot of sympathy and empathy” for struggling tourism operators.

“My heart really does go out to people that have put their heart and souls into their businesses and I know the tourism operators are very passionate about the services that they provide,” she said.

“It just breaks my heart every time I hear an operator having the conversation about potentially closing their doors and not having an ability to reopen.”

A survey of the territory’s tourism operators found 92 percent of respondents have been impacted by Covid-19 and 75 percent saw sales drop in January and March, Nokleby said.

More: NWT tourism companies begin to fold with borders closed

Ninety-four percent reported a decrease in bookings, and 88 percent said they’ve had a significant number of cancellations.

“The tourism survey really just reiterated what we already suspected, that pretty-much every company across the board is feeling this quite severely,” Nokleby said. 

‘Wondering where we’re going to land’

The hit to tourism is troubling as growing the sector is a key part of the NWT government’s plan to diversify the territory’s economy – one of its 22 priorities. 

Nokleby said the pandemic hasn’t altered that mandate, but has illustrated how important it is to address the issue sooner rather than later. 

“At any point when you have all your eggs sort-of in one basket, that does lead us to having concerns,” she said. 

Katrina Nokleby is pictured in an image issued to newsrooms on July 8, 2019.

According to numbers from the NWT Bureau of Statistics, mining and oil and gas extraction were by far the biggest contributors to the territory’s economy in 2018, accounting for more than 36 percent of gross domestic product.

“Pre-Covid we were walking along the cliff, and Covid just kind-of gave us a good kick off the cliff,” Nokleby said. “Now we’re sort-of flying through the abyss wondering where we’re going to land.”

The minister did say, however, the pandemic has given the territory the opportunity to push for federal support in rebuilding the North’s economy. It has also helped highlight disparities between the North and the rest of Canada, she said.

The unique northern context

On May 21, the NWT Chamber of Commerce and NWT Tourism outlined the impact these disparities have had on NWT businesses in a six-page letter to the Canadian Senate’s standing committee on national finance. 

They noted NWT businesses have the highest operating costs in Canada. The majority are operating with such thin margins that even a 10-percent decrease in revenue could cause them to close their doors, the letter stated, with many businesses reliant on government contracts to keep afloat.

The territorial organizations said these disparities should be considered when allocating federal relief funds. They pointed to several gaps in existing Covid-19 federal support for NWT businesses. 

“Often a national solution has quirks in it that don’t work for our unique northern situation,” Bolstad explained.

She said because many of the territory’s tourism operators are small, seasonal, and sole proprietors, they often struggle to meet criteria for federal relief programs.

Nokleby said addressing those gaps has been a priority for the territory in its conversations with the federal government. She has also asked for tourism-specific support.

NWT tour operators have raised other concerns during the pandemic including the cost of tourism operator licence fees, added challenges for non-resident operators, and uncertainty about when the border will reopen.  

Nokleby said the government’s plan to relieve operators of licence fees is currently in the approval process.

The minister encouraged non-resident operators – there are 54 among the territory’s 165 licensed operators – to apply for travel exemptions to complete annual maintenance or other work that needs to be done in the NWT. She said she will be advocating on their behalf as she understands they have to maintain regulatory compliance. 

But she said those operators will have to be self-sufficient and not interact with residents as, if they do show symptoms of Covid-19, it could strain the territory’s limited health resources. 

The NWT Business Development and Investment Corporation’s second intake for working capital loans has been opened to non-NWT resident tourism operators, she added, as long as they can prove the majority of that money is being spent in the territory.

When it comes to reopening the NWT’s borders, Nokleby said that depends on what happens in southern Canada and if widespread rapid testing becomes available in the NWT.

“We are in a bit of a waiting game, which I know is not really the answer I think people want to hear,” she said. 

Dr Kami Kandola, the territory’s chief public health officer, has said the territory won’t reopen until a vaccine or effective treatment for Covid-19 has been found. Experts say that will take at least 12 to 18 months.

Nokleby added the territory can’t reduce pandemic restrictions as quickly as southern Canadian jurisdictions because the North has fewer resources when it comes to things like health care. 

Tourism will ‘look different’ in future

For now, NWT tourism operators are only allowed to open for territorial residents.

While some operators have said that won’t come close to making up for the lost revenue of outside visitors, Bolstad said NWT Tourism is working to promote staycations.

Premier Caroline Cochrane recently tweeted encouraging residents to “explore inside our borders this year.” 

At the federal level, Nokleby said there are discussions about promoting tourism within Canada once internal borders reopen. She noted the majority of the territory’s tourists come from other jurisdictions in Canada. 

“I think that’s encouraging for the recovery aspect of post-Covid,” she said. 

As for what NWT tourism will look like post-pandemic or when the sector will fully recover, Bolstad said the outcome would “look different” to tourism in the past.

“It’s a moving target right now and it’s very difficult to answer, but it will be a new normal,” she said, adding the return of tourism also depends on when communities will be willing to welcome visitors again. 

Premier Cochrane has said her government is working on an economic and social recovery plan. Nokleby said it’s soon to say what that will mean for tourism.