Where are all the Canadians going?

In response to political tensions and tariffs from the U.S., Canadian visits to the United States have fallen sharply — down 23% year-to-date (Jan–Oct 2025), roughly four million fewer visitors and an estimated $4bn revenue shortfall versus last year (Canadians were 28% of foreign tourists in 2024), with the U.S. Travel Association warning the trend could cost the U.S. up to $5.7bn. Border and tourism-dependent regions are feeling the impact (Vermont -30% Jan–Jul; Las Vegas -18% YTD) even as Canadians boost domestic travel and shift to other international destinations—Mexican arrivals are up nearly 12% YTD and spending in cities like Buenos Aires, Osaka and Copenhagen rose over 100% this summer. Airlines and operators are adjusting: Air Canada is adding new transatlantic and Caribbean routes and launching 13 routes in December, suggesting a potential long-term reorientation of Canadian outbound travel that benefits domestic and non‑U.S. markets while pressuring U.S. regional tourism revenues.

Analysis

Canadian outbound travel to the US has fallen sharply: inbound Canadian visits are down 23% year-to-date (Jan–Oct 2025), equal to roughly four million fewer visitors and an estimated $4bn revenue shortfall versus the prior year, after Canadians accounted for 28% of foreign tourists in 2024. The U.S. Travel Association warns the trend could cost U.S. tourism up to $5.7bn, and several border-dependent regions are already reporting material declines (Vermont -30% Jan–Jul; Las Vegas -18% YTD; Ft. Lauderdale and Upstate New York also affected).

Canadians are reallocating spend domestically and to non-U.S. international destinations: Statistics Canada cites a surge in domestic travel, a near 12% rise in visits to Mexico YTD, and >100% summer spending increases in cities such as Buenos Aires, Osaka, Copenhagen and Curacao versus 2024. Air Canada is responding with route expansion—new transatlantic non-stops and 13 Caribbean/Central/South America routes launching Dec 4–20—targeting snowbirds and bypassing U.S. hubs.

Investment implications are twofold: downside pressure on U.S. regional tourism, hospitality and retail exposures that relied on Canadian visitors, and upside for Canadian domestic tourism suppliers, Air Canada (AC.TO) route monetization and Caribbean/Mexico travel beneficiaries. The duration of the boycott is uncertain and will hinge on political developments and sentiment, so near‑term operational metrics (load factors, route yields) and monthly USTA/Statistics Canada data are the critical monitoring inputs.

Key Decisions for Investors

• Consider a modest overweight to Air Canada (AC.TO) and Canadian travel/tourism operators positioned to capture redirected domestic and non‑U.S. international demand, given the carrier's route expansion and rising domestic travel
• Re-evaluate or reduce exposure to U.S. regional tourism assets and hospitality operators with high Canadian visitation (small‑market hotels, regional casinos, retail in Vermont, Las Vegas, Ft. Lauderdale) until inbound trends show durable recovery
• Monitor USTA and Statistics Canada monthly data, Air Canada load factors and route profitability, and political/tariff headlines as explicit triggers to reassess positions
• Implement tactical hedges on U.S. leisure-facing holdings or consider selective exposure to Mexican/Caribbean hospitality and tour operators likely to benefit from increased Canadian demand