The Change In Canadian Spending

DAYTONA NILES/NNY BUSINESS
Melissa and Mathew Hardy stand in front of their cafe Bella’s located in Clayton.

BY: Marcus Wolf
Cars adorning Canadian license plates fill parking spots outside boutique shops, restaurants, hotels and boat tours across the American side of the Thousand Island every summer. Local entrepreneurs in Alexandria Bay, Clayton and even Watertown welcome their northern neighbors with beaming smiles as they peruse their wares, eager to satisfy these prospective customers.
 

     When shoppers from across the border check out, however, they pay more than advertised price for U.S. goods because the U.S. dollar has held a greater value than the Canadian for years. Business owners and experts alike have witnessed a slight decline in Canadian traffic as the difference in currency values widen, yet a 2015 study by the 1000 Islands International Tourism Council found that 25 percent of visitors to the area are Canadian. Using incentives and goodwill, local business owners have been able to preserve their northern friends’ patronage, with some claiming the difference between currencies having no effect on their operations. 

    “There’s a long history here in the Thousand Islands of businesses trying to appeal to their Canadian neighbors,” said Corey C. Fram, executive director of the tourism council. 

    The disparity between Canadian and U.S. currencies has hovered between 20 and 30 cents in the past couple years, declining slowly from 2018 to 2019. One Canadian dollar equated to 74 U.S. cents in May, according to the Bank of Canada. 

    The difference between the two dollars, however, has varied for decades, with some periods exhibiting a stronger Canadian dollar, including in 2007, 2011 and 2013, according to the Canadian Library of Parliament. It has, however, held a lesser value than the U.S. dollar for most of the past 50 years. 

    Mr. Fram said traffic across the Thousand Islands International Bridge has typically ebbed and flowed with the value of Canadian currency, with less visitors crossing when the value is lower. Some retailers have also experienced a similar correlation, he said. 

    For example, 50,179 travelers returned from the U.S. to Lansdowne, Ontario, in the same day, which Mr. Fram said typically correlates with Canadians’ daily outings like shopping, in August of 2014, when one Canadian dollar equaled about 90 cents. The number of people returning to the province in the month of August, however, has since declined almost each year alongside the decline in the Canadian dollar value. Traffic dropped from 34,223 travelers in August 2016 to 24,751 travelers in August 2018, when the Canadian dollar equaled 77 U.S. cents. 

    “It looked like August 2014 was really an outlier,” Mr. Fram said. 

    Alex and BJ Mosher have managed their handcrafted jewelry store in downtown Alexandria Bay, Treasure Island, for 42 years. Despite the difference between the U.S. and Canadian dollar values, they have kept their loyal customers from across the border who have remained interested in purchasing their Elutheria Gold necklaces, silver earrings and other treasures. 

    While Canadian currency is valued less than U.S. dollars and coins, Mr. Mosher said the cost of U.S. goods typically remains cheaper, meaning the prices in their store and other shops can still attract consumers from up north. American customers believe they can save money by purchasing goods in Canada using their higher valued currency, but prices in Canada are higher, Mr. Mosher said. 

    “I get customers in here from Canada, I get potential customers amazed that the prices are so low,” he said. “Canadians have to pay more for their raw materials.” 

    Canadian consumers have also continued patronizing Bella’s in downtown Clayton into its 14th season, joining American patrons on the deck overlooking the St. Lawrence River to enjoy a breakfast wrap or stuffed French toast. 

    Melissa Ringer-Hardy and Mathew Hardy, co-owners of Bella’s, have attracted more clientele from across the border over the years, with Mr. Hardy saying they have bolstered their marketing efforts in cities like Kingston, Ontario. Mrs. Ringer-Hardy, however, also said she attributes the inflow of Canadian consumers to Clayton serving as a destination surrounded by various recreational opportunities, which they are less frugal about than physical goods. 

    “People who travel are still going to be traveling to Clayton,” she said. “For entertainment, they don’t spend huge money. I think they’re still willing to come over and do new things.” 

    In order to combat the disparity between the two currencies, local business owners implement discounts and other similar incentives for Canadian clientele. 

    Several retailers, restaurants and hotels accept Canadian dollars and cash, although Mrs. Ringer-Hardy said more customers use debit or credit cards. Jody Pettit, general manager of the Hilton Garden Inn, said the hotel accepts Canadian cash at par, or as equal to U.S. currency, as does the Holiday Inn and Riveredge Resort, Alexandria Bay. The Watertown hotels, however, do not accept debit or credit cards from Canadian occupants because their banks implement high fees, Ms. Pettit said. 

    “It really doesn’t affect us in the hotel or the dining room,” she said. 

    When the value of the Canadian dollar reached closer to the U.S. dollar, more businesses were willing to accept Canadian cash at par, Mr. Fram said, but as the divide grew wider, they looked at other incentives to maintain their consumers from across the border without losing revenue. They would typically provide a discount on the converted Canadian price of their American goods. 

    The owners of Bella’s provide a 25 percent discount on the converted Canadian price of their meals, and the Moshers also provide discounts on much of their wares at Treasure Island. 

    “We can’t change the exchange rate, but we don’t have to punish them additionally,” he said. 

    Other factors influence traffic from Canada such as weather, gas prices, perceoved ease of entry and water levels of Lake Ontario and the St. Lawrence River in recent years. 

    Weather typically has the greatest effect on travel in the Thousand Islands, Mr. Fram said, while businesses surveyed by the tourism council over the years have indicted that the difference between the two currencies provides little hinderance. Mr. Mosher said the federal government raising the drinking age in the U.S. caused a drop in younger Canadian consumers. Ms. Petitt said the decline in chain retailers in Watertown had a greater influence on her customer base than the currencies, as well as the rise of Destiny USA in Syracuse. 

    “Times have changed,” Mr. Mosher said. 

    While the fiscal value of Canadian currency has waned over the years, the value of Canadian consumers patronage has not. They not only provide a valuable income source, but a warm smile and good laugh that fosters the camaraderie shared across both borders of Thousand Islands. As long as both nations preserve that friendship and mutual support of each other’s industries, both the Canadian and the American flags will continue flying alongside each other throughout the border towns.