Lower exchange rate affects Canadian spending

Canadian license plates are still a common sight in the Flathead Valley. There’s nothing unusual about the Northern neighbors reaching into Northwest Montana in search of getting a little more leverage for their loonies.

But as oil and gold prices have slipped in recent months, the current exchange rate puts the loonie, Canada’s dollar coin, at 76 cents against the U.S. dollar. It reached the 76 cent-mark by mid-July — the lowest it’s been since 2009 — and has recently hovered between 76 and 77 cents. At this time last year, the loonie was valued at about 90 cents against the dollar.

This generally leads to less travel and spending in the U.S. by Canadians. However, while some Flathead Valley businesses have noticed a drop in Canadian consumers, others have still seen continued robust spending by Canadians in markets that aren’t as affected by the drop in Canadian dollar valuation.

This was a keynote topic of the recent Economic Update in Kalispell. Paul Polzin, former director of the University of Montana’s Bureau of Business and Economic Research, discussed the impact of nonresident travel. Polzin cited Canadian and other nonresident spending in the area that accounts for 19 percent of the Flathead County economy, higher than the bureau’s February forecast.

According to Diane Medler, director of the Kalispell Convention and Visitor Bureau, Canadians often travel to the Flathead Valley for vacations, lower car prices and bulk retail buying.

RETAIL

At Costco in Kalispell, Canadian sales make up about 10 percent of total sales, Warehouse Manager Greg Gillingham said. But Canadian sales fell 30 percent when the Canadian dollar fell in late 2014 and has sustained a lower value. That meant many consumers didn’t wait for the loonie to get any worse before turning back to their own markets.

“They’re typically here to buy big-ticket items and food,” Gillingham said. “Typically we have strong tire sales and when [the loonie] hit that 76-cent mark sales really fell off.”

Despite falling Canadian sales, Gillingham said customer traffic is up 2 percent, which means more memberships and smaller ticket items between local and visiting consumers.

“Our biggest thing is that exchange rate; they watch that pretty diligently,” he said.

SERVICE INDUSTRY

The Holiday Inn Express in Kalispell offers local gift cards with hotel room packages that are often used by Canadian visitors. These days, fewer packages are picked up and used by Canadian guests, according to Hotel Manager Brandon Peterson.

“We go through a lot of those each summer, they’re popular with the Canadians visiting here to shop,” he said. “We were averaging five to 10 of those a week and now I can’t even remember the last time someone took one.”

Peterson said he noticed a drop in customers in mid-June, around the time Glacier National Park opened for visitors. If circumstances don’t change, Peterson said the hotel may begin an advertising campaign to attract Canadian visitors.

“We’re waiting to see when it might pick back up, but if it’s like this again next year, we’ll have to re-strategize to see how we can get their business again,” Peterson said.

Several local businesses have already made an extra effort to advertise to the Canadian demographic. Don K Subaru of Whitefish is advertising reduced pricing on all 2014 retired loaner Subarus on its Canadian Buyer page. The website suggests to buyers that it is still “best to register your Subaru car in Montana,” adding that the dealership has variety of slightly used 2015 Subarus.

HEALTH CARE

Of the markets that do not rely on the tourism season, Kalispell Regional Medical Center’s international patient center seems resistant to the falling loonie. You can always wait to buy a new boat or toy, Kalispell Regional Senior Executive Director Ted Hirsch said, but when Canadian hospital wait times can last as long as a year in some cases, people are willing to spend the money on their health.

“It’s important enough for them that even if their currency has lost some of its purchasing power here, it can still take too long to see a doctor or have an elective surgery,” he said. “They’ve seen it is worth getting it done in weeks rather than a year or so.”

Over four years ago, Kalispell Regional added the International Medical Services division, which coordinates Canadian patients with its own hospital divisions. Canadians travel to Kalispell for orthopedic, back and women’s health surgeries at rates of 18 to 20 patients a month. Even long-term care such as radiation or chemotherapy has become popular. And those numbers haven’t been falling with the Canadian loonie value but instead have been steadily growing since the International Medical Service’s inception, said Hirsch.

“Their health system is so dysfunctional at this point,” Hirsch said, “by then the cancer might have spread or the pain has become too severe. This is their health, happiness and ability to relieve pain.”

RESORT TOWN EFFECT

Just a little closer to the border, Canadians haven’t disappeared from the radar by any means. Kevin Gartland, executive director of the Whitefish Chamber of Commerce, said spending may be down a little, but it’s still a strong economic factor in Whitefish.

“We’re still seeing a lot of Canadian traffic,” he said. “Word on the street is that they’re not just spending as much as they have in the past, and that’s understandable.”

Several visiting Canadians own second homes in the area, Gartland said. While the loonie is at a low point, other factors such as Whitefish’s strong economy and the low cost of gasoline are still reeling them in. Gartland finds indicators for Canadian spending in resort tax numbers and retail sales. As wildfires have kept a marginal number of tourists out of Glacier National Park, they’ve driven back into Whitefish for their vacation, Gartland said.

The real question is what will happen after summer, the peak of tourism season, has passed. It will be interesting, Gartland said, to take another look at non-resident spending levels.

The Canadian Consulate in Denver posts information on Canadian spending the Montana. The most recent post showed data from 2014 in U.S. dollars, totaling 913,100 visits to Montana buy Canadians who spent $275 million in the state last year.

There is no current data on tourism or Canadian spending in 2015.

“I think we’re a little insulated from what’s happening up north,” Gartland said. “But we still have to pay attention to what’s going on.”

Reporter Seaborn Larson may be reached at 758-4441 or by email at slarson@dailyinterlake.com.