By Jessica Valencia
Of the Journal of Business

With recent increases in duty-free exemptions and an exchange rate that
has remained relatively stable, Canadian tourism traffic reportedly is on
the rise this year.

Dana Haynes, communication director for Visit Spokane, says that dutyfree
exemptions for Canadians were increased recently for overnight
trips. Duty-free is a term used to describe the maximum Canadian dollar
amount of merchandise that tourists can take back to Canada before
being taxed on those purchases. The new exemptions, which went into
effect June 1, increased to $200 from $50 for trips between 24 and 48
hours and to $800 from $400 for trips longer than 48 hours.

"Their dollar's strong here," Haynes says.

The Federal Reserve says the U.S.-Canadian currency exchange rate
has remained relatively the same during the last two years. As of Aug.
17, the exchange rate was 99 cents Canadian for every $1 U.S.

Haynes says Visit Spokane has seen spending increase, citing the
change in duty-free exemptions as a possible cause.

"Part of it is our retailers have gotten really good at offering deals," particularly in the form of coupons and special pricing to tourist groups, she says.

For 2011, about 3,300 Canadians associated with group travel, particularly motor coaches, accounted for more than $1 million in spending here, Haynes says. She says that spending is driven by a combination of Spokane's wide selection of shopping, entertainment, and dining options.

"Those three together create a great environment," Haynes says, adding that the popularity of Canadian shopping trips in the U.S. continues to grow.

Statistics Canada, a Canadian national statistics agency, says there was a sizable spike in overall travel to the U.S. from
Canada in June. Overnight travel to the states rose to more than 1.9 million trips that month, up 7.5 percent from the prior month and up 8.4 percent from June 2011, the agency says. It says the month-to-month jump was the biggest spike since 1972.

U.S.-to-Canada travel reportedly is up as well, though not nearly as much. Statistics Canada says 1,754,000 people from the U.S. traveled across the border into Canada in June, up 7,000 from May, equating to a 0.4 percent increase.

From January through July of this year, Visit Spokane documented 1,272 Canadian visitors, compared with 1,271 during the same period last year. Haynes says although the number virtually went unchanged, Spokane is seeing more Canadian tourism traffic. Haynes says this isn't reflected in the numbers provided by Visit Spokane since its method of tracking tourists centers on word of mouth and guest books.

"You start getting all these little things working together and that starts getting the wheel to turn faster and faster," Haynes says. "Pretty soon you start to see visitation start to rise."

She isn't the only one who has noticed a spike in Canadian traffic.

Miles Vierck, general manager for Best Western Plus Peppertree Liberty Lake Inn, says a significant portion of Canadian guests typically come to the hotel from British Columbia and border towns during the summer months.

However, Vierck says, "What I've noticed this year is I'm getting a high amount of guests coming from the Alberta province."

The number of visitors from British Columbia meanwhile has stayed relatively the same, he says.

NXGEN Payment Services, a Whitefish, Mont.-based company that provides a Canadian debit-card service called Canada Certified, entered the Spokane market earlier this month in an effort to help businesses better serve Canadian guests. The service provides participating businesses with special terminals that enable them to accept Canadian PIN debit cards, which are different than those in the U.S. in that they're not affiliated with and endorsed by U.S.-based payment technology companies such as MasterCard or Visa.

Given that the Canadian economy is doing well and duty-free exemptions have been increased, Anne Britz, Certified Canada promotional coordinator asserts that making the switch to accepting Canadian debit cards makes sense for many businesses here that strive to cater to Canadians.

"What we're trying to do is educate businesses that this is a real desire and need of Canadians," Britz says. "They want to use their debit cards in the United States."

Britz says since many U.S. businesses don't accept the Canadian PIN debit cards, often those tourists pay with cash or credit cards. She says when paying with credit, Canadians also typically pay an international charge of around 4 percent of the purchase price. Businesses are also hit with an additional charge when processing foreign cards.

"If a business has to take an international credit card, it's going to cost more to process it than if they take the PIN debit card," Britz claims.

NXGEN installs a terminal and pin pad at the business and charges it an initial cost for installing the terminal that ranges from $90 to $424 depending on whether a business already has a system that is compatible. The payment service also charges businesses $13.99 a month for processing and statements.

Best Western Plus Peppertree Liberty Lake Inn is one business here that has started using the NXGEN Canada Certified terminals in order to make it easier on Canadian tourists.

Vierck says the Liberty Lake hotel is one of four Best Westerns in Washington that started accepting the Canadian debit card earlier this month to accommodate the sizable Canadian client base.

Vierck says it's hard to estimate the long-term effects of accepting Canadian debit cards, but he anticipates through word of mouth, it will drive more traffic to the hotel.

"It would save them the foreign transaction fees, which they get charged when using their debit cards," Vierck says.