Fade of the mist: U.S. border initiative

A U.S. border initiative threatens Niagara Falls.

On a bright, warm April day in Niagara Falls, Ont.—one of the first truly fine days this spring—Bob Masterson, president of Ripley Entertainment Inc., confidently told guests at the grand opening of his company’s Great Wolf Lodge that completion of the resort was just the beginning. For decades, the Ripley’s Believe It or Not! museum had been a stalwart attraction in the town’s Clifton Hill tourist area, but it had become a faded icon of kitsch until B.C. billionaire Jimmy Pattison purchased the entertainment company in 1985 and gave it a much-needed shot in the arm.

Masterson said Ripley is now committed to investing considerably more to make the region a “year-round tourist destination.” Great Wolf—a 406-suite hotel complex, complete with an Aveda spa and Canada’s largest indoor water park—joins Ripley’s stable of other Niagara Falls attractions, including Louis Tussaud’s Wax Museum, Ripley’s Moving Theater and the Guinness World Records Museum.

Great Wolf Lodge is the first of the northern-woods-themed resort franchise to come to Canada. Ripley holds the Canadian rights to the Great Wolf concept, developed by Great Wolf Resorts Inc. of Wisconsin, and the one in Niagara Falls represents a $130-million investment by Pattison. Masterson told a small group of reporters assembled in the Eagle’s Landing meeting room on the lodge’s third floor that investment would be followed up with construction of a $80-million Ripley Aquarium. It would be situated next to Great Wolf and rank as the second-largest aquarium in North America. He added that work had already begun on underground piping that would transfer water between the aquarium and the lodge, part of an elaborate, energy-efficient heating-and-cooling system. “Ripley does a lot more than museums and resorts—we do some of the best aquariums in the world,” Masterson said, pointing to Ripley’s Aquarium of the Smokies in Gatlinburg, Tenn., and Ripley’s Aquarium in Myrtle Beach, S.C., as examples. The Niagara aquarium would open in 2008, he announced—though the end of 2007 was also a distinct possibility.

But even as Masterson was enthusing about the plans, Pattison, the man with the money, was in the Great Wolf lobby giving a more cautious view of how things might unfold. He candidly told other journalists that a decision on building the aquarium had been put on hold indefinitely, thanks to concerns raised about the potential impact of a new U.S. border security law. Designed as a response to the concerns surrounding the 9/11 attacks and ensuing “war on terrorism,” the new regulations would force anyone wanting to enter the United States—including American citizens—to show a valid passport or some other secure travel document instead of just a birth certificate.

Pattison later elaborated on his misgivings to Canadian Business. While designs for the aquarium are going ahead for now, he said the project is “being reassessed—and a decision has not been made to proceed.” Pattison emphasized that U.S. residents make up a large portion of Niagara’s tourism business, yet less than one-third of Americans currently hold a passport. “It’s a major concern for us,” he said, adding that plans to build other Great Wolf Lodges in Canada—one was being considered for the Montreal area, another out West—have been put on the back burner. “It’s a major concern to anybody in the hospitality and tourism industry that depends on American tourists.”

That would be an understatement. Pattison’s reaction to the new U.S. regulations is just one example of how the tourism industry in Niagara Falls—and indeed across Canada—is responding to the so-called Western Hemisphere Travel Initiative, or WHTI. First announced in the spring of 2005, it is an outgrowth of the Intelligence Reform and Terrorism Prevention Act, passed by the U.S. Congress in December 2004. The legislation stipulates that Americans must have a valid travel document that proves their citizenship in order to travel anywhere in the Western Hemisphere, including Canada, Mexico, the Caribbean, Bermuda and Panama.

The WHTI regulations also apply to foreigners wanting to enter the U.S. While accepted identification would include a valid passport, Congress is also now considering another type of secure travel document for U.S. citizens: the so-called People Access Security Service card (PASScard), that would be cheaper and more convenient to obtain. The idea is for a wallet-sized card costing about $55 (compared to $97 for a passport) that could only be used for land-border crossings. But details on that scheme are still sketchy. Regardless of which documents will ultimately prevail, the WHTI provisions, as they stand, are scheduled to go into effect at the end of this year for entering the U.S. by sea or air, and on Jan. 1, 2008, when passing through land borders. Hundreds of millions of tourist dollars are threatened.

Communities like Niagara Falls would be among the hardest hit. Combined with rising gas prices and a high exchange rate (the Canadian dollar now hovers around 90¢US), the stars have aligned to create a potential disaster for the tourist trade. John Kernahan, general manager of the Niagara Parks Commission, a provincial agency that runs many of the area’s attractions, says talk around town is that business from American tourists—who make up 60% of visitors to commission attractions—could drop by up to a third. Losing that much business, he says, “would be devastating.”

Visitors to Canada like the Sweeneys, of North Ridgeville, Ohio, are a prime example of what’s at stake. The family of four—Bernie, Carollee, and their sons Anthony, 5, and Garrett, 3—have regularly made the four-hour drive from their Cleveland suburb to the Falls to take in the sights and get a little taste of another country. “We come up here about once a year,” says Bernie, standing across the street from the Rainbow Bridge border. As he sees it, the current system, under which a birth certificate or driver’s licence are sufficient ID, makes it easy to decide to come up on a whim. But if passports or some other special document are required for everyone in the family, the expense would be enough to prompt the Sweeneys to reconsider their travel options, at least for the foreseeable future. “For a family of four, it’s a lot of money,” says Carollee.

At the national level, a Conference Board of Canada report completed last year for the Canadian Tourism Commission says the WHTI regulations would mean 7.7 million fewer trips to Canada from the U.S. between 2005 and 2008, resulting in a $1.7-billion drop in tourism receipts. Ontario would bear the brunt, with 4.7 million fewer trips and $860 million less tourism revenue. British Columbia would be the next hardest hit, and would see 1.3 million fewer trips and $403 million less. Some of the lost U.S. tourist dollars might be offset by Canadians deciding to vacation at home. But the Conference Board predicts WHTI will still leave a net impact, nationally, of $1.6 billion by 2008. “While the Canadian tourism industry fully appreciates the enhanced security objects of WHTI,” the report states, “the short-term effects on the industry are expected to be negative and significant if passports are required.”

Ross Robinson, president of Canadiana Productions, which stages the Oh Canada Eh? dinner show in Niagara Falls’ Lundy’s Lane tourist area, says it’s no longer a matter of if or when WHTI will have an impact on his business—it already has. WHTI, he argues, might be a tool in the war against terrorism, but it also represents a “war against tourism.”

Just days after the WHTI initiative was announced in April 2005, Robinson received cancellations from a convoy of recreational vehicle travellers from North Carolina. A few of its members without passports were convinced they wouldn’t be able to get back into the States if they crossed the border to see the show. “They went to Cape Cod instead,” Robinson complains. Confusion about the rules has been around since they were first announced.

It used to be that 70% of those who came to see Oh Canada Eh? were from the States. “That figure is down to about half,” Robinson now says, noting he must increasingly rely on tourists from Asia and Europe. Five or so years ago, Oh Canada Eh? pulled in an average audience of 225 each show; now, it’s down to 195. That’s a big deal when it comes to his bottom line, Robinson adds.

Of course, not all of the decline can be blamed on WHTI regulations that aren’t yet in effect. Gas prices, the 2001 9/11 attacks and the SARS scare of 2003 are other reasons why fewer Americans have been crossing into Canada. Still, Robinson expects WHTI’s impact on Niagara tourism could be even more insidious than SARS, because it could radically alter long-entrenched behaviour patterns. The status quo encourages spur-of-the-moment travel, usually day trips. With WHTI, Americans without valid identification will simply change their plans, Robinson predicts. “If they can’t come over easily, they’ll just do something in their own country.”

As for Canadians, those without a passport (and only about 35% have one) might be less likely to follow up on the impulse to jump in the car, see the Falls, and gamble a bit at the town’s two casinos, before crossing the Peace, Rainbow or Lewiston-Queenston bridges to do a little cross-border shopping. Any way you look at it, Robinson argues, both Canadian and U.S. communities will lose.

Mayor Ted Salci of Niagara Falls, Ont., describes the two Niagara Falls as being “one city with a river running through it.” Salci, who got his education in both Ontario and New York, says residents “have always enjoyed the openness of the border.” But he is now worried that WHTI will cut a swath through the region’s tourism business, which he says accounts for more than 60% of Niagara Falls’ economy. And a good chunk of that business comes from U.S. tourists. Over the past decade, billions have been pumped into making Niagara Falls a first-class tourist destination worth more than just a quick day trip, Salci points out; the Ontario side now boasts more than 16,000 hotel rooms in all price ranges, more than 35 golf courses, and proximity to such attractions as award-winning wineries and the Parks Commission’s botanical gardens and butterfly conservatory.

The Great Wolf Lodge, built on the premise that about half of its clientele would hail from the U.S., is just the latest example of the ongoing effort to expand the region’s tourist options. Its amenities are aimed at families, and the lodge, with regular rates starting at about $250 a night, Salci says, is part of a push to encourage visitors to stay longer, because they’ll spend more. According to the mayor, day trippers—about 65% of Niagara Falls’ tourism business—are the mainstay of the trade, but “the ones who stay overnight are very valuable tourists.”

Niagara Falls’ two casinos—Casino Niagara, which has been operating since 1996, and the Niagara Fallsview Casino Resort, which opened in 2004—have been drivers for the development renaissance that has given the Ontario side of the Falls its current skyline of towering hotels and tourist attractions, dwarfing its U.S. neighbour. Much of the casinos’ business has been built on a strong U.S. customer base, but, again, the high dollar and gas prices have taken their toll. There’s also competition from two casinos across the border in New York, the Seneca Niagara Casino in Niagara Falls (opened in 2002) and the Seneca Allegany Casino in Salamanca (opened 2004), both operated by the Seneca Nation of Indians. A third, in Buffalo, is in the planning stages.

WHTI border regulations are bound to accelerate the decline in Canadian casino business from Americans. Stephen Wolstenholme, general manager for Fallsview Casino, says back in 1999, one in two patrons were Americans; today, that’s down to one in four. And U.S. citizens, he worries, might choose to “not deal with the border issue,” especially if they have gambling alternatives closer to home. Niagara casinos have managed to recoup some of the lost U.S. revenue by increasing their Canadian business, but any new border barriers will leave a serious mark, he says.

The rumblings about the adverse implications of WHTI on tourism and border-town economies are not just coming from Canadians, either. It’s caused consternation on the other side of the border, as well. In 2004, 31.5 million Canadians visited the U.S., spending US$7.7 billion. Of those visitors, 18.3 million were from Ontario, and they spent US$4.3 billion. Estimates are that under WHTI, the U.S. would lose about US$667 million in Canadian tourism spending by the end of 2008, with New York down US$62 million; Michigan, US$24.6 million; and Florida, US$136.8 million.

Chris Glynn, based in Niagara Falls, N.Y., operates Maid of the Mist boat tours, which each year take about 2.5 million people for an up-close view of the Falls. About three-quarters of Maid of the Mist passengers (60% of whom are non-Canadian) catch the ride from the Canadian side, with Americans making up the largest single group. Glynn predicts that under WHTI, not only will fewer Canadians cross into the States; fewer Americans will come to the region if they think they can’t easily get back from Canada. Americans visit the area, he explains, partly because they want to experience the superior tourist amenities and larger number of attractions on the Canadian side. “People associate the Falls with Canada—and there’s clearly more to see and do on the Canadian side,” Glynn says. The Canadian Falls may be the magnet, but communities on the U.S. side benefit from Americans travelling through western New York to get there. So both sides of the border stand to lose. Says Glynn: “It’s not a zero-sum game.”

At the Queen’s Landing resort in Niagara-on-the-Lake, about 20 kilometres north of the Falls, about 300 people—from both the U.S. and Canada—gathered at a conference in mid-May to learn more about WHTI and its implications, and what they can do to blunt the impact. The picturesque and historic community—perhaps best known for its Shaw Festival and its proximity to local wineries—is just as vulnerable as Niagara Falls to a dip in tourism. Janice Thomson, executive director of the town’s chamber of commerce, says overall tourist trade could drop by a third, while at Shaw, organizers are now trying to get a handle on the situation by asking Americans phoning for tickets this summer whether they have a passport or intend to get one. It’s an important question, since about 40% of the festival’s business comes from the U.S., says Jill Planche, its director of resource development.

Those at the conference, organized by the Bi-National Tourism Alliance, which represents about 100 businesses in Ontario’s Golden Horseshoe and New York state, were encouraged to put up a united front to lobby for changes that would lessen the impact. While the need for better border controls are important in a post-9/11 world, Canadians should not “lie down and let a bad policy steamroll our industry,” Ontario Minister of Tourism Jim Bradley told the audience. “This is no time to run up the white flag.”

The alliance has lobbied for a delay in WHTI’s implementation, and on May 17, the U.S. Senate passed an amendment postponing the rollout until June 2009. But that measure must still be passed by the entire U.S Congress if it is to stick. Meantime, the alliance also wants to ensure that a full economic impact study is done to show how much both countries stand to lose if the new requirements unfold.

Critics of WHTI say that secure (and even cheaper) identification other than a passport or the PASScard should be considered; support for secure border identification skyrockets when the cost is US$20 or below. As well, upgrading driver’s licences, in the U.S. and Canada, might be a longer-term solution, since that is something most adults already have and are familiar with. Such a measure could dovetail with another U.S. law coming into effect in May 2008 that will require state driver’s licences to identify the holder’s citizenship. “No matter what happens, we need more time to get this policy right,” Lisa Katz, the director of government relations for the Detroit Regional Chamber of Commerce, told conference delegates.

For Arlene White of Fort Erie, Ont., the executive director of the Bi-National Tourism Alliance, the good news is that debate over WHTI in the U.S. has mushroomed as the deadline for its implementation nears. Political forces on both sides of the border, White says, have “woken up” to the economic dangers of legislation that has been characterized as hastily passed and ill-conceived. The most important thing the Canadian tourism industry can do, White adds, is not to simply shrug its shoulders and think there is nothing that lobby groups and elected officials here can do to influence U.S. legislation. And as she sees it, comments from politicians, including Prime Minister Stephen Harper, suggesting that WHTI is a done deal, represent defeatist thinking.

Indeed, there has been a groundswell of support, especially from lobby groups and politicians representing U.S. border states, or states such as Florida that receive a lot of Canadian tourists and would be most affected. Even more encouraging, says White, is that some opposition to WHTI is coming from Republican politicians. “I never knew how serious Americans across the border were about this issue, and I’m glad to hear it,” says Donald Ziraldo, president and co-founder of Inniskillin Wines Inc. of Niagara-on-the-Lake. U.S. lawmakers, he maintains, “aren’t going to listen to Canadians—but they’ll listen to their own people.”

Politically, WHTI is a pretty safe bet as U.S. politicians head into mid-term elections, given how much Americans are worried about security, terrorism and immigration, especially along the border with Mexico. And most U.S. citizens are far enough removed from border tourism issues that the economic implications of WHTI haven’t yet sunk in. “It’s great politics at the expense of business,” says producer Ross Robinson, adding that most Americans “never leave their country.”

Others betting on the future of Niagara Falls, however, say it’s not all gloom and doom. Ripley’s Bob Masterson, for one, remains optimistic. He insists that whatever happens, tourism “has the ability to weather all the storms that come its way.” One thing is for sure, he adds: “We know Niagara Falls is going to be here for a long time—it might move a few inches toward Buffalo over the centuries, but it’s still going to be here.”