One-Two Punch Hits Canada

There is no place that says Canada like Barberian’s Steak House. You could always get a fine Alberta-bred filet mignon here, and generations of people have.

That was before last week, when Canada was hit with what some analysts are beginning to call the economic equivalent of “the perfect storm”-- a renewed outbreak of severe acute respiratory syndrome, with 11 new probable cases in Toronto, and a confirmed incidence of “mad cow” disease that has left some diners leery of beef.

Arron Barberian had no choice. The Alberta filet got yanked off the menu last week, in favor of USDA Prime. But business is still barely half of normal. Two restaurants down the small downtown side street are closing their doors, and Barberian fears that he may soon have to lay off some of his seasoned, white-aproned waiters.

“This is pretty brutal stuff,” Barberian said Monday, surveying a city that only a week ago declared it had “beaten” SARS and made progress overcoming its economic woes. “There’s never, ever been a slowdown like this. It’s totally devastating.”

Perhaps the unkindest cut of all came when the World Health Organization -- whose advisory warning against nonessential travel to Toronto was lifted only 12 days ago -- said Monday that it was placing Toronto back on its list of SARS-affected areas. The international organization did not renew its recommendation against travel to Toronto.

“We thought we’d turned the corner, no question,” said Denzil Minnan-Wong, chair of the Toronto City Council’s economic development and tourism committee.

Canada, which led the world’s seven most industrialized nations in economic growth in recent years, this week is expected to revise its economic forecasts downward. The Canadian dollar took its sharpest one-day plunge in 26 years last week, and Toronto city officials temporarily pulled the plug on a $128-million marketing plan intended to attract tourists.

Who, they reason, would pay attention now? These days, Canadian television is little more than a parade of grim-faced cattle ranchers, worried government officials and epidemiologists talking about infection, quarantine and methods of transmission.

Health officials toss out phrases such as “working quarantines” for exposed health-care workers (go to work with a mask on if one must but please don’t take public transit) and “the new normal” -- a day-to-day reality in which Canadians get used to life on the defensive.

“It seems as though every time we turn around, we’re facing something else. SARS, then SARS again, and then mad cow,” said Terry Mundell, president of the Ontario Restaurant, Hotel and Motel Assn., which has reported substantial job losses in restaurants alone -- before the latest outbreaks.

“We’re probably looking at a two-year effort to recover from this.”

Now, the marketing campaign has been delayed by public officials convinced that they’ll get more bang for their buck if the advertisements aren’t competing for attention with headlines about new SARS cases.

By far, the tourism and hospitality industry has been hardest hit by SARS and, to a lesser extent, by the single case of bovine spongiform encephalopathy, or BSE, identified last week in a cow in central Alberta. By the end of April, even before BSE was found, 12,000 restaurant jobs had been lost in Toronto -- 10% of the city’s restaurant workforce -- and hotels were reporting losses of up to $130 million.

Overall, tourism losses from SARS were predicted to reach $2 billion this year -- before the latest outbreaks were reported.

“Quite honestly, these numbers continue to roll. Unlike major other occurrences which have happened, there always seemed to be kind of an endpoint to them,” Mundell said. “This one isn’t like that. Here we thought we had rounded the corner. The WHO had lifted the travel advisory, the CDC gave everybody the green light. Great job. Great effort. And then on Thursday we start all over again.”

At the Holiday Inn downtown, where half the clientele comes from the United States, 66 of the hotel’s 225 full-time staff have been laid off.

“It’s not really mad cow. Mad cow, you just stop eating beef. It’s another thing to go to a place where there’s a disease that they don’t even know how you catch it,” said Marlin Keranen, the general manager. “Nobody quite frankly wants to go around wearing a face mask on vacation.”

In fact, hardly anyone wears face masks in Toronto -- the public seems to accept officials’ word that affected hospitals are the only real points of risk.

But tourists don’t know that, Keranen said. “I was in L.A. on vacation when this whole thing broke. I said, ‘Hi, we’re from Canada,’ and they said, ‘Hey wait a minute, I gotta go wash my hands.’ People in the elevator moved over. I am not kidding you.”

Mad cow disease has caused trouble for beef joints like Barberian’s, compounding the SARS-related tourism problems. Barberian traces his downturn to the Iraq war, when Canada’s decision not to support the U.S., he believes, prompted many Americans to vacation elsewhere.

“Some people took it personally. Some people dumped French wine. Some people said, ‘Well, we don’t need to go to Canada,’ ” he said.

Business was already 40% off normal with the SARS outbreak, he said, and then came the news of the BSE-infected cow. “I immediately got the phone call from people canceling their dinner reservations. ‘We’re not going to eat beef right now,’ they say. It’s like a true sucker punch.”

Barberian said he decided to pull Alberta beef from the menu even though it tastes better than his U.S. beef, and despite his own conviction -- backed by public health officials -- that there is no BSE threat to the food supply. “We can’t serve it now,” he said. “There’s a perception that the product is tainted, and I can’t run the risk of customers thinking that we would make them ill.”

The ban on Canadian beef imports by the U.S. and several other nations has cost the country’s beef industry an estimated $48 million, though widespread tests so far have failed to identify any additional BSE cases in Canadian herds.

Canadians seem unconcerned. There are robust lines at the McDonald’s, and people shrug off fears of SARS. “Look around you: Do you see anyone wearing masks?” an auditor at a downtown bank, who asked not to be identified, said as he dined at a local food court. “I ate beef today,” he said pointedly.

Lynne Higgins of Culver City was touring Toronto’s scenic Harbourfront with two new friends she met on an Internet bulletin board devoted to the British soap opera “Coronation Street.” They decided to meet for the first time in Toronto because the air fare was cheap.

“You know what the impact is? I got my air fare up here for $98 each way from L.A.,” she said. “We’ve been on two-for-one deals all over town. We’ve been eating and drinking and going to Niagara Falls -- you name it.”

Overall, the SARS outbreak has forced reassessments of what had generally been an optimistic economic outlook, but so far not major changes. Marc Levesque, senior economist for TD Bank Financial Group, has estimated that the SARS crisis will shave up to 1.5% off the annual pace of Canada’s GDP growth for the spring quarter.

Finance Minister John Manley predicted the government’s own growth estimates will likely now have to be scaled back somewhat in light of the new SARS cases. “This is not helpful, this is not what we needed now,” Manley said.