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Penetanguishene is located on the eastern shore of Georgian Bay, approximately northeast of Toronto. The town is situated between two large bays: Penetang to the west and Kempenfelt Bay to the east. The town's waterfront area has been developed with marinas, parks and a boardwalk along Lake Huron's shores. A few kilometres north of downtown are several sandy beaches that have been designated as provincial parks (see below). In addition there are many cottages in this area which provide summer vacation opportunities for people from across southern Ontario and beyond. The local economy relies heavily on tourism during these months; however, it also benefits from its location at a major crossroads for those travelling by land or water throughout northeastern Ontario or into western Quebec via Highway 17/Trans-Canada Highway through Hearst some away southward along Georgian Bay towards Ottawa (the Trans-Canada Highway bypasses Penetanguishene). The main road running through Penetanguishene was once part of an important transportation route known as "Tecumseh's Trail".