HOTEL TAXES FOR TOURISM
Orr sees new opportunities
An extra $4 on the bill for an overnight hotel stay in Windsor could pull in an additional $2 million annually for local tourism endeavours.
New provincial legislation that came into effect in December allows cities to impose a tax on hotels, motels and other places where visitors stay, with the proceeds split between the municipality and the local tourism entity.
Council got a peek at a preliminary report on the hotel tax during budget deliberations in January.
The report listed 35 hotel/motels in Windsor for a total of approximately 2,300 rooms. In determining annual revenue of $2 million, the report relied on an average occupancy rate of 60 per cent with an average daily rate of $100 per night.
The extra money would be split evenly between the city and Tourism Windsor Essex Pelee Island (TWEPI).
“We’re certainly excited about the potential of having more funding, ” TWEPI CEO Gordon Orr said. “I think it’s a good revenue stream. The people using the hotel rooms are the ones paying for further tourism opportunities in the region.”
London’s city council just recently voted in favour of a four per cent “transient accommodation tax” following the lead of other cities such as Ottawa, Toronto, Niagara Falls and Mississauga.
London has decided the city’s cut will be used for an infrastructure fund for tourism-related projects.
Windsor Coun. Rino Bortolin said establishing a tourism fund would prove beneficial when various delegations approach council for bid money to try and lure events to the area.
“Look at the golf tournament,” Bortolin said of the Mackenzie Golf Tour that will hold an event in Windsor for the next three years following council’s approval of $120,000 towards staging it. “If we’re taking that money from our tourism fund it makes it less contentious, less political.”
Council’s vote to support the Mackenzie Tour was 7-4 in favour with Bortolin as one of the no votes.
“To me that’s the real opportunity of this tax,” Bortolin said. “It takes the burden and the pressure off the tax base. Right now we’re self funded, we’re taking the residents’ cash.”
Bortolin compared the hotel tax to the gas tax that helps communities fund improvements for roads and infrastructure.
Orr also pointed out the need for available funds “to bid on conferences and sporting events.” He noted that a hotel tax has been in place for years in the United States. “It’s the new reality,” Orr said. Tony Elenis, the president and CEO of the Ontario Restaurant Hotel & Motel Association, expects the hotel tax to spread across Ontario.
“Today you have to buy business,” Elenis said. “If a volleyball tournament says it wants $100,000 to come to your municipality and you don’t have it, the tournament will go somewhere else. If you don’t have enough dollars to promote your destination effectively and another destination does, you’re going to lose out.”
Dharmesh Patel, the general manager for the Leamington Quality Inn, doesn’t like the idea.
“From a consumer standpoint, with the minimum wage increase, hotels just had to increase their prices,” said Patel. “It’s basically hurting the guests, not the corporate travellers but the leisure travellers, all those hockey parents who have already got increased costs as it is.”
From a county standpoint, Patel said he’d rather see the municipality of Leamington get 100 per cent of the revenue as opposed to just half.
“We want that money to stay 100 per cent in Leamington,” Patel said. “It might help Windsor. I don’t think it’s a good idea. It doesn’t help us.”
Each municipality must decide if they want a hotel tax or not.
Elenis agreed rural areas with hotels should be allowed to keep 100 per cent of the revenue generated by the new tax.
Windsor’s city council has asked administrators for a more detailed report on the options and recommendations for the tax.
Marco Aquino authored the preliminary report and is working on the final report, which he said should be ready to go before council by late spring or early summer.
After years of seeing a TWEPI budget that’s “flat lined” Orr views the tax as “an appropriate revenue stream coming from the people who are consuming the product.”
TWEPI has received “baseline funding ” of $1.9 million annually from both the city and county for the past five years.
Any increases to the budget over the course of the five-year agreement have been achieved through other revenue streams.