Tax on tourists up for renewal in shadow of pandemic

Kelowna hoteliers will be asked this year if they support retention of a 3% room tax to fund tourism promotion activities.

The program that sees the tax collected and turned over to Tourism Kelowna is scheduled for renewal in July 2022.

As part of preparations for renewal of the tax, city and tourism officials will create a new five-year tourism plan showing how the money will be spent.

As well, signed letters of support for renewal of the room tax will be sought from a minimum of 51% of local accommodation providers, according to documents to be reviewed Monday by city council.

Since a new bylaw is required, members of the public will also have the opportunity to comment on the room tax at a future council meeting.

The room tax makes up 60% of Tourism Kelowna’s annual budget. It was planned to be $4.7 million last year but was cut to $3 million because of the COVID19 pandemic.

To cope with the reduction, Tourism Kelowna laid off some staff, reduced its hours of operation, and spent less money on marketing.

In 2020, Kelowna hotel occupancy was at 41%, down from 65% in a normal year; the average daily room rate was $153, down 6%, and airport passenger traffic plunged 64%.

Nevertheless, Tourism Kelowna says total overnight visitors still increased in 2020, to 1.9 million, up five per cent from 2019.

The mood among tourism operators heading into 2021 is somewhat pessimistic, judging by Tourism Kelowna’s report to council.

It says only 20% of local tourism businesses are operating as usual; two-thirds of tourism businesses saw revenue drops of at least 20% during the winter; three-quarters predict revenue drops this spring.

Tourism Kelowna predicts the beginning of a domestic leisure travel recovery in 2021, but says international visitors may not return in significant numbers until 2022, and says “major events dependent on large audiences could return in 2023.”