Hotel tax needed to offset city’s ‘inadequate’ marketing: hoteliers

By Dave Pizer

Ottawa’s hotel industry needs a hotel tax to generate money to promote tourism in Ottawa, but hoteliers don’t agree with the mayor on how the proceeds should be spent, says Dick Brown, executive director of the Ottawa Hoteliers de l’Outaouais Inc (OHOI).

According to Brown, Mayor Bob Chiarelli would like to see the money used to fund the expansion of the Congress Centre.

Brown, however, says the current funds available to promote Ottawa as a tourist destination are “totally inadequate,” and that this shortcoming is affecting business at local hotels.

“Judging by occupancy rates, (business is) down and will continue to be down unless we can tell everybody what a great place Ottawa is,” he says.

The OHOI’s proposal for the tax, which still needs provincial government approval, involves hotel visitors paying a three-per-cent tax on the cost of their hotel room. The revenues, which could range from $4 to $6 million per year, would be transferred to the Ottawa Tourism and Convention Authority (OTCA) to promote the city as a tourist destination.

City councillor Rainer Bloess is a member of the OTCA. He says discussions with the province have stalled somewhat due to the Progressive Conservative leadership campaign. He added that, despite the fact Chiarelli and the tourism industry have different ideas about how to use the money, the primary challenge right now is to persuade the province to approve a hotel tax.

Leslie Miller, president of the OTCA, believes the expansion of the Congress Centre is necessary, but the issue is not related to the hotel tax.

“The tourism industry’s position has always been that the hotel tax be used for destination marketing and not bricks and mortar,” says Miller.

Miller says Ottawa is at a competitive disadvantage compared to other Canadian cities, such as Vancouver, Montreal and Quebec City, which already have a hotel tax. Vancouver has had a hotel tax since 1988. Tourism Vancouver’s 2002 budget was almost $10.5 million, 85 per cent of which was derived from the hotel tax. The city intends to spend roughly $8 million dollars in destination marketing this year.

In comparison, the OTCA will receive about $1.7 million from the city this year. With members’ dues and partnerships its total budget is just under $4 million.

John Cosentino, president of the OHOI and director of hotel operations at the Albert at Bay Suite Hotel, says Ottawa hotels spent approximately $25 million promoting themselves last year, but the city as a whole needs to be marketed to get the most out of their dollars.

“An individual hotel can say ‘come to Ottawa and stay at so-and-so hotel’ but it doesn’t really promote what there is to do in Ottawa,” says Cosentino. “People need other reasons to come.”