A guest checks out of The Bostonian Executive Suites on MacLaren Street.
After HST voided a tourism levy, Ottawa’s tourism industry is divided over talk of a potential new hotel levy.
A regional tourism levy of up to three per cent may take effect as early as 2012 if the majority of hoteliers vote in favour of the tax on hotel rooms.
The money collected from the levy will fund Ottawa Tourism’s advertising and marketing campaigns.
The levy is needed in order to replace a recently eliminated fee that many hotels voluntarily charged, says Dick Brown, executive director of the Ottawa Gatineau Hotel Association.
The three-per-cent “destination marketing fee” was eliminated this summer with the implementation of the HST, he says.
“We developed that program in 2004 and it’s been hugely successful,” says Brown. “We generated an excess of $42 million, all of which has been spent through Ottawa Tourism.”
The fee agreement with participating hotels specified that any tax increase would lead to a decrease in the marketing fee.
Sheila Love, general manager of The Bostonian Executive Suites on MacLaren Street, says her hotel had charged the voluntary fee since 2004, and she would fully support a new hotel room levy.
“I firmly believe that it’s the only way to go about it, and I was quite disappointed that we weren’t continuing the fee,” she says. “We need it if we want to compete with Toronto and Montreal since we’re right in the middle.”
Brown says any roofed accommodation with more than four rooms would qualify for the tax.
But not everyone in the tourism industry is convinced of its benefits.
Richard Brouse, owner of the Inn on Somerset, a bed and breakfast with 11 rooms, says smaller establishments don’t have the flexibility of larger hotels when it comes to absorbing taxes.
“It’s not a good idea. Big hotels can afford to make up the difference, they can keep lowering their prices, but I have a big mortgage to pay,” says Brouse. “People are looking for luxury accommodation but they don’t want to have to pay for it.”
Brouse says his business took a hit during the recession, and things had just started to improve when the HST was implemented. Now, he says, occupancy is down again.
Sarah Armstrong, part-owner of McGee’s Inn on Daly Avenue, says Ottawa Tourism doesn’t do a good enough job marketing Ottawa and therefore doesn’t deserve the funding.
“I don’t think Ottawa Tourism does a good job at marketing the city, especially when it comes to things like Winterlude and the Tulip Festival,” she says. “Big or small, I can’t understand why hotels would want to charge another three per cent, our room rates have already gone up and we aren’t seeing any of that money.”
The provincial government has pledged $7.5 million in each year of the next two years to compensate for the elimination of the destination marketing fee.
But Brown says that funding will drop to about $4 million in 2012, and that is why the hotel room levy is necessary.
Ottawa Tourism says industry funding is used to market the city both domestically and internationally.
“It includes direct sales to meeting and conference planners, it includes major and significant multimedia marketing campaigns in our core domestic markets of Toronto, southern Ontario and Montreal,” says Noel Buckley, president of Ottawa Tourism. “It also includes a travel trade program where we target tour operators particularly in five key international markets – France, Germany, the U.K., Mexico and China.”
Brown says he expects the majority of hotels to vote in favour of the levy, since it makes good business sense for the city.
“Without enough money to market Ottawa as a place for people to visit, tourism will suffer and it’s a huge industry,” says Brown. “Marketing is the lifeblood of tourism.”