Deerhurst GM says biggest challenge to implementing a Destination Marketing Fee is finding common ground among operators

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Earlier this week Doppler reported that Councillor Bob Stone hasn’t given up on the idea of a Destination Marketing Fee (click here to read the story if you missed it). That fee would see area accommodation providers levy a fee on top of the their rate, and the money would go towards marketing and funding events in order to draw more people to the community.

On Monday, Town council agreed to pursue it further:

The committee thought that it would be difficult to get the hotels on board, so it chose not to spend any effort to that end. But let me tell you that the mayor and myself have started discussions with some hotels and we’re happy to come back with whatever we find.
CHAIR OF HUNTSVILLE’S ECONOMIC DEVELOPMENT COMMITTEE, COUNCILLOR BOB STONE

Chris Lund, Regional Vice President and General Manager of Deerhurst and Horseshoe resorts, has experience with that fee. He was on the Greater Toronto Hotel Association Executive when the levy was first implemented in Ontario in the City of Toronto. An estimated 125 hotels signed an agreement with the Association and Tourism Toronto to levy a three per cent tax, and put together a plan on how to spend those funds.

“In return the hotel association and Tourism Toronto guaranteed a certain budget that was designed to be spent toward predetermined markets to drive tourism to the areas,” he explained. “Back then, in 2003 or 2004 somewhere in there, it generated about $30 million a year.”

In terms of implementing a Destination Marketing Fee in Huntsville, Lund questioned whether there is enough common ground among operators here to make it work.

Deerhurst Resort, Comfort Inn Huntsville, Holiday Inn Express – the list gets pretty short, pretty quickly even within the Muskoka context and then next thing you know you’re talking about Mr. and Mrs. Joe Smith’s small resort and are their interests and the interests of Deerhurst Resort the same, and would they necessarily spend their marketing money in the same areas?Deerhurst general manager Chris Lund

Lund said very few guests actually refuse to pay the levy.

“The other issue in Muskoka is there are a lot of people renting cottages and doing stuff that aren’t paying business taxes. They’re really under the radar. They’re being taxed as residents yet they’re running businesses out of their home. This money can’t go anywhere near promoting that kind of experience. In other words, it’s going to have to have nothing to do with cottages or I can tell you a business like Deerhurst wouldn’t support it.”

Asked about using the money to fund events such as the Ironman, which saw the bulk of participants stay at Deerhurst Resort, Lund suggested that the resort would’ve been full anyway.

“The week is within August (when) I don’t need the business. We did it to promote tourism on a broader basis. A lot of people think it’s all about Deerhurst but not really.”

He said most triathletes are on special diets so they don’t use the food and beverage facilities at Deerhurst.

“A couple of thousand people came to Huntsville, well they do other things besides stay at Deerhurst. They go into town, they go shopping… they went to the Independent and other grocery stores and bought all their food. Very few of them ate in my restaurants because they don’t eat cheeseburgers and drink beer,” he laughed. “It’s like anything else, there are two sides to every story.”

He said for him to support a Destination Marketing Fee in Huntsville, and make the recommendation to Deerhurst’s business owner to support it, he’d have to see what is being proposed, what the potential revenue pool might be, who would be tasked with spending the money, and how those funds would be spent.

“It is a useful concept. It has worked in other jurisdictions under the right set of terms and conditions,” he noted. But he said Deerhurst’s main market is conferences.

The reality about Deerhurst is we do almost half of our business from conferences and without conferences we wouldn’t be in business. There’s not enough leisure business coming into Muskoka to support a property the size of Deerhurst. The leisure market is important to us but only in and around what we can’t sell at the conferences.  Chris Lund

He said Deerhurst can attract a conference in November, but it’s very difficult to attract the leisure market during the winter months – especially during mid-week.

Lund said if Deerhurst were to support a Destination Marketing Fee, a component of it would have to cater to attracting conferences and conventions to the area.

“And a lot of smaller operators who don’t have meeting facilities wouldn’t agree with that, so there’s one potential roadblock right there,” he said. “That’s why the comprehensiveness of what’s being proposed would have to have a lot of detail in it to get that broad range of support that’s needed,” he advised.


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11 Comments

  1. …what’s next? – Tip jars on all the counters for donations to the Huntsville tourism bank account.

    Let’s get one thing straight – guests do end up paying for it not because they want to, but because they DON’T know they are being billed for it. It’s called deception. ‘Fingers crossed they don’t look at their bill at the time of check-out.’

    If the town and its business owners need to have their hands out, choking visitors for money to be able to market this region and their businesses, then they need to look at what it is they are doing wrong. Taxing visitors is like putting lipstick on a pig.

    Disgusted.

    Kyra Watters / owner of the Well Known Company

  2. Population growth and the increasing costs of health care, infrastructure, and environmental protection are taking priority in state and municipal budgets everywhere. So even after massive volunteer efforts, other sources of funding are needed to create and maintain the shared public assets and events that fill hotel rooms.
    Destination / tourism / travel / room taxes are common across the USA, the European Union, and many parts of Canada. 22 US states involved in tourism levy a travel tax on lodgings ranging from 3% to 13%. In the EU, travel taxes range from 5% to 10% of the room rate. Most municipalities in BC have a travel tax. For simplicity of collection, they are usually applied in establishments with more than four rooms.
    Why rooms? Other than a slight inconvenience, it costs the room owners nothing, but it is a way for outside travellers to help fund the shared public assets and events that they came to see. Locals go to restaurants, but locals seldom rent rooms.
    Room taxes are not a deterrent to business. How often do you hear, “I am going to vacation in Brampton instead of Niagara because Brampton doesn’t have a 3% room tax”? Muskoka has been recognized by National Geographic as one of the world’s top travel destinations. Who stands to benefit from high quality tourism assets and promotion funded by a room tax more than the room owners themselves?

  3. Jacquie Howell on

    As a past president of a provincial tourist organization, I must express some concern for hotels, resorts, and lodges in HUNTSVILLE. Destination marketing is just that – not a small community or town. I am sure Bracebridge, Gravenhurst and Halliburton are hoping the town fathers of Huntsville will give them this advantage. Chris Lund would end up paying the lions share and the marketing of Deerhurst is very different than most of the accommodation in Huntsville and they would deserve and rightly so, strong input and that would eliminate cottages, motels and private rentals (biggest accommodators) outside of Deerhurst in Huntsville.

    I have just read a interesting article in the Tampa Times (Sunday Nov 30) re taxation on PRIVATE homes/cottages and the $$$$$ it is costing Clearwater in lost taxes – perhaps this would be a better place to look for money that would support our hospital, our roads and our Chamber of Commerce. If they just paid 1% of their weekly rental to the Chamber of Commerce, the Chamber could do a great job of marketing HUNTSVILLE

  4. For those of you wanting to learn how this tax can lead to a magnitude of problems you must take a look at the Niagara region and learn from their mistakes. Head to this news article, link below, and better yet watch the Market Place episode that covers this exact topic. {market place link is in article}. http://www.niagarafallsreview.ca/2015/02/01/tourism-fee-earns-falls-another-black-eye?utm_source=addThis&utm_medium=addthis_button_mailto&utm_campaign=LAW%3A%20Tourism%20fee%20earns%20Falls%20another%20black%20eye%20%7C%20Niagara%20Falls%20Review#.VltliLu0OTk.mailto

  5. I have no experience as a tourism provider, but I do have more years than I like to admit of experience as a consumer of both business travel and tourism, which I suggest is relevant to this discussion. People are attracted to conventions and events by a variety of factors including what is available for the enjoyment of accompanying family members that often outnumber the actual participants. So it is in the interest of all providers, whether for conventions, specific events, or just family vacations that a variety of high quality assets and events are well-maintained and effectively promoted. That takes money as well the massive volunteer efforts that Huntsville citizens so generously provide.

    The town is now facing a number of new regulations and demands that, notwithstanding the importance of tourism, must take precedence over tourism. So the options are: 1. to allow our tourism assets to deteriorate, or 2. to raise the needed funds through the general tax levy, or 3. to find another fair and reasonable source of funding. I can live with options 2 or 3. I cannot live with option 1. But it seems to me that option 3 provides the fairest way for those who benefit most from tourism assets and events to help maintain them. And I am sure that we can be smart enough to avoid any negative features that may have affected the tourism tax in Niagara. Apparently many other locations are able to do so.

  6. An “outside the box” suggestion would be to set up a Crowd Sourcing / Funding campaign for the Chamber of Commerce, directed at ALL the Huntsville Lake of Bays businesses, as well as patrons, supporters and beneficiaries, of the initiatives and events.

    One Target would be to raise $50,000 for the 2016 Chamber of Commerce projects. Another target would be to raise money for the Muskoka Pioneer Village. And another target would be to raise money for the Culture station.

    Crowd Funding gives Every business large and small ( not just roofed accommodation) that values tourism and the Chamber of Commerce, the opportunity to take part in the funding.

    A recent local example of successful Crowd Funding using social media, is the request for support of Tobin Spring who lost everything in a house fire on Saturday night. Crowd Funding using http://www.gofundme.com raised over $20,000 in less than 24 hours for Tobin. https://www.gofundme.com/62ch2hrx

  7. May I compliment Mr Lund, GM of Deerhurst, for criticizing the “underground” activity of private cottage rentals. There are 2000 private cottage rentals in Muskoka, mostly in residentially-zoned land.
    I call this the “Virtual Resort” because the internet makes these businesses possible. The is the largest “resort” in Muskoka, with approximately 5000 bedrooms for rent. As a cottage resort owner, I compete and I am succeeding; however, as Mr. Lund states, most private cottage rentals do not charge the 13% sales tax that resorts and hotels do.
    I imagine that most private cottages which rent frequently (or regularly) do not have commercial insurance. If one of their clients is hurt or the cottage burns, good luck to both guest and owner with collecting any insurance.
    Resorts and hotels have fire and water and septic safety regulations to follow. Many private cottage owners who rent overload the cottage, may or may not have proper alarms, and are usually not on site to supervise as resort owners are.
    Private cottage rentals in Muskoka are a traditional activity. The internet has acted as a catalyst to advance these rentals tremendously in scope and frequency. This “virtual resort” is far too important to our local economy to constrain now. Hundreds of Muskoka jobs depend upon private cottage rentals.
    The answer is to regulate private cottage rentals as the business that it so often is. The data is all in the public domain, on the internet: rates: refund policies; availability charts. These private cottage web listings have the same attributes that every resort has on the web. Municipalities could hire college students to compile this data at a minimum cost directly from the internet.
    We Canadians pride ourselves on having the rule of law. These businesses are operating in the public domain in residentially-zoned properties.
    Fees could be levied. Safety regulations and proper insurance required. Sales tax or administrative fees collected. The $30,000 thresh hold for HST would currently exempt many private cottage rentals from collecting that tax ( although on Lake Muskoka and Lake of Bays that thresh hold is pierced rather quickly by those owners who charge weekly rental rates over $3000 a week for ten weeks !)
    The advantage of regulation is that everybody wins: resort owners, both large and small, win because they can compete on a level playing field; tourists win because they are protected by proper insurance and safe accommodations; private cottage owners who rent are protected because they will be properly insured; lake associations should be happy because members should derive some regulatory protection from the few irresponsible owners who rent to partiers. (Note that Wasaga Beach has taken a less accommodating stance on this issue than I am recommending because of the partying there.)
    The issue of the Destination Tax becomes mute because when the largest resort, the “virtual resort”, in included officially in the tourism business, Muskoka Tourism, Explorers Edge, and Chambers of Commerce can begin to develop marketing plans that are based on the total reality of tourism for a change. If Muskoka came together and we all worked together to promote our exceptionally beautiful region, we could all grow our businesses,. Private cottage owners who rent, cottage resorts, hotels , and all the related cultural attractions, everyone would win as we advertise together to promote our region throughout Canada and internationally.
    Mayors would not have to fear to bring this issue forward provided that they used the inclusive approach I am recommending, The lake association who are now afraid of offending their members by bringing this up, would have a positive approach to offer.
    We all win when the playing field is level and we all co operate to compete fairly keeping Muskoka’s total future prosperity as top of mind. By working together, all those who rent to tourists in Muskoka can grow their businesses , expand their seasons, and increase their numbers. Everybody wins.

  8. I agree with Hugh and I like Gords crowd funding idea.

    The reality is we have 3 choices. #1 a tourism tax as we are discussing now. #2 we the tax payers of Huntsville continue to fund it. #3 no events.

    I think when most people come to the realization that the $100,000 ironman loss will show up on your property tax bill you may reconsider option #1.

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