In its 2017 budget, the Ontario government included a proposed tax that has some local accommodation owners concerned: a ttransient accommodation tax. It is geared toward the City of Toronto, but if it is approved along with additional proposed amendments to the Municipal Act it would also allow single-tier and lower-tier municipalities across the province to levy the hotel tax. Up to 50 per cent of the tax could be kept by the municipality for its own projects, while the other half would have to be directed to a regional or local non-profit tourism organization.
Some communities in Ontario already have a voluntary Destination Marketing Fee; the transient accommodation tax would differ in that it would be mandatory for all roofed accommodation operators in municipalities that choose to levy it, and that the municipality could take a cut.
In a release from Muskoka Tourism, the organization notes that in competition for the “$139 million person visits and $24 billion in visitor expenditures… Muskoka is in last place compared to other regions in southern Ontario.” It adds that to grow their market share, Muskoka operators “must not only maintain our current marketing efforts but we also need to make a quantum leap in the level of investment to support more MUSKOKA CENTRIC destination marketing initiatives.”
Michael Lawley, Executive Director for Muskoka Tourism, said that they are trying to get ahead of the provincial discussion to engage their local operators in consultation sessions. “No decisions have been made at the provincial level or even regionally,” he said. “We met with 65 tourism industry partners and stakeholders through the six regional sessions and there is no unanimous decision in favour of a transient accommodation tax for Muskoka. Some of our partners are really adamantly opposed to the idea under any circumstances, other partners are saying we need more information. Our members are business owners and they are the folks closest to their customers and they are the ones we turn to when discussing these kinds of major changes.
“Is it right? Nobody knows. We need to be prudent and really think about both the opportunities as well as the challenges it presents to our tourism industry partners.”
In the Huntsville area, some of those operators fall within the Resorts of North Muskoka Group, who as a whole are opposed to the proposed tax.
Bruce Howell from Colonial Bay Cottage Resort and a spokesperson for the group, said that there are concerns about the equity of the tax, the difficulty in administering it, and its impact on long-term visitors to the area.
Local resorts and hotels compete with private cottage rentals for tourism dollars, but the latter are not held to the same regulations as resort owners. If a hotel tax were to be implemented by local municipalities, the group would want to see it apply to private rentals as well. “Why would we as a sector want our customers to pay to expand other cottage rentals that might not be participating in this?” said Howell.
It could also create an administrative nightmare for resorts and hotels tasked with collecting it, only to have up to half of it redirected away from tourism marketing.
And then there are the families who have been returning to the area year after year, often to the same resort, some for generations. “To turn around and tell them that they now need to pay a fee to bring more people to Muskoka seems a little counterintuitive,” said Howell. “There’s got to be some concession for customers that have been coming to Muskoka and enjoying our facilities for 20, 40, 50, 60 years.”
He also noted that a model based on a large urban centre might not be the best approach for a region like Muskoka. “We are very clearly a different destination than Toronto, Kingston, Ottawa, or Niagara Falls. We are spread out over a large geographic area and are significantly seasonal,” he said, but conceded, “What municipality wouldn’t take advantage of legislation that allows them to tax and they don’t have to tax their own constiuents? If you can build roads on the back of a visitor to your area, isn’t that a wonderful thing? I personally think it’s an ill thought-out concept.”
Jeremy Fleming from Cedar Grove Lodge added, “Muskoka has tried on numerous occasions to implement a Destination Marketing Fee or hotel tax over the last 20 years and every time the operators have been strongly opposed. I don’t know why this issue has come up again, it’s not operator driven.”
Kelly Haywood, Executive Director of the Huntsville Lake of Bays Chamber of Commerce, said that she’s hearing similar concerns from other hotel and resort owners.
“Most would prefer it didn’t happen at all,” said Haywood. I don’t know any that are looking forward to adding three per cent to their bill, combined with the fact that this would likely be implemented right around the time of the increase to minimum wage. It’s sort of a double whammy and will be a difficult time for the business community.”
Should the tax be levied locally, however, Haywood said it could be a positive thing, particularly if many other communities do the same, leaving them on the same playing field. “I think there’s a great deal of promise around an increased pool of dollars for marketing the community, but also for workforce development. We are hearing from almost every business owner this year that their biggest hurdle is finding staff. It’s an opportunity for the community to grow. It will depend on how many communities across Ontario implement it at same time.”
She added that the message she’s getting from the local accommodation sector is that they’d prefer to see whatever marketing dollars are collected stay in Huntsville to promote Huntsville, and said that the Chamber is well-prepared to use those dollars within its existing community marketing initiative.
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