Exploring the bed tax issue in Ottawa

Americas Expert Opinion
Exploring the bed tax issue in Ottawa

Lesley Mackay, Ottawa Tourism’s Vice-President for Meetings and Major Events, follows up on CMW’s recent bed taxes cover story.

 

Your recent bed taxes article raises some interesting questions about an income stream that many people and organisations find troubling.

However, a close look at the numbers show that there is a compelling argument for such a tax. In fact, here in Ottawa, where we host more than 11m visitors per year and generate CAD$3bn in economic output for the city, the tax is a real confidence booster, allowing us to expand our offering and grow our profile on the global stage.

In 2017, the Canadian province of Ontario passed legislation to allow municipalities to implement a Municipal Accommodation Tax (MAT). Consequently, as of 1 January, 2018, Ottawa Tourism, the destination marketing organisation of Canada’s capital city, welcomed the change as it replaced a 3% voluntary Destination Marketing Fee (DMF) collected by hotels representing 90% of the city’s room inventory with a new 4% MAT.

The challenge with the DMF was its fragility, at any point, a major player might have pulled out and the whole thing would have crumbled. The fact that no one did is a testament to the close alignment of our accommodation partners, led by the Ottawa Gatineau Hotel Association.

The new 4% MAT, which was enabled and decided upon at a local level, is compulsory for all transient accommodation providers, excluding bed and breakfasts and other short-term accommodation providers with four rooms or fewer, and provides clarity, certainty, and a level playing field for hoteliers, as well as for Ottawa Tourism in its efforts to promote the city domestically and internationally.

Most importantly, the funds generated are invested back into Ottawa Tourism’s marketing, conventions, travel trade, sports tourism, and media relations programmes. Additionally, a quarter of the tax revenues are earmarked specifically for destination development initiatives which enhance the appeal of Ottawa as a destination, ensuring that the visitor experience and offerings result in positive word of mouth and repeat visitation.

The knock-on benefit to this structure is that visitors who spend their out-of-town dollars in the community and boost the local economy are also reinvesting and, therefore, elevating the amenities, services, and experiences that make Ottawa a great place to visit, work, and live — both for visitors and for residents. It is fundamentally generating community wealth through tourism and it is a funding model that rewards success.

Coming off a record-breaking tourism year in 2017 — when Canada celebrated the 150th anniversary of Confederation, with Ottawa leading the year-long celebrations — Ottawa Tourism’s strategic plan has those numbers as the baseline targets by 2022. The MAT is crucial to achieving that vision as we confidently plan for the future.

Stuart Wood is a news reporter across the Mash Media editorial portfolio. He writes for CMW alongside sister publications Conference News, Exhibition News, Access All Areas and Exhibition World.