Council carves out B&B exemption for new 4% hotel room levy

Hotel
Stock image, for illustrative purposes only.

Bed-and-breakfasts will be able to avoid a new four per cent tax on guest accommodations, but Ottawans who rent out rooms on platforms such as Airbnb will still have to charge it, city council decided Wednesday.

Any establishment that uses a third-party home-sharing listing service to do its invoices will have to collect the tax, council ruled. The city could receive up to $300,000 a year from Airbnb.

However, bed-and-breakfasts will be eligible to apply for an exemption if the establishment is owned and operated by the property owner and is classified in the residential property tax class.

The ruling comes a week after B&B owners urged the finance and economic development committee to spare them from the tax, which they argued would be too much of an administrative burden for small operations. They also said they would receive little benefit from the marketing efforts the new revenue is designed to fund.

The accommodation tax, which is expected to be implemented on Jan. 1, will replace the voluntary three per cent “destination marketing fee” that expires at the end of the year.

About half of Ottawa’s hotels representing 90 per cent of rooms currently charge the levy, which goes to the Ottawa Gatineau Hotel Association and funds Ottawa Tourism’s campaigns to attract visitors to the nation’s capital. The fee generates between $8 million and $9 million a year, and the city expects the new tax to raise about $12 million annually that will continue to go to Ottawa Tourism.

The province’s 2017 budget allows municipalities to collect a mandatory tax from any business that offers accommodations for consecutive nights under 30 days.