While hotel guests spending a night in Ottawa will face a tax increase next year, at least one local industry expert says Ottawa’s “unique” situation will ensure the tax revenues are put to good use.
The City of Ottawa’s 2024 budget proposes increasing the Municipal Accommodation Tax rate from four per cent to five per cent, effective Jan. 1, 2024. The tax is collected by hotels on all rooms in the city, with proceeds supporting marketing Ottawa as a tourist destination.
While hotel guests and tourists might not welcome the increase, Steve Ball, president of the Ottawa-Gatineau Hotel Association, said, with the help of the city, the taxes will bolster local tourism.
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“Nobody likes taxes. But we went from four to five per cent, whereas cities like Toronto went from four to six,” he explained. Ball said the city recognizes “that the value tourism brings to the Ottawa economy offsets additional property taxes that residents would have to pay without this influx.”
In fact, Ottawa’s system for collecting and managing the funds is the “envy of the country,” Ball argued, explaining that all of the tax revenues collected flow through Ottawa Tourism and the Tourism Development Council, which is comprised of stakeholders such as the Ottawa Board of Trade, the Ottawa International Airport Authority, Invest Ottawa, the Shaw Centre, the National Capital Commission and the City of Ottawa.
“It ensures that we’ve got community input as we develop and evolve the tourism industry in Canada and in Ottawa,” Ball said. “That’s what’s unique and special. I really do thank the mayor, council and city manager Wendy Stephanson for their foresight to recognize it’s best to let the tourism industry decide where the best growth in tourism could come from.”
Although increased cost could deter some visitors, Ball said he doesn’t think the rate hike alone would be to blame. Between increases in costs for airline tickets, hotels and restaurants, “inflation has impacted everything,” he said.
“(The tax) is one of many concerns around pricing … From a leisure perspective, there’s concern everywhere,” he continued. “So I’m not going to point to this increase specifically.”
Ball said Ottawa has “good value” compared to places like Toronto, Vancouver and Quebec City. Ottawa is uniquely positioned, he said, with the tourism industry poised to invest in the local economy and focus the funds from the tax on things such as festivals and local projects.
“That’s unique. That’s not what’s going on in other markets,” said Ball. “Nobody likes taxes, but that’s the reality of the situation. At least we’re managing it in a very, very effective way. We’re quite excited about 2024 – Ottawa is off to the races.”