Hotel tax millions not available to bail out tourism sector
LONDON, ONT. -- Hit hard by COVID-19 travel restrictions, London’s once flourishing tourism sector is now on its knees.
And despite raising millions of dollars through the hotel tax, that money isn’t available as a financial lifeline.
The Four Points by Sheraton’s sign along Wellington Road tells guests ‘Stay home and be healthy.’
“We have nobody staying in our hotels right now. That should be a surprise to no one, and it’s going to have a significant impact,” says Councillor Shawn Lewis, who sits on the Tourism London Board of Directors.
Tourism London aims to boost the eventual recovery by booking events which have been postponed, according to Manager Cheryl Finn.
“There are event rights holders looking to the future, tapping us on the shoulder and saying, ‘You better get ready,’ that’s what this MAT (Municipal Accommodation Tax) fund has been used for.”
Better known as the hotel tax, the four per cent charged on room rentals is estimated to generate about $2 to $4 million each year.
But attracting future events after the pandemic subsides may be the only way the lucrative tax can help the industry survive.
The tax revenue is split 50-50 between Tourism London and city hall.
Council has already allocated essentially all of its revenue anticipated in 2020 - before it was earned.
Projects receiving funding included recent renovations to RBC Place, and upcoming renovations to the Grand Theatre
“In 2020 we are going to have an opportunity to help recover, but unfortunately council’s spent all the money available for 2020,” laments Lewis. “I cautioned when we allocated the funds, we shouldn’t spend money we don’t have in the bank yet.”
But Councillor Josh Morgan says city hall’s share of the hotel tax is specifically set aside for capital construction projects.
“It may not fit with the traditional things the industry needs when we get into a recovery situation because ours is mainly a capital program.”
With hotels renting few rooms, the amount of money raised by the MAT is expected to fall well below expectations.
Lewis warns London’s tourism sector must look to 2021 for financial relief, “What are we going to do with the 2021 MAT, to use that opportunity when things normalize to boost that local in Canada in Ontario tourism.”
Morgan points to other potential sources of financial relief that could be accessed earlier, “We have our economic development reserve fund, to support the general economic development, or support the tourism industry in the future.”