London poised to increase hotel tax to fund more tourism initiatives

Travelers arrive outside the Delta London Armouries Hotel on Sept. 17, 2024. (Daryl Newcombe/CTV News London)

London might soon increase the municipal tax charged on each night spent in a hotel room or short-term accommodation (Airbnb, Bed & Breakfasts, etc.).

On Tuesday, a motion by Deputy Mayor Shawn Lewis and Budget Chair Elizabeth Peloza called on the Strategic Priorities and Policy Committee (SPPC) to recommend increasing the Municipal Accommodation Tax (MAT) from the current 4 per cent to 5 per cent by Jan. 1, 2026.

“This would be the first increase we've seen here in London, realizing other cities have already raised theirs,” Budget Chair Elizabeth Peloza told colleagues.

The 4 per cent MAT charge has not increased since London implemented a hotel room tax Oct. 1, 2018.

Some other Ontario municipalities have increased their MAT rate in recent years, including Toronto (6 per cent), Mississauga (6 per cent), Kingston (5 per cent), and Ottawa (5 per cent).

The revenue is divided evenly between Tourism London and city hall to support various tourism-related investments.

Deputy Mayor Shawn Lewis emphasized that the tax revenue is reinvested in tourism initiatives, “We have continued to use both the Tourism London piece of the MAT to enhance events, bring new events to the city, [and] to do marketing abroad.”

Lewis and Peloza’s joint motion explains, “MAT revenues has allowed [London] to be much more competitive and successful in bids for conferences, conventions, sporting events, and entertainment events.”

It also supported enhancements to longstanding events including the 30th Anniversary Sunfest and Airshow London.

City council has allocated some of its revenues towards capital investments including to both Budweiser Gardens and the Grand Theatre.

Coun. Jerry Pribil expressed concern that the local hotel sector was not broadly consulted about the proposed increase.

“The thing is hoteliers [act] as the tax collectors for us,” Pribil said. “I would like to give them the opportunity to give their feedback and consult.”

Lewis responded that two hoteliers sit on the Tourism London Board of Directors where the topic became a point of conversation back in April.

“Without naming and shaming, there are a couple of hoteliers who don't like it and who continue to insist that we're taking from their profits, which is not true,” explained Lewis. “It is a tax collected on the bill as a separate line item. There are other hoteliers who absolutely recognize the value of this and who are supportive of it.”

The committee voted 13-1 (Pribil opposed) in favour of the one per cent increase.

A final decision will be made by council on Sept. 24.