City could tax hotel rooms to support tourism

The idea of imposing a hotel tax on visitors to Greater Sudbury – and idea raised during last winter's budget talks – is feasible, but only if the revenue it generates is used to promote tourism to the city.

That's the conclusion of a staff report on the idea headed to the finance and administration committee Tuesday. While other cities have the tax – formally known as a destination marketing fee (DMF) – they rely on willing hotels to collect the money.

“The decision to collectively impose a hotel room surcharge is generally understood to rest with the hotels themselves,” the report said. “The members of the Sudbury Tourism Partnership have discussed this potential on many occasions over the past 15 years. There was some interest developing several years ago, but the Ontario government brought in legislation to stop collection of fees until 2012.

“Successful DMF programs have been dependent on the voluntary collection of fees by the hotels themselves, with revenue remitted to a tourism-related organization that has demonstrated a clear focus and mandate to grow the tourism industry, with revenues reinvested into the tourism sector under the guidance of the sector stakeholders themselves.”

That means if Sudbury was to impose a hotel tax, it couldn't use the money for general revenue. While some cities have directed the money for other purposes – Sault Ste. Marie contributed some of the revenue into the construction of the Essar Centre – the report said the overall purpose is for tourism marketing and development.

The report says Greater Sudbury is part of a DMF research study being conducted through the Hospitality and Tourism Management program at the Ted Rogers School of Management at Ryerson University, in partnership with Waterloo Regional Tourism and Tourism Barrie.

“This study will provide more information this spring in terms of best practices with DMFs,” the report says. “Staff are currently engaged with the study researchers and will have more information that will be incorporated into future DMF discussions.”

Hotels in Sudbury have told city staff that they could support such a fee as long as councillors “first commit to maintaining current levels of funding provided for the tourism sector through ... operating budgets, rather than seeking to use the DMF revenue to replace municipal funding.”

The hotels would like to see the revenue used to promote tourism targeted areas, such as “additional meetings and convention business and enhancement of the leisure marketing component, both of which represent an important boost to hotel room-nights sold within the city.”