New Hamilton hotel tax takes effect in January
Guests staying in Hamilton hotels will pay a four per cent tax starting next year that's meant to support local tourism.
The municipal accommodation tax, which is to take effect Jan. 1, comes as the hospitality sector recovers from the ravages of the COVID-19 pandemic.
The industry is anxious and supportive" of the investment the new taxation stream will generate, Carrie Brooks-Joiner, director of tourism and culture, told council this week.
So far, 40 municipalities in Ontario have implemented the tool the provincial government created via legislation in 2017, Brooks-Joiner noted.
The city must allocate a minimum of 50 per cent of the revenue to an eligible tourism entity," which will be a newly created Hamilton Tourism Development Corporation. Three councillors will sit on the governance board.
The legislation doesn't stipulate how the other half of revenue is spent, but staff suggest it be directed to support local tourism.
The city will rely on the Ontario Restaurant Hotel and Motel Association to collect the tax on its behalf.
Coun. Tom Jackson said he's very supportive" of the new tax given the industry has been desperately" in need of support during the pandemic.
Since the lifting of government restrictions, Hamilton hotels reported a May 2022 occupancy rate of 74.5 per cent, up from 40.7 per cent the previous May, a staff report noted.
We have seen strong recovery of the transient market for tourism in Hamilton and a return strong hotel accommodation level usage," Brooks-Joiner said.
Based on pre-pandemic hotel occupancy, staff estimate the tax would generate roughly $2 million a year, which is to be the minimum balance of a dedicated reserve fund.
Staff recommended the city extend the Hamilton Tourism Development Corporation a $2-million line of credit to enable it to invest in tourism initiatives while the reserve balance builds.
Under the legislation, the municipal accommodation tax can also be collected from short-term-rental operators, via such platforms as Airbnb. Staff expect to report back to council on a proposed methodology for those stays.
Teviah Moro is a reporter at The Spectator. tmoro@thespec.com