HomeMy WebLinkAboutCAO-19-007 - Municipal Accommodation Tax (Ontario Regulation 435/17 Transient Accommodation Tax)REPORT TO:Finance and Corporate Services Committee
DATE OF MEETING:April 15, 2019
SUBMITTED BY:Dan Chapman, CAO
519-741-2200 ext. 7350
PREPARED BY:Kathryn Dever, Director, Strategy & Corporate Performance
519-741-2200 ext. 7370
Kim Kugler, Director, Sport
519-741-2200 ext. 7544
Cory Bluhm, Executive Director, Economic Development
519-741-2200 ext. 7065
WARD (S) INVOLVED:All Ward(s)
DATE OF REPORT:March 29, 2019
REPORT NO.:CAO-19-007
SUBJECT:Municipal Accommodation Tax(Ontario Regulation 435/17 Transient
Accommodation Tax)
_____________________________________________________________________________
RECOMMENDATION:
Thatabylaw be established for implementation of a mandatory 4% Municipal
Accommodation Tax for hotels in the City of Kitchener effective July 1st, 2019; subject
to equivalent approvals by the other lower tier municipalities in Waterloo Region; and,
That the 50% (Waterloo Regional Tourism Marketing Corporation-WRTMC) / 40%
(City) / 10% (Region of Waterloo) revenue sharing modelas outlinedwithin this report
be approved; and,
That staff be directed to establishaMunicipal Accommodation Tax Reserve Fund to
outlined in Appendix B of this report; and,
That the Chief Administrative Officer (CAO)and Clerk be delegated authority to enter
into an agreement with the Waterloo Regional Tourism Marketing Corporation to
collect the revenues on behalf of the City of Kitchenerand for the use of 50% of the
Municipal Accommodation Tax funds by WRTMC. (Note: Administration costs to be
deducted prior to distribution of funds); and,
That the CAO and Clerk be delegated authority to enter into other agreements as may
be required to administer and govern work to be funded from the MAT; and,
That staff/WRTMC report back in 2020 to Council on the progress of the new Municipal
Accommodation Tax; andfurther,
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
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That a joint study be undertaken by WRTMC and the Municipal partners in 2022 with
respect to the effectiveness of the program to inform potential program refinements
at that time.
BACKGROUND:
On November 23, 2017, the Province of Ontario issued the Transient Accommodation
Regulation 435/17, which came into force December 1, 2017 and provides the necessary
provisions for lower tier and single tier municipalities across Ontario to implement a Municipal
Accommodation Tax(MAT). These voluntary fees have been used to raise funds for
destination marketingand tourismacross Ontario and North America for many years but have
not been implemented in Waterloo Region.
As a popular destination for culture, events (sports and otherwise), sightseeing, business and
government travel, the Region of Waterloo welcomes more than 4.8 million visitors a year.
Accommodation supply in Waterloo Region totals approximately 3,000 rooms, with 1,090being
in the City of Kitchener. Visitors to Waterloo Region have a significant economic impact locally
injecting approximately $357 million into our local economy on an annual basis.
The purpose of this common report is to recommend the implementation of a 4% Municipal
Accommodation Tax for all Waterloo Region lower tier municipalities effective July 1st, 2019.
It is estimated that this will generate $3.271M annually ($938,000 in the City of Kitchener)
which would be split between the Waterloo Region Tourism Marketing Corporation (50%), the
participating lower tier municipalities (40%), and the Region of Waterloo (10%).
REPORT:
Introduction
In the spring of 2017 the Provincial Government announced budget plans to give municipalities
the power to levy a hotel tax.On November 23, 2017, the Province of Ontario issued the
Transient Accommodation Regulation 435/17, which came into force December 1, 2017 and
provides the necessary provisions for lower tier and single tier municipalities across Ontario to
implement a Municipal Accommodation Tax (MAT).Voluntary fees (known as destination
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marketing fees) have been collected in a number of municipalities across Ontario (Ottawa,
Toronto, Sault Ste. Marie, Niagara Falls) for many years but have not been implemented in
Waterloo Region.
Waterloo Region Tourism Marketing Corporation and Regional Tourism Organization 4 (RT04)
have both been advocates of the need for more revenue tools to enhance the competitiveness
of tourism in our broader community.RT04 commissioned a report by CBREinthe summer of
2017 that documented the potential implications of a hotel tax on its key partners.This report
providedthe following revenue estimates for Waterloo region:
Hotel Accommodations* within Waterloo Region and Estimated Revenue from a 4%
Municipal Accommodation Tax
MunicipalityHotel PropertiesRoomsEstimated 4% MAT
Revenue
Cambridge101,026$1,200,000
Kitchener101,090$938,000
Waterloo4538$640,000
Woolwich3313$475,000
Wilmot16$10,000
Wellesley116$8,000
North Dumfries000
TOTAL282,973$3,271,000
*Note The CBREstudydid not include properties in Wellesley, North Dumfries orshort term
rentals (ie: Airbnb, Homeaway, VRBO, home-to-go). Municipalities with a significant clustering
of short term rentals would also generate revenue from this framework. This additional revenue
has not been factored into the numbers above.
WRTMC further engaged Gaining Edge consulting to prepare a business case for MAT for
Waterloo Region. Their findings are included in Appendix A.
Sharing of revenue with WRTMC
With regards to revenue sharing with WRTMC, the Provincial regulations provide for the
following:
Where no formal Destination Marketing Fee (DMF) exists, municipalities can impose a
tax.Local municipalities that choose to impose a tax may reach an agreement with a
person or entity to collect it on their behalf.
The rules set out a minimum amount of tax revenue sharing that must occur, but in no
case do the regulations require municipalities to share more tax revenue than they
collect.
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Waterloo Region and the Area Municipalities formed the WRTMC in 2007.This organization
has a $1.05 M annual budget with approximately 60% of the funding coming from the Region
and Area Municipalities, as outlined below:
Municipality2019 Contribution
Region of Waterloo$300,000
City of Cambridge$90,000
City of Kitchener$90,000
City of Waterloo$90,000
Township of Wilmot$10,000
Township of Woolwich$10,000
Township of North Dumfries$5,000
Township of Wellesley$5,000
TOTAL$600,000
The WRTMC Board has long considered a voluntary DMF for our community but did not find
consensus from the accommodators and as such no DMF has been implemented.Therefore
by regulation the area municipalities would be required to provide at least 50% of revenues
collected through this proposed tax to WRTMC.
Municipal staff has considered the foregoing regulations and recommendthat 50% of the
revenues from the MAT be provided to WRTMC for the advancement of their tourism strategic
plan with a goal of increasing overnight accommodation metrics within our community.Based
on the hotel accommodation calculations earlier inthis report,the 50% allocation to WRTMC is
expected to be approximately $1.6M annually.Aproposed sports hosting office would be
funded through the WRTMC portion as well.
Municipal funding (40%) would be used to support and enhance tourism, sport, and cultural
offerings, as well as major event attraction efforts in a variety of ways. Appendix B outlines
more information on the specific proposed uses.
The Region of Waterloo would be remitted (10%) of the anticipated annual revenues
($327,100) for enhancement and promotion of their cultural funding allocations.It is anticipated
this will strengthen the position of key cultural institutions within the Region thereby also
enhancing the tourism component of our economy.
Ontario regulation 435/17, Section 6, requires that tourism organizations that receive funding
from a MAT enter into agreements with local municipalities respecting reasonable financial
accountability matters in order to ensure that amounts paid to the entity are used for the
exclusive purposeof promoting tourism, and the agreement may provide for other matters.
WRTMC is committed to entering into an agreement with its municipal funding partners for the
collection, disbursement and use of the MAT funding based on the outcomes of this council
report and the council reports of the other applicable local tier municipalities (City of
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Cambridge, City of Kitchener, Township of Woolwich, Township of Wellesley, Township of
North Dumfries and Township of Wilmot).
What types of accommodations are required to pay this tax?
As an eligible hotel transient accommodator doing business and/or facilitating business
transactions within the boundaries of the Region of Waterloo, the accommodator will be
obliged by law to collect and remit a four percent (4%) MAT on all rooms sold for overnight
accommodation. Revenues generated from other hotel services, including but not limited to
such things as meeting room rentals, food & beverage, and room service, will be excluded
from the MAT.
Bed & Breakfast operators will be required to collect and remit the MAT until an exemption is
applied for and approved.
It is also expected that short term rentals (STRs -
MAT.It is understood that Airbnb has agreements in more than 300 jurisdictions globally to
collect and remit hotel taxes on behalf of their hosts and guests, and as such implementation
in Waterloo Region is not expected to be difficult.
Currently the proposed 4% MAT would be applicable to all eligible hotel transient
accommodators including STRs in the City of Cambridge, City of Kitchener, City of Waterloo,
Township of Woolwich, Township of Wellesley, Township of North Dumfries and Township of
Wilmot. This framework is proposed to exclude campsites, given that no other municipality in
Ontario is implementing a MAT for this form of rental.
What types of accommodations would be exempted from this tax?
Accommodations that are rented for 30+ consecutive nights (including seasonal trailer
parks)
Lodgings provided to students by a university, college or post-secondary while the
student is registered at and attending the institution
Every hospital referred to in the list of hospitals and their grades and classifications
maintained by the minister of Health and Long-Term Care under the Public Hospitals
Act and every private hospital operated under the authority of a license issued under the
Private Hospitals Act
Every long-term care home as defined in subsection 2(1) of the Long-Term Care Homes
Act, 2007, retirement home and hospices
Treatment centres that receive provincial aid under the Ministry of Community and
Social Services Act
Every house of refuge, or lodging for the reformation of offenders
Every charitable, non-profit philanthropic corporation organized as shelters for the relief
of the poor or for emergency
Every tent or trailer sites supplied by a campground, tourist camp or trailer park
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Every accommodation supplied by employees to their employees in premises operated
by the employer
Every hospitality room in an establishment that does not contain a bed and is used for
displaying merchandise, holding meetings, or entertaining
A traditional Bed & Breakfast operator may apply to the local municipality for an
exemption from the charging and remittance of the Municipal Accommodation Tax,
o namely the Bed & Breakfast establishment meets the definition of the local Zoning
By-laws;
o the Bed & Breakfast establishment is occupied and operated by the property owner,
and is classified in the residential property tax class;
o the accommodation purchases are invoiced by the Bed & Breakfast establishment
and not a third party home-sharing listing entity.
What happens with the funds generated through the MAT?
Funds generated through the MATwill be invested in sales, marketing, bid acquisitions, bid
hosting, office operations support and tourism development activities through the Waterloo
Region Tourism Marketing Corporation. WRTMC promotes Waterloo Region for leisure
visitors, meetings and conventions, festivals and sporting events, tour operators, and travel
trade. WRTMC also invests in long term destination attraction/retention/development initiatives
aimed at enhancing the visitor experience.The current budget of WRTMC is approximately
$1.05M and the additional anticipated MAT revenue is expected to be $1,615,000.
In 2017, WRTMC engaged in a broad discussion with stakeholders, Board members and staff
to develop a 3 year strategic plan. In late 2017 and throughout 2018, WRTMC and RTO4
engaged in an assessment of Waterloo Region (DestinationNext) followed by consultations
with community leaders, stakeholders, tourism industry partners and elected officials to
develop a Strategic Plan for Waterloo Region. This plan is a 10 year destination road map that
includes a vision, goals and strategic initiatives. It reflects on the importance of paying as much
attention to the management of the destination, as it does to the marketingand event hosting.
And the foundation of the plan is the unique selling propositions of the region.Actions
recommended from the secondplan are not solely the responsibility of WRTMC, but rather
include municipal partners, community groups and volunteer organizations.
The following table shows the responsibilities and actions to be undertaken by WRTMC and
the estimated costs involved for a one year term. WRTMC will develop further policy that
guides allocation of the increased budget, with a goal of avoiding duplication and enhancing
transparency.
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Strategic ObjectivesTacticsKey Performance Spend
Indicators
Develop a strategy to enhance # of festivals, growth of Current spend
(Budget $1,047,600)
and grow festivals, build festivals, event impact year
collaboration within WR over year, # of festivals &
Focus on event
festivals, collaborate with events receiving Celebrate Marketing
generation as a key
municipal staff, Festivals & grants, amount of $400,000 -38%
enabler of tourism
Events ON and MTCS for Celebrate $$ received in
development within
Celebrate funding, build WR, ROI on digital ads, Communications/
Waterloo region
marketing content, digital ExploreWR website & Content/Public &
advertisingsocial media analyticsMedia Relations
$64,325 -6.1%
Continue to build hosting
# of RFPs received, # of
resume and target larger
Supporting Pillars #2
site visits, # of events
Sales
profile events as thenational
Sport Hosting and #3
booked, ROI analysis of
$83,940 -8%
and international level
Festivals, Events &
sport events, # of bids
for Sportand festivals, build
Attractions.
submitted for local sport &
Research
relationship with local sport
festival organizations,
$16,500 -1.6%
organizationsand PSOs, grow
growth of volunteer base
volunteer base
Staff
$417,407 39.8%
Website improvements &
Raise the profile &
updates, collateral # of RFPs received, # of
brandassociation of
General & Admin
development, image & video site visits, # of meetings
the technology
$65,428 -6.2%
development, content booked
knowledge sector with
creation,social media, attend ROI analysis of meetings in
Waterloo Region
Forecasted spend
trade shows, host fam visits, the region
through development
(Budget $2,500,000)
build bid support fund
of meetings & events.
Marketing
Digital advertising, social ROI on ads, web & social
Supporting Pillar #1
$858,600 34%
media, public & media media analysis, earned
Knowledge &
relations, familiarization visits, media coverage, leads
Tecnology
Communications/
travel trade show attendance generated from show
Content/Public &
& sponsorshipattendance & site visits
Media Relations
$140,000 5.6%
Analysis of current offerings
and gaps, align with
Target product
Sales
municipalities, RTO4 and # of outdoor experience
development &
$300,000 12%
Destination ON to enhance offers, # of bookings by
enhancement of
marketing of G2G Trail, Grand meetingand tour operators,
outdoor experience
Research
River, support and analysis of earned media coverage,
$64,000 2.5%
local operators and offerings, web & social media
Supporting Pillar #4
media & travel trade fam analytics
Urban Outdoors
Product Development
visits, Newsletters, web &
$100,000 4%
social media content
Visitor statistics,
Bid Support
Researchbenchmarking, data
Benchmarking info
$250,000 10%
evaluation, Event impact
Supporting all Pillarscalculator
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Establish WRTMC as Media development & Staff
communication, regular $634,400 -26%
Authority, while newsletters, fam visits, media
# of speaking engagements
adopting a singular support for visits, build website General & Admin
by CEO/staff, earned
focus on high return content & community $153,000 6.1%
media,User generated
target markets and engagement, participate in
content, Instagram posts
eventslocal events, est. presence on
industry Board of Directors &
Supporting all Pillarsvolunteer committees
There will be future opportunities for stakeholders to be involved in planning and budgeting of
future MAT proceeds.
The City of Kitcheneris expected to receive approximately $375,200 annually (40% of the
$938,000 Kitchenergenerated revenue).The intention of this funding is to support and
enhance tourism, sport, and cultural offerings, as well as major event attraction efforts in a
variety of ways. Appendix B outlines more information on the specific proposed uses, which
would be governed by the proposed Reserve Fund guidelines.
It is important that the municipal share of funds raised through the MunicipalAccommodation
Tax be segregated and only used for approved municipal purposes to demonstrate
transparency and accountability to the hospitality industry. To that end, staff are
recommending to create a specific
revenue, as outlined in Appendix B.
Stakeholder Consultation
WRTMC has consulted with the hotel industry on the MAT issue overthe past six years and
more extensively since the provincial legislation was introduced.The majority of hotel partners
agree that a municipal accommodation tax will level the playing field (as all accommodators
will be affected) and is a good way to stabilize marketing and tourism funds for Waterloo
Region.
There are some stakeholdersthat prefer 100% of all funds to be directed to WRTMC to ensure
that tourism promotion receives maximum benefit. In response, staff throughout the region are
proposing to place revenue into a dedicated account for the purpose of tourism-related
activities and to report on expenditures. This will ensure all monies are directed to tourism-
related activities.
It is proposed that staff report back to Council in 2020 on the implementation of the Municipal
Accommodation Tax.Further, it is proposed that a formal joint study be undertaken by the
WRTMC and municipal partners in 2022 to assess the impact of investments made with this
revenue and to inform refinements to the model asappropriate.
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Implementation
A decision by the local Waterloo region area municipalities for implementation of a MAT on
st
July 1, 2019 is the recommendation contained within this report. This timeframe will provide a
reasonable notice period for thestakeholder accommodators within our community and in turn
their respective customers.In addition it is expected that little time is required for the various
accommodator billing systems to be updated to accommodate the MAT and for WRTMC to
implement theadministrative system for collections and distribution.
Should Council approve this report, City staff will also draft a bylaw that would enable the MAT
including the following requirements
Subject of the tax to be imposed;
Tax rate or the amount of tax payable;
Manner in which the tax is to be collected, including the designation of any persons or
entities who are authorized to collect the tax as agents for the municipality and any
collection obligations of persons or entities who are required to collect the tax.
The by-law may also provide for: exemptions from the tax e.g. university and college
residences occupied by students; bed & breakfast; rebates of tax; penalties for failing to
comply with the by-law; interest on outstanding tax; penalties or interest; audit and
inspection powers; dispute resolution mechanisms; and enforcement measures.
It is anticipated like other Cities in Ontario that a simplified remittance form can be used by the
local accommodators similar to that used by business to remit HST/GST to the Canada
Revenue Agency. Accommodators would complete the simplified MATform on a monthly
basis and remit the associated MAT to the WRTMC.
Conclusion
Various communities across Ontario are moving toward the implementation of the MATin
order to promote and advance the tourism potential of their Cities.Recent decisions and
considerations by other Ontario jurisdictions include:
CommunityProposed MATImplementation Date
st
City of Ottawa 4%January 1, 2018
City of Sault Ste. Marie4%January 1, 2019
Niagara Falls$2/room nightIn place
Waterloo Region 4%July 1st, 2019
Municipalities
City of London4%October 1, 2018
City of Toronto4%April 1, 2018
City of Kingston4%August 1, 2018
City of Windsor4%October 1, 2018
City of Hamilton3%Voluntary DMF in place
City of Barrie4%January 1, 2018
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City of Stratford3%Voluntary DMF in place
City of Brockville4%May 1, 2018
City of Cornwall4%July 1, 2018
City of Huntsville4%April 1, 2019
City of Markham4%January 1, 2018
City of Mississauga4%July 1, 2018
City of North Bay4%February 1, 2018
City of Oakville4%January 1, 2019
City of St. Catharines4%January 1, 2018
City of Sudbury4%September 1, 2018
City of Thunder Bay4%September 1, 2018
City of Timmins4%January 1, 2019
* Proposed rates still subject to council approval
The percentage of MAT revenue that Tourism Marketing Corporations receive from the list
above varies from 50% (as proposed here) to 100%. A 50% allocation is the most common
allocation,based on available information.
More locally, the Cities of Guelph and Brantford do not have independent destination
marketing organizations, and until these are established, they cannot introduce a MAT. The
City of Stratford has had a voluntary DMF in place for a number of years, although the largest
hotels (Arden Park and The Bruce) do not participate. The Stratford DMF generates $80,000
per year.
A 4% MAT in Waterloo Region will assist in further development of tourism potential,
assist in maintaining and developing tourism oriented assets and events (including event
hosting support) and complement respective municipal economic development strategies.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The
the delivery of core service.
FINANCIAL IMPLICATIONS:
It is estimated that a 4% Municipal Accommodation Tax will generate $938,000 annually in the
City of Kitchenerbased upon the affected hotel properties. It is proposed that the City will retain
40% ($375,200), 10% will be remitted to the Region ($93,800), and 50% ($469,000) will be
provided to WRTMC for tourism promotion, includingfundingthe newly proposedsport hosting
office.
The City will retain the first year revenues in the newly created MAT Reserve Fund given the
uncertainty of the estimates and potential for annual changes in the amount allocated. Beginning
in 2020, funds are proposed to be used to support and enhance tourism, sport, and cultural
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offerings, as well as major event attraction efforts in avariety of ways. Appendix B outlines more
information on the specific proposed uses.
COMMUNITY ENGAGEMENT:
INFORM
council / committee meeting.
ACKNOWLEDGED BY: Dan Chapman, CAO
Appendix A Business Case for a Municipal Accommodation Tax
Appendix B Potential Uses for KitchenerShare of MAT Revenue
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APPENDIX A Business Case for a Municipal Accommodation Tax
February 25, 2019
Minto Schneider
CEO
Waterloo Regional Tourism Marketing Corporation
Waterloo, Ontario
Dear Minto,
GainingEdge is pleased to submit this letter outlining our rationale for WRTMC to increase its revenues through
the introduction of the MAT. Having advised more than 120 DMOs in 37 countries over the past ten years, we
have developed a clear understanding that marketing a destination in a dynamic environment requires
significant financial resources. It is our view that the MAT will enable Waterloo Region to realize its potential
from the tourism and business events sector by implementing a funding source that is substantive, dedicated
and dependable.
Background
The visitor economy is a significant contributor to the quality of life and job opportunities in the region.
According to the Ontario Ministry of Tourism, Culture and Sport, the region attracted 4.8 million visitors in 2016,
including 1.2 million overnight visitors, deliver $357 million in spending to local restaurants, retail,
accommodation, transporation, and experiences such as arts and culture, recreation and entertainment.
The region is growing and changing, driven by renewal and development initiatives. It is imperative that visitor
markets are properly served to maximize the benefits of this transformation. The region can improve its position
with visitors, operators and event planners who are willing to stay longer and spend more by better leveraging
its brand and improving amenities, infrastructure and partnerships.
In October 2018, GainingEdge submitted the 5ĻƭƷźƓğƷźƚƓ tƌğƓ ŅƚƩ ƷŷĻ ğƷĻƩƌƚƚ wĻŭźƚƓ to WRTMC on behalf of
its stakeholders. The plan was the cumulation of an extensive effort that included input from more than 250
private- and public-sector participants from the region. This collaborative effort will assist industry, government
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and other related sectors to support and implement a long-term destination vision and key strategic initiatives.
A key conclusion of the Destination Plan states:
Increased funding for Explore Waterloo Region \[WRTMC\] is necessary to take a lead role in coordinating
the next phase of the Destination Plan. Because this is a road map with ideas that transcend the tourism
organizations, and the various municipalities in Waterloo Region. The effective engagement and
alignment of all stakeholders is the key element to a successful destination plan that will benefit
residents, businesses and visitors for years to come.
Carrying out the destination plan will take considerable effort from the industry and stakeholders. While
the destination has strengths and assets to forge a new direction, structural and funding issues need to
be addressed to move forward with success.
Funding of Destination Marketing Organizations (DMOs)
The ability to attract tourism and business events require a well-funded effort through DMOs that bring their
destinations together in a consolidated manner, providing the marketplace with a unified solution to assist their
needs. This hyper-competitive DMO environment is intermixed with a significantly new world for DMOs. They
are having to adapt to disruptive marketplaces driven by rapidly changing visitor and event planner expectations
and extensive technology impacts.
Destinations around the world are investing significant resources to generate the social and economic benefits
from this industry sector. In North America, the main source of funding for DMOs are hotel taxes, comprising
70% of the budgets of these organizations.
Chart: Funding Source as Proportion of Budget (from Destinations International, 2017)
In a recent survey conducted by Destinations International, it was determined that a total of 41 out of 196
DMOs have budgets of US$10 million or more, with 35 in the US$5-$10 million range, 49 within US$2-$5 million,
35 within US$1-$2 million, and the remaining 36 below US$1 million. Up until this year, WRMTC fell within the
last category.
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Chart: Budget of 196 DMOs (from Destinations International, 2017)
WRTMC Budget Comparison
The ğǝĻƩğŭĻ budget of the 196 DMOs surveyed is more than US$6.5 million. Closer to home, the following
cities, which often compete with Waterloo Region, are all better funded:
City of Hamilton, Tourism & Culture CDN $8.9 million
Tourism London CDN $4.0 million
Tourism Windsor Essex County CDN $2.1 million (expected to be higher with MAT)
Tourism Kingston CDN $1.2 million
And although the $250,000 increase to WRTMC for sport hosting development is welcome, the $1.05 million
(CDN) budget for 2019 means that the region still lags the others. WRTMC can be a leader, if not the leader,
amongst them. Waterloo Region product is attractive, the stakeholder collaboration is strong, and the expertise
is in place. The missing piece, though, is resources. Without addressing the budget shortcomings, the bureau
will not be able to set the pace.
Despite the small budget, WRTMC delivers strong returns relative to its investment. The efforts of the
organization:
Help businesses grow and prosper
Attract visitors, conventions and events to the region
Generate jobs and tax revenue
Connect with the community on the benefits of tourism
With incremental funding, WRTMC and its partners will be even more proficient in identifying, pursuing and
securing new commitments from convention, travel trade, sports and niche segment groups, while helping to
manage a sustainable industry on behalf of the community.
Benefits of Municipal Accommodation Tax (MAT) for WRTMC
A key advantage of accommodation taxes to fund DMOs is that they are directly tied to the visitor industry and
generate significant amounts of revenue. Room taxes and levies are common in North America as the chart
3 - 14
above illustrates. They shift the financial burden of funding DMOs from local taxpayers to visitors. The MAT is
highly desirable for WRTMC for the following reasons.
Substantive: generates the necessary funds for WRTMC and the municipalities of the Region of Waterloo to
compete
Total estimated revenue from a 4% MAT is more than $3 million
Dedicated: funds collected are to be used to support destination marketing and management
Enables delivery of the strategic initiatives agreed by stakeholders in the 5ĻƭƷźƓğƷźƚƓ tƌğƓ ŅƚƩ ƷŷĻ
ğƷĻƩƌƚƚ wĻŭźƚƓ
Dependable: funding mechanism in place for the long-term due to government legislation
WRMTC makes commitments on behalf of the community for meetings and sport events that are often
years away from coming to the region
Another advantage of the MAT is that it effectively ties WRTMC to the ebbs and flows of industry. Revenues will
increase or decrease based on how the industry is performing. Therefore, WRTMC must act as a business and
be commercially focused. With its entrepreneurial industry board, we are confident WRTMC will innovate and
respond to opportunities as they arise.
5ĻƭƷźƓğƷźƚƓ tƌğƓ
ŅƚƩ ƷŷĻ ğƷĻƩƌƚƚ wĻŭźƚƓ. The intent is to attract higher spending segments such as key meeting and corporate
clients, sports groups, and targeted leisure segments.
20162028Variance
# of Visitors4.8 million6.5 million+1.7 million (+35%)
Visitor Spending
$357 million$585million+$228 million (+65%)
Table: 2028 Targets for Visitors and Visitor Spending
Budget Implications of the MAT
The implementation of the MAT would enable WRTMC to be more competitive through enhanced marketing
and communications programs, increased sales activities and stronger organizational capacity. The MAT will
enable WRTMC to offer bid support to event organizers, a key business development tool that has been lacking
to date. It will also help facilitate investment in product development, which is a critical part of the
recommendations in the 5ĻƭƷźƓğƷźƚƓ tƌğƓ ŅƚƩ ƷŷĻ ğƷĻƩƌƚƚ wĻŭźƚƓ.
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Current Enhanced
Budget Budget
Revenue $ 1,047,600 $ 2,512,600
Municipal - Core Funding 600,000 600,000
Municipal - Sport Support 150,000 -
Provincial (RTO4) 100,000 100,000
MAT - 1,615,000
Private Sources 197,600 197,600
Expenditure $ 1,047,600 $ 2,512,600
Marketing, Communications & Research 480,825 1,014,000
Sales & Bid Support 83,940 550,000
Product Development - 125,000
Personnel 417,407 659,400
Administration 65,428 164,200
Net Income $ - $ -
Table: Forecasted Budget with MAT
Final Comments
Simply put, WRTMC is inadequately funded and has been since its inception in 2007. The organization is under-
resourced to compete in the regional, national and international marketplace.
If the Region of Waterloo is sincerely committed to enhancing its position as a tourism and business events
destination, they must set their aspirations to be much higher than the existing situation. As witnessed in
hundreds of destinations across North America, the introduction of an accommodation tax, such as the MAT, to
fund WRTMC will have a significantly positive impact. With substantive, dedicated and dependable funds,
WRTMC can leverage incremental resources to make strategic investments that will benefit the Region of
Waterloo well into the future.
Please do not hesitate to ask if we can be of further assistance.
Yours sincerely,
Paul Vallee
Executive Consultant, GainingEdge
Cc: Gary Grimmer, CEO, GainingEdge
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APPENDIX B Potential Uses for KitchenerShare of MAT Revenue
The following list of potential uses is outlined for discussion. Staff is proposing to create a MAT
reserve fund with applicable terms andguidelines for Council approval.
Market Research (Facility Research -Convention, Theatre, Stadium, Arena, Pool).
Tourism Sport & Cultural Permanent Infrastructure, e.g., acquisition or improvement of
tourism related facilities and public spaces.
Sport/Festival/Event Infrastructure permanent or one time infrastructure like
washrooms, seating, staging, fencing, Wi-Fi, etc.
Major Festival and Events Expansion & Development including building a reserve for
targeting and attracting major festivals and events.
Bid Funding for International, National and Provincial Event Hosting (Arts & Cultural,
Conferences and Sporting).
Grant Funding for International, National and Provincial Event Hosting (Arts & Cultural,
Conferences and Sporting) to assist with transportation, road closures, etc.
One-Time Festival, Convention or Sporting Acquisition Costs, e.g., Hometown Hockey
Sponsorship, Maple Leaf Training Camp.
Collaborative Tourism Marketing Efforts (over and above WRTMC).Facilitative role
e.g., collaborative outbound marketing by all Arts organizations, destination marketing
campaign by all local micro-breweries.
Additional staff resources if needed to support the above bidding, hosting and or
marketing.
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