A tax on hotel stays? Windsor-Essex's tourism agency says it could help boost tourism

Every municipality in Essex county now has a hotel or a proposal for one, the region's tourism agency says — and says that makes it the perfect time to explore adding a municipal accommodations tax in the region, in a bid to boost tourism revenues and bring more people to the region at a time when Canadians are looking to spend their money at home. 

What is MAT?

A municipal accommodation tax, or MAT, is a four to six per cent tax imposed on rentals of fewer than 30 days. 

It applies to stays at hotels, motels, motor hotels, lodges, inns, resorts, bed and breakfasts, among others, and including those sold online.

Representatives from Tourism Windsor Essex Pelee Island (TWEPI) has been making rounds, giving presentations to local municipalities in Essex trying to get councils on board with implementing the tax.

The goal is to support local tourism growth and development and generate another source of revenue for municipalities. The money collected by the tax, in TWEPI's case, will be split evenly between municipalities for their own use, and TWEPI to use for promoting tourism to the region. 

Windsor has had a municipal accommodations tax since 2018. It started at four per cent and rose to six per cent in April.

The tourism agency says Windsor's tax generates about $1.5 million dollars annually.

MAT money goes back into the community: Windsor councillor

Ward 3 Coun. and Downtown Windsor BIA board member Renaldo Agostino says the accommodations tax has been a "fantastic" addition to help Windsor host and attract more visitors.

The money the tax generated went into projects like the new civics skating rink and esplanade, Agostino said. It also helped fund last year's NFL draft events downtown, including the drone show and block parties.

"We get to collect the tax that's not technically collected from the user base, the taxpayer," he said. "It's done through people who are visiting our hotel and then it gets put back into the community to add more features, more entertainment, more tourism options so it's really a win-win for everybody.

"What brings people to the downtown core, what brings people to the area is what helps the businesses. Without people, there's no revenue. So, it's one of the tools in the tool chest that we use ... and thank goodness we have it."

Hope is all seven join MAT: TWEPI

TWEPI CEO Gordon Orr said that because every municipality within Essex County has or will soon have a hotel, now is the time to begin discussion on an accommodation tax for the region. 

"Our hotel inventory has never been stronger or better ... The other thing is that of the 144  municipalities in the province of Ontario, 73 municipalities are [already] collecting the tax," he said, noting that's increased from 50 municipalities this time last year.  

"It is certainly a trend that we're seeing. We've got the hotel product, the inventory, and we thought now was the right time to introduce a collection opportunity to our friends in the community and see what their appetite is."

'MAT would have a detrimental effect': Kingsville hotel owner

But not everyone is on board. 

In Kingsville, there are a handful of short-term rentals and just one hotel: The Grove. 

Its owner and general manager, Jennifer Flynn, says she thinks businesses will bear the brunt of the impact of a municipal accommodations tax and she's against the proposal — a position she said her visitors have also expressed.

Flynn says the pandemic took a toll on the hotel industry, and now they're in recovery mode.

Of the 12,000 visitors the hotel had last year, roughly half were from the United States. But with recent tensions with the United States, she says that's down so far this year. 

"We still are in a regroup, regain, grow again mode," she said. "So MAT just feels like another punch in the gut.

"Of course the answer is always, 'well, it's passed on to the guests'. To us, that doesn't mean much because now it's a competitive advantage that we have."

Flynn also noted administrative costs and having to potentially hire and train staff on the new tax and take care of the reporting and accounting. 

"So for us, it's going to appear that we're just raising our rates and that is not good for tourism because people definitely that are visiting us have a finite amount of money," she said. "I definitely think MAT would have a detrimental effect.

 "At the end of the day, the guest looks at the final cost of their bill and doesn't really consider where portions of that may be going."

Orr said they have asked each one of those seven councils to indicate their interest by August 31, and hopes all seven come on board.

"We've always promoted Windsor, Essex County and Peele Island as one region. We know that politicians see borders, tourists do not," Orr said.

"We want to continue that approach. We recognize the benefits of having a MAT tax collection."

If the municipalities do come on board, Orr said it would bring in between $1.7 and $2.4 million annually, depending on whether they implement a four or six per cent tax. 

"Without question, it would be our desire that they would all buy into the program."

Orr said while they are having discussions with municipalities now, the tax itself, should communities implement it, won't be in place for another year or two. 

What's happening now?

LaSalle and Tecumseh are two municipalities whose councillors have joined Essex, Kingsville and Amherstburg in asking their administration teams for reports on the impact of an accommodation tax. 

"While LaSalle currently has a small number of short-term rentals and no hotels, it's important to establish a MAT framework now— before our short-term rental market grows or we welcome [the] first hotel—so we are not making changes after the fact," said LaSalle mayor Crystal Meloche in a statement.

Meloche said they're working on two important reports right now: one will provide council with the information needed to approve or deny the MAT, while the second is focused on licensing short-term rentals in LaSalle, which is a necessary step to implement and manage a MAT effectively.

Hilda MacDonald, the mayor of Leamington, said that until the council hears the report from their finance director, no decisions will be made. 

'Fairly good idea': Amherstburg mayor

Amherstburg's town council is also awaiting a report from staff. 

Mayor Michael Prue says he is supportive of the accommodations tax for the community and said it could raise as much as $80,000 in revenue — of which $30,000 or more would come to the municipality and could help them put on events like Amherstburg's open air weekends.

"It's not a huge amount of money, but it does cost a lot of money for us to put on good shows. We have a lot of exciting talent, jugglers, dancers and bagpipers and we have everything every weekend," he said. "So if we could get the tourists to contribute a little bit of that, it will not fall back on the taxpayer."

Prue said they only have one hotel, and that has six rooms with more on the way. 

"We all think it's a fairly good idea, provided it's not going to hurt the tourism industry."