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Proposed new hotel room tax gets preliminary stamp of approval

City would partner with Ontario's Lake Country on new municipal accommodation tax; 'This will help us in promoting Orillia to ... the rest of the world'

It could soon cost tourists a little more money to visit the Sunshine City.

On Monday, council committee approved a plan to introduce a new municipal accommodation tax (MAT) to be charged at area hotels, motels, B&Bs and inns.

If the scheme is approved by city council next week, a new 4% tax would be slapped on every room used for short-term accommodations as of April of 2020.

If the city moves, as expected, to licence short-term rentals such as Air bnbs and VRBOs (vacation rentals by owner) later this year, their patrons would also be subject to the new tax.

“This is a very important piece of paper,” Coun. Ralph Cipolla noted, citing the staff report recommending the MAT.

“We don’t have the factories that we used to have,” said the long-time Ward 2 councillor, who added tourism is a “key economic driver” in the region.

“We don’t have enough funds to market (tourism opportunities) without going to the taxpayers of this community,” said Cipolla. “This will help us in promoting Orillia to Toronto, to, I guess, the rest of the world, hopefully.”

Under the plan recommended by the city’s manager of tourism, Michael Ladouceur, and the manager of communications, Jennifer Ruff, the city would strike a relationship with Ontario’s Lake Country to implement and administer the new tax.

Under the terms of Bill 127, passed by the province in 2017 to pave the way for such taxes, the legislative framework stipulates that at least 50% of the net revenue from the MAT must be shared with an eligible tourism entity.

While staff considered forming a municipal tourism corporation, it was felt it would make more sense to partner with the “very successful” Ontario’s Lake Country, who, staff noted, have become well known and well respected for the work they do.

According to Ladouceur, the MAT is expected to bring in about $435,000 in annual revenue.

Ontario’s Lake Country will be paid 2.5% of gross revenue, an estimated $11,000, to collect and administer the tax.

The remainder of revenue will be split in half. That means the city and Ontario’s Lake Country will each receive about $212,000 annually. On top of that, the city would no longer provide $20,000 in annual funding to Ontario's Lake Country.

The idea is to spend the revenue from the tax to promote and develop tourism.

Under the proposed agreement, Ontario’s Lake Country would be mandated to spend 70% of their share on promoting Orillia, specifically.

While there was general agreement about the concept around the council table, Cipolla said the MAT will, essentially, see the municipality become the regional tourism agency’s primary funder.

With that in mind, he tried to win support from his colleagues to force Ontario’s Lake Country to include ‘Orillia’ in its name and its branding.

He said at a regional conference he attended, “nobody knew where Ontario’s Lake Country was."

“My concern here is that somehow we have to get Orillia in there,” suggesting the name be changed to Orillia and Area’s Ontario Lake Country. “That’s going to be a key factor in my supporting this.”

Ultimately, he was not able to win support for the idea.

Orillia Mayor Steve Clarke said he agrees with Cipolla "that the brand could be stronger and more identifiable.”

However, he said it would be more prudent to have discussions about the idea, rather than attempt to mandate a name change.

Coun. Tim Lauer agreed, saying he was “sensitive to telling” another organization what to do and didn’t want to be seen as trying to “ram it down their throats.”

Coun. Jay Fallis concurred. “Forcing a name change may be a bit much,” he said.

Coun. Mason Ainsworth said forcing the issue could “derail” the whole concept.

In the end, councillors opted against including a demand for the name change.

After the meeting, Kris Puhvel, executive director of Ontario’s Lake Country, said he would take council’s concerns to the entity’s leadership.

“It’s a board decision,” said Puhvel. “I’m sure the board will undertake this conversation moving forward.”

He noted a “branding exercise” occurred in 2014. As a result of that, Orillia was made more visible, he noted, explaining the agency is now known as Ontario’s Lake Country - Orillia and area's four-season playground. That tagline is used in all marketing and promotions.

Puhvel said the new MAT is vital.

“Any extra marketing dollars would be most welcome,” said Puhvel, noting Huntsville and Barrie, on either side of Lake Country, charge a MAT.

“They both charge the MAT, so we definitely don’t want to be left behind,” he said. “This region needs to remain competitive and build its strong tourism product and MAT will allow for that.”

Ladouceur said hoteliers were canvassed about the new tax. He said their survey yielded an 83% response rate.

“Overall, the industry felt a proposed MAT would yield a positive impact on tourism in Orillia,” noted Ladouceur.

Officials also hope the tax yields more people coming to the area.

According to the city’s research, only 48% of hotel rooms in Orillia are booked.

Cipolla said he hopes proceeds from the MAT could drive that number up to over 60% through better marketing and promotions and increasing opportunities.

As an example, he suggested the city could use the revenue to develop a refrigerated skate trail at the park or consider other similar ideas. Those ideas would be debated during budget deliberations.

If Orillia adopts a MAT, it would become the 20th city in Ontario to do so.

Ladouceur said most municipalities, such as Barrie, chose a 4% tax. Barrie also partnered with Tourism Barrie in a similar way Orillia is hoping to partner with Ontario’s Lake Country - a partnership “that has worked well” so far in Barrie.

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Dave Dawson

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