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Municipal Event Lodging Tax in the form of Hotel Surcharges

In our hometown, London, Ontario, there is a political debate about charging a “bed tax” to hotel patrons and putting the money towards funding events.  This tax is already up and running in several other cities throughout Ontario and is common in metropolitan areas throughout the world.  The proposal would have about three percent added to hotel bills and generate an estimated $1.5 million to $2 million in annual revenues for the city. 

This money would be used to attract talent and fund events in the city.  The theory behind this is that the hotels benefit in the form of additional revenues from tourists attending events in the city, so this would be a way for them to facilitate contributions from their guests towards these events. 

One foreseeable problem for the hotels is that surcharges are already a forefront issue for them.  Guests often become very disgruntled over receiving surcharges for various things, so adding further tax onto the bill, in the form of a surcharge, could draw more discontent and unwanted attention to the surcharges already in place by the hotel.

Will the money used directly increase any given hotel’s revenues enough to offset the decrease they may experience from their guests being subjected to the additional surcharge? The CEO of the Ontario Restaurant, Hotel and Motel Association, Tony Elanis, was quoted by the London Metro saying he thought the bed tax was a good idea if the money was used to “aggressively showcase the city”.  

Here in London, we recently had the pleasure of hosting The World Figure Skating Championship which drew over 20,000 people to London and had most of our downtown hotel locations filled to capacity.  Events like this are surely a great thing for all of the hotels that are impacted.  Elanis further elaborated that our neighbors in Burlington, Ontario, had accomplished a very successful, targeted approach in drawing additional tourism to their city by investing revenues into hockey and promoting it properly. 

What’s your opinion?  Is it fair to subject all travelers using our city’s lodging to partially fund events in the city?  There is no guarantee that people attending events will stay at the hotels or that people staying in the hotels will attend the events.  There are also many other businesses that benefit from events in the city such as taxis and restaurants whose customers will not be additionally taxed.

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