$1M generated from city accommodation tax

COVID-19 expected to cut that number in half this year

Hotels are seen along Lakeshore Drive in North Bay, Monday. An accommodation tax put in place by the city last year generated nearly $1 million in 2019. Council is expected to discuss a policy on how to allocate its portion of the funds, Tuesday. Michael Lee/The Nugget

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A city tax on bookings at local hotels, motels and other accommodations reined in nearly $1 million last year.

A staff report to North Bay council, expected to be discussed Tuesday evening, shows the city’s municipal accommodation tax generated a total of $982,487 in its inaugural year, exceeding an initial projection of $890,000.

The tax, which came into effect Feb. 1, 2019, adds a four per cent rate, before HST, to the total cost of a room booked in North Bay for less than 30 consecutive days, including at hotels, motels, motor hotels, lodges, inns, resorts, and bed and breakfasts.

But several months into a pandemic, the tax is now expected to draw in substantially less, or about half, of what was received in 2019.

The city’s 2020 operating budget is also projecting $890,000 in revenue this year from the municipal accommodation tax.

“Obviously, when March came about, we realized that that clearly wasn’t going to happen,” Tourism North Bay executive director Steve Dreany said.

“And because of the unprecedented nature of what has occurred, it was pretty hard to do a projection. But our best estimate is that we will probably do maybe 50 to 55 per cent of 2019, and that’s the best optimistic projection.”

Last year’s better-than-expected revenue has been attributed to the Pinty’s Grand Slam of Curling in North Bay, the International Plowing Match in Verner, an increase in film and TV productions, and increased sport groups and tournaments, the city staff report says. When the tax was put in place, the average hotel price in North Bay ranged between $100 and $140 a night.

The city collects the tax and splits the net revenue between itself and Tourism North Bay at 40 and 60 per cent, respectively.

The city’s portion was approximately $360,000 and is sitting in a reserve account, while Tourism North Bay was paid about $540,000 total for the year.

The remainder, or roughly $83,000, went to administration, including for a financial reports co-ordinator.

The province gave municipalities the authority to levy the tax in 2017 and North Bay council is expected to vote on a new policy Tuesday around how those funds will be allocated.

The policy recommends the city’s share be invested in assets that support tourism, with a minimum one-year delay between the year the money is earned and when it is allocated to a specific project.

Another recommendation is to set aside a portion of the reserve — $40,000 — for Tourism North Bay and a third party to potentially use, including on infrastructure or programming that would help bring in a large event or attraction.

Any amounts paid to Tourism North Bay are to be used exclusively for promoting tourism and Dreany says the funds are provided on a monthly basis.

Programs such as the Canada Emergency Wage Subsidy have helped to mitigate the expected drop in revenue, he says, adding Tourism North Bay will still be fully funded by the end of the year and will not ask the municipal government for assistance.

He says the organization has had to shift its focus toward supporting local businesses, namely food and beverage outlets, and co-ordinating a regional tourism effort, such as through Destination Northern Ontario’s online Campaign of Hope that was announced in May, which is encouraging operators and residents to share inspiring stories.

“Essentially, we’re figuring it out as we go along, but we’re not doing too bad I think,” Dreany said.

Dreany is scheduled to present his first report to council Sept. 1.

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