Horseshoe Resort not on board with accommodation tax in Oro-Medonte

Marwa Grimes

‘It’s not a level playing field,’ said Horseshoe official, noting the resort has the township’s only full-service hotel

If you’ve only got one hotel in your municipality, does it make sense to introduce a municipal accommodation tax (MAT)?

That’s the question Oro-Medonte council wrestled with last week after Jennifer Whitley, the township’s economic development officer, presented a report on the value and impact of the municipality bringing back a MAT on transient accommodation stays of less than 30 days after it was rescinded in March 2020, shortly after the pandemic began.

According to Whitley’s report, the purpose of the MAT is to “increase investment in tourism development without relying on additional tax levy from the local businesses or residents, which in turn can assist with local competitiveness and can improve the tourism ecosystem.”

Based on research conducted by the township, the average MAT in Ontario is four per cent and that’s what staff recommended, if the township decides to go that route.

The four per cent MAT would be on the accommodation portion only of a guest’s bill. All other charges — food and beverage, spa services and recreational activities such as skiing and golf — would not be subject to the tax.

The four per cent tax would be split evenly between the township and a local non-profit tourism entity, whose mandate includes the promotion of tourism in Ontario or the municipality. The township would be free to use its share of the tax any way it wanted.

Jonathan Reid, chief operating officer at Freed Hotel and Resorts, owners of Horseshoe Resort, told council that Horseshoe Resort is not in support of the implementation of a MAT.

“Horseshoe Resort is the only full-service hotel within Oro-Medonte,” Reid said. “It would be the only hotel that would be contributing to the MAT.”

According to Reid, the list township staff developed to support the case for a MAT in Oro-Medonte illustrates just how precarious it would be to implement a MAT in Oro-Medonte.

“Every other municipality in Ontario that has implemented a MAT has a minimum of 15 to 20 hotels, or more, in locations like Niagara Falls,” he said. “The revenue that would be generated from a MAT tax in Oro-Medonte just simply will not create enough revenue to drive enough tourism or make enough of an impact to drive additional tourism to Oro-Medonte.”

Reid was also concerned about competing in a market that is not fair and equal.

He said Horseshoe’s biggest competition — Blue Mountain Resort in the Collingwood area — doesn’t have a MAT and fears Horseshoe would lose bookings because of it.

“It’s not a level playing field,” Reid said.

According to hypothetical information generated by township staff, based on an average daily rate of $150 per night and an occupancy rate of 55 per cent of total inventory, 200 rooms would generate annual gross revenues of about $6 million. 

The four per cent MAT would generate $240,900 of which 50 per cent — $120,450 — would go to the township coffers.

Horseshoe Resort has 100 hotel rooms.

Coun. Lori Hutcheson said she was having trouble “getting my head around the net benefit” when council doesn’t really know what the numbers would be or what properties the township would be taxing.

“I want to weigh out the net benefit of a MAT versus the concerns we’ve heard from Mr. Reid,” Hutcheson said. “I think we need to get another report back in front of council so we can make a more financially based decision.”

Oro-Medonte Mayor Randy Greenlaw also wanted a better understanding of the net value of the tax.

“To be fair, I don’t want to have to change it to the Horseshoe tax because there’s really only one main contributor,” Greenlaw said. “What we need to understand is just how much net value is there to take advantage of to help promote tourism in this township.” 

Donna Hewitt, the township’s director of corporate services, told council it would be difficult to provide the information they wanted since there was no obligation on the part of the hotels or other accommodation providers to supply their average daily rate, their room occupancy numbers or anything else for that matter.

“The accommodators don’t have to give us this information, nor do we know that what they’re giving us is accurate,” she said.

With so many uncertainties, Oro-Medonte council opted to defer a decision and requested more information from staff.

The Town of The Blue Mountains (TBM) is currently conducting a public survey as part of its own MAT research and evaluation project. TBM residents, tourism industry members and business owners/operators can provide feedback until Nov. 26. 

Orillia brought in a MAT in September of 2020. Despite the pandemic, Orillia’s hotel tax generated $346,000 in 2021 revenue.

The city’s municipal accommodation tax generated significantly more revenue than expected through the first eight months of 2022, bringing in more than $476,000 against a projected $295,000.

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