An Accommodation Levy is a small amount added to the price paid for a hotel room. It is generally an additional one to five percent of the room cost. For example, if the room cost was $150 per night, and the accommodation levy was 2%, the additional cost added to an accommodation bill would be $3.
Frequently Asked Questions
Levy Frequently asked questions
What is an Accommodation Levy?
Why do we want an Accommodation Levy in Yellowknife?
Accommodation Levies help communities to fund tourism marketing in order to develop and expand their local tourism industry. In Yellowknife, this will develop and expand our local economy and local tourism industry without an extra cost to Yellowknife taxpayers – putting money back into our community through tourism employee wages, local purchases and taxes.
Who initiated the proposal for this Accommodation Levy?
Initially a proposal was developed by the Yellowknife Hotel Association in conjunction with the City of Yellowknife and now has the support of both the NWT Association of Communities, NWT Tourism and City Council.
If an Accommodation Levy proceeds, will it be applied across the NWT?
The Accommodation Levy is not proposed as an “across the board” model. The proposed legislation would enable communities to make their own decision about implementing an Accommodation Levy in their community. Yellowknife is ready to proceed.
Do other cities in Canada charge an Accommodation Levy?
Almost all large cities, and many smaller cities in Canada, charge an Accommodation Levy of between 2% and 5%. Most Canadian and international travelers are used to seeing this charge on their hotel bills. However, the charge goes by many different names across Canada. It may be called a Destination Marketing Fee (DMF) if it is voluntary. It may be called a Municipal and Regional District Tax (MRDT) or an Accommodation Tax if it is mandatory. When it is called a Levy it is usually mandatory.
Who will collect the Accommodation Levy?
In Yellowknife, an Accommodation Levy will be collected by hotels, motels and most other providers of short term accommodation. The levy will be mandatory. It will not be optional. The funds collected by the hotels will be remitted monthly to the City of Yellowknife, who will provide the money to a proposed Destination Marketing Organization (DMO) that will be responsible for increasing the number of visitors to Yellowknife.
Who will decide what the Accommodation Levy funds are to be used for?
The Levy will be managed by a not-for-profit Yellowknife tourism marketing organization that will be involved only in tourism marketing and be set up as a Destination Marketing Organization (DMO). All its marketing plans will be reviewed and approved by an independent Board of Directors that represent all tourism stakeholders in Yellowknife.
What types of marketing campaigns could be funded by an Accommodation Levy?
Marketing to attract more visitors to Yellowknife for longer periods of time will be the top priority. Some campaigns could include:
- Increasing awareness of Yellowknife as a year round tourism destination.
- Promoting Yellowknife as a conference/convention centre.
- Promoting larger, multi-day events such as Folk on the Rocks, Long John Jamboree, the Snow King Festival to audiences outside Yellowknife.
Where appropriate, the new DMO could partner with NWT Tourism on marketing efforts.
How much will be collected annually through an Accommodation Levy?
The amount collected will depend on the number of visitors to Yellowknife. Considering the number of available rooms, the current occupancy rates and a proposed Levy of between 2% and 4%, the amount collected annually could be between $750,000 and $1.5 million.
Will this Accommodation Levy be mandatory or voluntary? Does every accommodation facility have to collect the levy?
In Yellowknife an Accommodation Levy will be mandatory for short accommodation facilities within the municipal boundaries. However, in the legislation to be developed, the following exemptions are being considered:
- Accommodations purchased by the same person for a continuous period of 30 nights or more (because this is similar to monthly apartment rentals);
- Accommodation in smaller B&Bs, with three rooms or less for rent;
- Accommodation provided to patients or residents of a hospital, nursing home, Elder’s residence, care facility or medical boarding house.
- Accommodations provided to a student in a college residence;
- Accommodation supplied directly by employers to their employees; and
- Hospitality rooms in hotels that do not include a bed and are used for meeting and receptions instead of overnight accommodation.
Does the Accommodation Levy apply to the GST?
The Accommodation Levy will not be applied to the GST. It is calculated on the rental price of the guest room before GST is added.
What if the accommodation price is part of a package that includes additional services?
If a tourism “package” includes the accommodation plus other goods and services (spa, meal, etc.), services that can be bought separately will not be taxed. The Levy also will not apply to optional items such as room service, movies, and telephone calls. The Levy will only apply to the room portion of the hotel bill.
Who supervises how the money raised through the Accommodation Levy is spent?
Money raised through a Yellowknife Accommodation Levy will be managed by a Destination Marketing Organization created to market Yellowknife as a tourism destination. Across Canada similar organizations operate with strict planning and spending guidelines. They have representation from key stakeholders on their Boards of Directors.
Why do we need a Yellowknife Destination Marketing Organization? We already have the Northern Frontier Visitors Association (NFVA).
The Northern Frontier Visitors Association is not a marketing organization. It is an advocate for the tourism industry in the North Slave Region. It also operates the Northern Frontier Visitors’ Centre in Yellowknife as part of its visitor services mandate. This centre directs visitors to tourism attractions and activities in the region and across the NWT. The proposed DMO for Yellowknife could be the NFVA if they want to expand their mandate. Or it could be an entirely new organization that merges with, or works with, the NFVA. Various options will be investigated during the next few months.
Just how important is tourism in Yellowknife’s economy?
In Yellowknife the average direct contribution from visitors to the local economy is $250,000 a day. That adds up to over $90 million a year. When purchases from local suppliers and service providers and spending by employees that work in tourism related businesses and tourism industry suppliers are added, the benefit to Yellowknife’s economy increases to over$300,000 per day.
In Yellowknife there are scores of businesses that depend on tourism. These businesses employ hundreds of people who live and work in Yellowknife. They buy goods and services locally and pay taxes. An Accommodation Levy, when used to market Yellowknife as a tourism destination, will help to make more people aware our city’s attractions and encourage more of them to visit us – strengthening our local economy.
What should we call a new accommodation charge on travelers’ hotel bills – a Tax or a Levy?
Both terms, Accommodation Tax and Levy, are in use across Canada. Some people like the term Levy because it labels the charge as separate from taxes, like the GST, which go to the government. Others prefer the term “Tax” because it makes it clear that the charge isn’t voluntary. The Yellowknife Hotel Association, and other businesses providing accommodation, is being asked for their preferences.
What happens if there is no Accommodation Levy to raise funds to market Yellowknife tourism?
Without a levy it will be very difficult for the City of Yellowknife to raise more funds to promote Yellowknife as a tourism destination. And, without increased promotion there will be slower growth in the tourism sector. That will mean slower economic growth for Yellowknife, fewer new job opportunities and less money circulating through the Yellowknife economy.
Why does Yellowknife tourism marketing need financial support from an Accommodation Levy? Doesn’t it already get lots of money from the Government?
The territorial government supports NWT Tourism which promotes the entire territory with the “SPECTACULAR NWT” brand. Individual community tourism promotions are largely up to the individual communities themselves.
Aren’t most of the people who stop in Yellowknife coming because they work with governments or for businesses? They’re not really tourists and we won’t get more of them here with advertising.
That’s not really true. Conventions and business meetings bring thousands of people to Yellowknife every year. In 2015-16, business travelers, including conferences and convention attendees, made up 28% of all visitors and contributed 45% of all visitor spending. Yellowknife Aurora visitors accounted for 29% of all visitors in 2015-16 and contributed 22% of all tourism expenditures.
What will be the additional cost to the GNWT when staff uses Yellowknife Hotels?
The additional cost to the GNWT for employees using Yellowknife hotels will be substantially lower than the cost of providing additional marketing funds to market NWT cities. And, additional visitor revenues will be collected by the GNWT through licences and corporate taxes. The amount collected by the GNWT, will very likely be larger than the Accommodation Levies paid by GNWT staff using Yellowknife hotels.
What is required to move an Accommodation Levy forward?
The main thing needed is for the Government of the Northwest Territories to pass new legislation. That will enable communities, should they wish, to implement a municipal Accommodation Levy to raise money to market their community as a potential visitor destination.
How long will it take to get an Accommodations Levy in place in Yellowknife?
It could take up to one year.
Once the legislation is in place, how will an Accommodation Levy be monitored?
The money raised in a municipality by an Accommodation Levy will be monitored in two ways. First, the levy money will be collected by the municipality and will be reported separately. Second, the spending of the money will be monitored by a not-for profit organization formed to approve strategic marketing plans, budgets and financial statements of the Destination Marketing Organization that is doing the marketing.
DMO Frequently asked questions
What is a DMO?
“DMO” is short for Destination Marketing Organization. Most DMOs have two primary purposes. The first is to increase awareness of a city or region as a uniquely attractive destination for both leisure travelers and conference organizers. The second is to make sure that travelers have great experiences that can live up to the destination promotions and advertising.
Most DMOs are organized to do three things. First they want to promote their destination and convince travelers that the city or region they represent will provide visitors with great experiences. Second they want to showcase the tourism attractions and services that will transform potential visitors into actual visitors. Third they want to work with their community, and its tourism businesses, to give visitors unique, high quality experiences that will bring them back again and encourage their friends to visit as well.
What is the difference between a DMO and Visitor Information Centre?
The biggest difference is that the DMO is primarily a tourism marketing organization and the information centre provides visitors with information about a destination once they have arrived at the destination. In many communities the information centre is operated by the DMO.
Where do city DMOs get their money to operate?
Most city DMOs get their funding from either mandatory or voluntary fees that are added to the room rental charge when a visitor checks out of a hotel. To make sure that the whole process of collecting and spending the money is open and accountable, mandatory fees are collected by some level of government. The money is then made available to a not-for-profit organization, such as a DMO, that decides on the best way to spend the funds to increase the number of visitors.
Most DMOs operate through a registered not-for-profit organization with an elected, independent Board of Directors representing major parts of the tourism industry, government agencies, community groups and community members with an interest in promoting local tourism.
What kind of staff is needed?
DMOs are staffed by marketing specialists who know how to promote their destination to audiences who are a match for the attractions, facilities and experiences that the destination offers. They often focus on specific niches like convention marketing, sport and special event marketing. They also work with local tourism operators to make sure that tourism products are both trade and consumer ready. And, they work with all sizes of tour operators to assist in marketing the destination. Using advertising, public relations and social media skills, they focus on developing a compelling, sustainable and memorable brand for their destination.
When would a Yellowknife DMO get established?
Planning for a Yellowknife DMO is happening now. Once an Accommodation Levy is approved, implementation of the plan will begin. It could take up to a year to have a fully functioning DMO.
Could an existing Yellowknife group take on the DMO role?
Possibly. An existing group, such as the NFVA, could become a DMO. This would require some changes to their mandate, the addition of specialized marketing staff and the formation of a new Board and organization charter. As is the case with most other DMOs, they could continue to be responsible for visitor services as well as destination marketing. Their role in marketing Yellowknife as a convention and large business meeting destination could also become part of the mandate.
How much money would be needed each year to fund a Yellowknife DMO?
The total budget will need to consider the scope of the DMO’s work. A minimum of $1.0 million would be needed to mount an effective destination marketing program. If the DMO was also a funding source for tourism visitor services an additional tourism and conference marketing initiatives, an adequate budget could be between $1.5 and $2.0 million.