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Tax revenue data shows Okanagan hotels hit hard by COVID-19 pandemic

Click to play video 'Tourism Kelowna expresses concern over  fewer marketing dollars as a result of drop in hotel tax revenue' Tourism Kelowna expresses concern over fewer marketing dollars as a result of drop in hotel tax revenue
It's a sector that's been particularly hard hit by the pandemic--the hotel industry. New data released by BC's finance ministry show just what a big blow COVID-19 has been to Okanagan hotels and motels. The stats show a significant drop in hotel tax revenue and as Klaudia Van Emmerik reports, that directly impacts tourism organizations and their ability to properly market the area to potential tourists – Jan 26, 2021

B.C.’s Ministry of Finance has released new data that highlights the struggles the Okanagan hospitality sector has faced during the coronavirus pandemic.

In Kelowna, hotel tax revenues decreased to $2.2 million from January to October, compared to $3.5 million over the same time period last year.

In Penticton, hotel tax revenue was down as well. The lakeside city saw visitors pay $550,243 in hotel taxes from January to October, compared to $669,732 over the same time period last year.

Read more: British Columbia will not impose restrictions on inter-provincial travel, premier says

In Kelowna, the Municipal and Regional District Tax (MRDT) is a 3 per cent tax applied to sales of short-term accommodations, like hotels and motels.

Taxable accommodation also includes resorts, bed and breakfasts, houses, cottages and cabins.

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The MRDT applies in the same manner as the eight percent provincial sales tax (PST) on accommodation.

The levy provides funding for local tourism marketing initiatives, programs, and projects with the intent to help grow B.C. revenues, visitation, and jobs.

Click to play video '13 COVID-19 cases now linked to private parties in Kelowna involving tourists.' 13 COVID-19 cases now linked to private parties in Kelowna involving tourists.
13 COVID-19 cases now linked to private parties in Kelowna involving tourists – Jul 14, 2020

Tourism Kelowna said hotel tax revenue is down due to decreased travel during the COVID-19 pandemic.

“Like other destinations across Canada, Kelowna saw a complete halt to visitation in early 2020 as the global pandemic reached British Columbia and travel restrictions were imposed,” said Lisanne Ballantyne, president and CEO of Tourism Kelowna.

Read more: Guests welcome, says Tourism Kelowna, but research recommended before visiting Okanagan

“Over the summer months, when travel restrictions were eased, Kelowna and the Okanagan saw above provincial and national averages for visitation and overnight stays, though these were still much below 2019 levels.”

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Ballantyne said visitor spending was also down.

Click to play video '“This hotel is fully occupied this weekend,” Tourism on upswing in the Okanagan despite pandemic' “This hotel is fully occupied this weekend,” Tourism on upswing in the Okanagan despite pandemic
“This hotel is fully occupied this weekend,” Tourism on upswing in the Okanagan despite pandemic – Jul 3, 2020

“Coming into the end of 2020, travel slowed and restrictions and recommendations against non-essential travel were again imposed, resulting in limited overnight travel. Naturally, overnight stays and spending in destinations is far below 2019 levels, which, for Kelowna, was the highest year on record for accommodation levels and revenue,” she said.

Ballantyne added that Kelowna also suffered major economic losses from reduced business travel and postponed or cancelled conferences and major events, including several high profile national and international events like the Memorial Cup and World Curling Championships.

Read more: “This hotel is fully occupied this weekend,” Tourism on upswing in the Okanagan despite pandemic

“These major events usually take place in the spring or fall months when travel levels are naturally a bit lower,” she said.

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Tourism Kelowna said it anticipates 2021 hotel tax revenue will also be below 2019 levels as it will take years to fully recover from the impacts COVID-19 has had on the tourism industry.

Click to play video 'Bed and Breakfast operators in the Okanagan have been hard hit by the pandemic' Bed and Breakfast operators in the Okanagan have been hard hit by the pandemic
Bed and Breakfast operators in the Okanagan have been hard hit by the pandemic – May 21, 2020

The tax is at 2 per cent in Penticton and was increased to 3 per cent in Osoyoos in September 2019.

Osoyoos visitors paid $677,857 in hotel tax in the first ten months of 2020, while $597,077 was collected in the same time period the year prior.

The BC government said it has provided 61 organizations with a one-time $10 million grant to help them retain staff and offset expenses the organizations faced with a reduction in MRDT funds, “allowing them to better support economic recovery efforts in the tourism sector when travel restrictions are eased,” it said.

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B.C.’s remains under a non-essential travel advisory as health officials attempt to curb the spread of COVID-19.

B.C. had explored the idea of an inter-provincial travel ban, but Premier John Horgan said last week the province cannot legally prevent non-essential travel. 

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