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Editorial

Tourism marketing and Victoria: the numbers speak for themselves

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By now most people have heard that the provincial government has challenged the tourism industry in B.C. to double in size in 10 years. Premier Gordon Campbell has been making the point since at least 2001. At the B.C. and Yukon Hotels Association annual convention that year he told the audience: "Tourism is exceptionally important to our province's economic future. Currently it generates about $1 billion in the provincial coffers every year. We'd like to double that."

And the provincial government appears to be sincere in its belief that tourism can be an even bigger part of the provincial economy. It has supported the industry with things like the resort task force, which will lead to a resort development strategy this fall, investment in infrastructure that will benefit tourism, commitment to the 2010 Olympics, and training/education programs that support tourism.

But a newsletter this week from the Council of Tourism Associations of B.C. shows how the Alberta government is actually providing more cash for tourism marketing than is B.C., and that the Campbell government, like other governments that preceded it, is skimming from the tourism industry.

The news is that Alberta announced late last month it is doing away with its 5 per cent hotel room tax and, starting next April, replacing it with a 4 per cent tourism levy. Details on who would be charged the tourism levy were not announced.

The new tourism levy is expected to generate more than $42 million in revenue in its first year – a 75 per cent increase over what the hotel room tax generated – and all of that money will go to marketing and development of tourism in Alberta.

It could be that the tourism levy is tacked onto things like ski lift tickets, golf green fees and restaurant bills, in which case it would be more than tourists paying the levy. But in a province that doesn’t have a provincial sales tax it may be acceptable. Regardless, the revenue generated will certainly empower the tourism industry in Alberta.

By way of comparison, B.C. has an 8 per cent provincial hotel room tax. It also has a provincial sales tax of 7.5 per cent. And in special places, like Whistler, Vancouver and Victoria, tourists pay an extra 2 per cent hotel room tax, which goes to the local governments for tourism-related spending.

So, in Alberta there will be a 4 per cent tourism levy. In B.C. there is an 8 or 10 per cent hotel room tax and 7.5 per cent provincial sales tax on everything Alberta could possibly put its tourism levy on. Of course in both provinces there’s also the GST on top of all these taxes. And in Whistler we have been pushing for "financial tools", which could add another tax to those totals.

Keep in mind that tourism is a global and very competitive industry.

But we also have to look at where the tax revenues go. Alberta has said that all of the 4 per cent tourism levy will go to tourism marketing and development. In B.C. only 1.65 per cent of the 8 per cent hotel room tax goes to Tourism B.C. The remaining 6.35 per cent goes to the province, which considers it provincial sales tax revenue.

Alberta is expected to generate $42.4 million for tourism marketing through the tourism levy next year. By 2006 it expects to raise $48 million. Tourism B.C. – which it should be noted is the primary, but not the only agency marketing tourism in B.C. – received $24.2 million in hotel room tax in 2003/04. The Crown corporation’s total revenue for 2003/04 was $32.9 million.

Tourism in B.C. is about a $9.3 billion industry. In Alberta, tourism generates a little over $5 billion annually.

In April, when Whistler hosted a one-day forum on the 2010 Olympics, Tourism B.C. President Rod Harris was asked if the province was providing enough funding for the tourism industry to meet the stated goal of doubling in size in a decade. Harris’s response was that at the current rate of investment it will take 34 years to double the size of the tourism industry in B.C.

The numbers speak for themselves.

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