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RMOW gets hotel tax revenue from points-based real estate

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The municipality will get its fair share of hotel tax revenues from the future Hillside Lodge in Creekside even though no money will be exchanged in the room rentals.

The Hillside Lodge, which will be one of the last Intrawest buildings to go up in Whistler Creek, is designed to operate on a points-based real estate system. As such, members of Intrawest Resort Ownership Corporation can stay at the Hillside Lodge by redeeming the points they collect as IROC members.

It’s a system that has pros and cons for Whistler explained Bob MacPherson, general manager of planning and development services at the municipality.

Points-based real estate, like time-share mechanisms and fractional ownership, generally mean that there is a high occupancy in the building he explained.

The downside however, is that there are no cash transactions and so the two per cent hotel tax, which is applied to hotel rooms throughout the resort, does not apply to rooms operating on the points system.

On Monday council approved a deal whereby the Hillside Lodge will still contribute to the hotel tax fund.

A formula, which calculates the room rates at $195 each and the occupancy rate at 85 per cent throughout the year, means Intrawest will contribute about $85,000 annually to the hotel tax fund or $1,210 for each of the 70 rooms in the lodge.

The formula raised red flags for some councillors, even though it was designed to follow the annual trends of the Vancouver Consumer Price Index.

Councillor Ken Melamed said the trend in Whistler has been for room rates to go up, far higher than increases of the Vancouver CPI.

"That ($195 per room) rate could double (in coming years)," said Melamed.

"Room nights have not gone up by the CPI."

He was concerned that once council approved the formula, they would be in no position to bargain down the road for a more equitable share if the room rates increase.

Likewise Councillor Kristi Wells wanted assurances from staff that the formula could be adjusted if the two per cent hotel tax changed in the future.

Wells also asked for the fees to be paid in a lump sum at the beginning of the year so the municipality could gain interest and also access the money sooner rather than later.

Administrator Jim Godfrey explained that though the room rates might be a little light at $195 the occupancy rates were very high at 85 per cent. He said the formula was reached after significant negotiations with IROC.

Council ultimately approved the rental pool modification, allowing the Hillside Lodge to operate on a points based system. As a compromise, council asked that the municipality be able to renegotiate the hotel tax calculation for the Hillside Lodge after five years.

The existing IROC building, on the Blackcomb Benchlands, is a time-share operation and the municipality does not collect hotel tax from it.

The Hillside Lodge is one of the final pieces to Intrawest’s development of Whistler Creek. When complete it will be a 70-room condo hotel.

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