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MRDT Hotel Tax & Renewal Process

Wednesday • May 11, 2016

Fernie's 2% Hotel Tax/MRDT approved for another 5 year term, begining February 1, 2017.

MRDT 5-Year Term Renewal Process

January 31, 2017 marks the expiry of the current 5-year MRDT term in Fernie. Led by Tourism Fernie, the renewal process is now complete and consisted of:

  • Tourism Fernie to develop a high level 5 Year Strategic Business Plan
  • Presentation to Chamber of Commerce Board of Directors May 12th
  • Presentation to Fernie's City Council on May 24th
  • Local accommodators Meeting on May 25th
  • Presentation to Regional District of East Kootenay Board of Directors on June 9th
  • Letter of Support from the RDEK and City of Fernie for the tax renewal and for Tourism Fernie to become the Eligible Entity
  • Confirmation of local accommodator continued support of the MRDT at the current 2% tax rate. A minimum of 51% of the accommodators and 51% of the rooms/units need to be in support.
  • Completed and submited renewal application by July 29, 2016 deadline
  • Received approval from Ministry of Finance on December 14, 2016

What is the MRDT?

The Municipal, Regional and District Tax (MRDT), previously known as the Additional Hotel Room Tax (AHRT), is a tax of up to 3% on the purchase of short-term (under 30 days) accommodation (fixed-roof lodging of 4 or more rooms) imposed in specific geographic areas of the province on behalf of municipalities, regional districts or eligible entities.

The MRDT program was originally introduced in 1987 and raises revenue for local tourism marketing, programs and projects. It is intended to help grow BC revenues, visitation and jobs, and amplify BC’s tourism marketing efforts in an increasingly competitive marketplace.

In 2002 only 7 communities in BC collected the 2% MRDT. In 2015, 54 communities/regions are collecting the 2% MRDT and investing over $28 million annually to bring visitors to their businesses.

MRDT Program Principles:

  • Effective tourism marketing, programs and projects.
  • Effective local-level stakeholder support and inter-community collaboration.
  • Marketing efforts that are coordinated and complementary to provincial marketing strategies and tactics.
  • Fiscal prudence and accountability.

The MRDT in Fernie:

Since February 2007 Fernie accommodators have been collecting the 2% MRDT from their overnight guests. Accommodators report and remit the MRDT (along side the PST) to the Ministry on a monthly or quarterly basis. The Ministry then sends Fernie’s monthly MRDT amounts, less an administration fee, to the Regional District of East Kootenay who in turn sends it under contract, less an annual administration fee, to Tourism Fernie.

Since 2007 Fernie’s MRDT gross collections have totaled $2.5 million, an average of $295,000 annually. 

The MRDT and the development of Tourism Fernie, a non-profit industry led organization, has allowed the community to develop and execute tourism destination marketing initiatives totaling over $5 million plus an estimated $2 million in additional value added marketing exposure and leveraging.

The MRDT has also allowed Fernie to become an approved Resort Municipality Initiative (RMI) community. RMI funds go directly to the City of Fernie, and are intended to assist small, tourism-based municipalities to support and increase visitation. Since municipalities like Fernie typically have a small tax base due to their size, the demands of their tourism activity often strain the resources available to provide infrastructure and event programming. RMI funding allows these communities to dedicate resources to improving tourism-based infrastructure and amenities to attract more visitors and encourage longer stays. Fernie has been an RMI community since 2009 and has received over $2.3 million as of 2014. In Fernie, RMI funding is calculated at 1.5 of the previous year’s MRDT.

The MRDT is a direct reflection of the strength of the tourism sector in Fernie.

The $2.5 million in Fernie MRDT translates to $125.5 million in accommodation revenues. Since 2007 accommodation revenues in Fernie have increased 25% (outside of a dip with the recession and the low-snow months of Jan-Apr 2015), with the most significant growth in the summer (46%).

Visit www.tourismfernie.com/stakeholders for more details about Tourism Fernie including how MRDT funds have been invested as detailed within the Annual Reports.

NEW MRDT Program Requirements

As of September 2015 the government released a document detailing the updated MRDT Program Requirements. In brief, the updated requirements include more detailed annual reporting, a 5-Year Strategic Plan (upon renewal periods), and an annual Tactical Plan. Full details can be found at this URL: http://www.destinationbc.ca/BC-Tourism-Industry/Municipal-and-Regional-District-Tax-Program.aspx

NEW 3% Option

As part of BC Government’s 2015 Budget, the legislature approved a 1% increase to the maximum Municipal and Regional District Tax (MRDT) program rate allowed under the Provincial Sales Tax Act to 3%, from 2% previously. This change to the MRDT rate is entirely voluntary (51%+ accommodator vote approves the increase within a community) and will only apply to municipalities, regional districts or eligible entities that request the increase, and whose applications are approved by government. Communities that choose to increase their MRDT rate will also support a new provincial Tourism Events Program. 0.2 percentage points of the incremental 1% collected would go back to the province for this program.

The additional 1% would equal approximately $150,000 in additional MRDT funds (27% increase in Tourism Fernie’s budget) to market Fernie annually. The Tourism Events Program would take approximately $30,000 of the $150,000. The Tourism Events Program is a provincial application-based program intended to support large events that drive significant overnight visitation to BC.

The 3% option will involve additional reporting including a stakeholder satisfaction survey and report on community collaboration.

Tourism Fernie Vision, Mission, Guiding Principles & Key Goals

TOURISM FERNIE VISION

Fernie is the most sought after tourism destination in the Canadian Rockies

TOURISM FERNIE MISSION

Increase visitation and revenue for stakeholders through tourism marketing

TOURISM FERNIE GUIDING PRINCIPLES

  • Industry Led / Government Supported – we are led by members of Fernie’s tourism industry who solicit government support for tourism as an economic engine for Fernie
  • Customer focused – we place customer needs first in the belief that what is best for the customer will ultimately be best for our stakeholders
  • Sustainable –we respect the community’s social, economic and environmental values
  • Fair and transparent – we have fair processes that are open to scrutiny and we explain the rationale for our decisions to interested stakeholders   
  • Inclusive – we welcome input and work together with members, stakeholders, and other organizations
  • Innovative – we consistently create solutions that are ahead of the marketplace and the competition
  • Accountable – we are fiscally responsible, measure results, adjust to changing market conditions, and account to stakeholders

TOURISM FERNIE GOALS & OBJECTIVES

  • Long-term sustainability of Tourism Fernie
    • Effectively engage stakeholders to maximize opportunities for Tourism Fernie
    • Maintain fiscally responsible financial plans
  • Effective marketing
    • Enhance use of research and metrics
    • Continue to shift to content marketing and ‘story-telling’ marketing
    • Collaborate with members/stakeholders to create and market innovative initiatives that drive visitation and revenue

For more information please contact:

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