British Columbia’s visitor economy has been one of the province’s top performing business sectors over the past few years, expanding faster than the economy at large and outpacing traditional sectors such as agriculture and fishing.

In February, the provincial government announced, as part of its BC Budget, to apportion some MRDT revenues toward affordable housing initiatives. The proposed change to MRDT regulations was introduced without meaningful consultation with the industry most affected. The current MRDT structure has been successful for decades. No other industry would have to face this scenario where they are destabilized to fix another issue. The tourism industry does not want government to use any part of MRDT for affordable housing initiatives. These initiatives should be funded through other mechanisms as there are numerous examples of when governments destabilize tourism marketing or eliminate it completely – example Colorado http://longwoods-intl.com/the-rise-and-fall-of-colorado-tourism/.

MRDT is the 2% or 3% Municipal & Regional District Tax, also known as the Additional Hotel Room Tax, that accommodation properties collect from guests. In Fernie, these funds are the primary revenue source for Tourism Fernie. The MRDT program is designed to assist destination marketing organizations (DMOs), like Tourism Fernie, with funding tourism marketing, programs and projects. MRDT is intended to help communities attract more visitors, generate economic impact through tourism, and create jobs.

MRDT Hotel Tax & Renewal Process - Fernie 2016

The concept to rob Peter to pay Paul typically results in failure.  For example, in recent years government used a particular crown corporation’s revenues to balance the books and fund other projects. Now this crown corporation is in a perilous position financially. This will happen in tourism as well.

Because MRDT requires support from the local hotel community, this new scenario will pit hoteliers against local governments.  That does not foster intra-sector collaboration.

At renewal time, MRDT may be shut down in many communities due to lack of hotel support because of the housing stipulation.  Consequently, a smaller destination marketing fee applied by hotels could emerge to replace MRDT but not necessarily be forwarded to a DMO.  This type of voluntary marketing fee (attempting to be similar to the MRDT tax but is not enforceable) was once in place in Canmore that ended up falling apart in 2016 causing Tourism Canmore shut its doors and the community to lose vast tourism destination marketing dollars.

MRDT provides local/regional governments with a sales tax stream derived by only one industry. It makes this revenue stream too tempting for a local government to resist.  As a result we will see DMOs at risk.

Reduced MRDT will cost communities who will now have to fund tourism marketing out of city coffers (resident property tax vs the MRDT consumer tax).  

With an incoming crop of new councillors and mayors this fall, many of them will not have familiarity with this program.   Therefore, they may view MRDT as another source for funding election promises.

Regrettably, despite strong efforts to date by the Tourism Industry Association of BC, several destination marketing organizations, and sector partners, we have not yet convinced the BC government of the seriousness of our concerns, even after recent meetings with the Minister of Tourism, Arts and Culture, and the Minister of Finance.  Tourism Fernie itself has sent letters to government and recently met with East Kootenay MLA Tom Shipitka.  Local accommodators have also been sending letters to government. The Fernie and BC Chamber of Commerce both support the cause, and the City of Fernie has verbally stated that they have no interest in supporting the use of any MRDT funds for affordable housing initiatives.

The tourism economy is vital to Fernie’s overall economic sustainability and prosperity with over 307,000 visitors annually and over $100 million in visitor spending[1].  Over 42% of businesses in Fernie are directly impacted by tourism and 93% of businesses indicate that tourism is an economic driver with the greatest growth potential[2]. The future of tourism in Fernie is very optimistic with opportunities for further growth.

Value of Tourism in Fernie

For more information please contact either Scott Gilmet, Chair of Tourism Fernie at 250-423-6008 or Jikke Gyorki, Executive Officer of Tourism Fernie at 250-423-2037.