It urges all Ottawa-area hotels, which have four or more rooms, to add a three-per-cent destination marketing fee on all hotel room bookings to partially fund Ottawa Tourism.
If the proposal is successful, the money will be remitted through a new OGHA management committee made up of representatives of DMF participants. The OGHA would like the new fee in place by Sept. 1.
Unless the fee is implemented, Ottawa Tourism faces drastic cuts as provincial funding – its only source of money – drops from $7.59 million in 2012 to a projected $3.56 million in 2013.
Halving the budget would mean restructuring the office, removing marketing in emerging markets such as China, and eliminating a conference destination fund that has already been lauded for bringing prominent meetings to town, according to Ottawa Tourism.
Still, local tourism officials said in a meeting on Tuesday that they expect this won't happen because industry will hop on board. So far, hotels representing 40 per cent of local inventory, or 3,800 rooms, have verbally agreed to institute DMFs.
The OGHA is strongly pushing for 100-per-cent participation, and has a stick to encourage this to happen: only hotels that contribute to the DMF will receive marketing from Ottawa Tourism.
"I think we all agree a $4-million cut will have a devastating impact to us here," said Dick Brown, OGHA's executive director. He was flanked by Mayor Jim Watson, Ottawa Tourism head Noel Buckley, and Hotel Association of Canada president Tony Pollard when he made the announcement.
Funding for Ottawa Tourism has been in flux since the implementation of the HST in 2010.
Prior to the introduction of the HST, Ottawa Tourism derived all of its money from a previous version of the DMF (set at three per cent) that virtually all OGHA members included on hotel rooms.
When the new tax came in, the provincial sales tax portion on hotel rooms increased to eight per cent from five per cent, and the DMF was eliminated due to a provision under an agreement with participating hotels.
The agreement said any tax increase on hotels would be offset by a decrease in the DMF.
The province offered transitional funding to address the shortfall, but that is slated to end on Dec. 31 this year.
Afterwards, it proposes to offer a smaller, permanent amount to the region that varies by year, made up of a mix of base funding, performance funding and funding through partnerships.
The province designated 13 tourism regions in 2009 (later expanded to 15), with Ottawa and the united counties of Prescott-Russell forming Region 10.
Each of these regions will likely receive the following annual funding from the province:
- Base funding of $500,000;
- Performance funding based on roughly how much tourism revenue is generated in each region. In Ottawa, the performance funding is expected to be $2.55 million in 2013;
- Partnership matches of up to 20 per cent of performance-based funding. In Ottawa, this is expected to be $510,000.
The city plans to implement a "bid more, win more, host more" approach to draw larger events to the capital, especially with Canada's 150th anniversary coming up in 2017. It is hoped that by drawing bigger events, performance funding from the province will increase.
Mr. Watson told attendees at Tuesday's meeting that he wants the city to "own" 2017 in terms of events in the same way Vancouver owned 2010 for the Olympics, and Toronto will own 2015 because of the Pan American Games.
Toronto is facing a similar challenge from the province and is working to implement its own DMF from hotels in its region, Mr. Brown said.
If Ottawa hotels don't step up, Mr. Brown added, the province will likely be forced to implement a tax on rooms in the city. Conversely, if there is 100 per cent participation, Ottawa Tourism will receive $7.5 million annually from the DMF on top of the expected $3.56 million in provincial funding.
But Mr. Brown warned this pales beside the other cities for which Ottawa competes for the leisure and convention business, including Toronto ($36 million), Montreal ($31 million) and Vancouver ($15 million.)
"$11.5 million is but the minimum required to market this city," he said. "Without these funds, we can't do it."