The City of Kelowna has renewed its tourism tax for the next five years.
With unanimous support at a Monday, Oct. 25 meeting, council approved extending the Municipal and Regional District Tax (MRDT) until 2027.
The MRDT is a three per cent levy imposed on every hotel or motel stay in the city. It was first adopted in 2004, with a two per cent fee, before being hiked to three per cent in 2017. The city uses the revenue for tourism advertising and other initiatives via Tourism Kelowna. The funds account for around 65 per cent of Tourism Kelowna’s budget.
Since 2019, the city has also taxed online accommodations such as Airbnb and VRBO at the same three per cent cost. Those funds are instead earmarked for a city reserve for affordable housing initiatives, namely land acquisition.
Provincial law requires the city to look at the bylaw every five years to gauge support among accommodation providers. At least 51 per cent of properties, collectively offering at least 51 per cent of the city’s units, have to support the program for it to continue.
City-data show the tax is supported by 77 per cent of units and 58 per cent of properties, about seven points lower than the last time the city reviewed the bylaw in 2017. Tourism Kelowna said fewer responses from properties caused the drop — 28 per cent of properties, accounting for seven per cent of the city’s units, did not respond when asked whether they supported the tax.
Based on 85 per cent of pre-COVID tourism levels, the MRDT is anticipated to net the city $2.63 million in 2022. From December 2020 through July of this year, the levy garnered more than $1.5 million.
Tourism Kelowna hopes that by 2023 visitation numbers and hotel occupancy will return to pre-pandemic levels.