Hospitality association resigned to Nanaimo's hotel tax exemption

The Nanaimo Hospitality Association has reservations about a new hotel tax-exemption bylaw despite efforts by city hall to address some of the concerns.

In November, council considered the original bylaw that would allow new hotels, or rebuilds with a minimum $2 million investment, to be eligible for a 10-year tax exemption. The plan was an effort to attract a developer for a hotel to complement the Vancouver Island Conference Centre and improve the quality of downtown hotel rooms.

That presented an unfair advantage for a new hotel that could save as much as $1 million annually on a $40-million hotel, while existing hotels had no opportunity to take advantage of tax exemptions, the association said.

Under an amended bylaw, which unanimously passed third reading Monday and is awaiting adoption, existing motels and hotels can now save money by adding services for guests, adding rooms, renovating, or improving the quality of the stay for visitors.

Tax exemptions will be based on an increase in assessment, not the amount spent on improvements, said Ian Howat, director of strategic relationships for the city.

Dan Brady, chairman of the hospitality group, said he is disappointed the city could not follow through on requests to level the playing field – by freezing existing tax rates for existing hotels and motels, or waiving development cost charges – but understands the city's position.

"Unfortunately the city just wasn't legally able to carry through on some of our requests, so I think they did what they were able to do which is great, we appreciate it, and what's done is done. We understand why they're taking this approach, we just don't agree with it."

Brady said despite the inequalities, hotel operators will continue to support economic and tourism strategies being developed to attract more visitors and fill up more rooms.

"We just need to get more people coming to Nanaimo for whatever reason, whether it's sports, business, tourism, education, or whatever. We need to keep working together to get more people coming to town."

Visitor stays in Nanaimo and across the country have sagged due to a slow economy. Nanaimo saw a steady drop in hotel stays of two per cent annually in recent years.

The bylaw amendment also included staff reports to explore the potential for redevelopment of some hotels and motels to provide rentals for working poor and low-income seniors, as well as preparing guidelines to determine whether applications for tax exemptions conform with the objectives of the bylaw.

Other requests by the hospitality association included providing credits for past improvements already complete or providing a $200 water and sewer credit per room, all of which were denied mostly because of provincial regulations.

"It's an extremely challenging amendment to this bylaw," said Coun. Bill Bestwick. "To attempt to [provide incentives] when it's not a level playing field is very challenging, especially with restrictions placed upon us provincially or otherwise."

The conference centre hotel is seen as a key component of the facility's success. As the VICC starts its third full year of operation, it is expecting 32,000 delegates this year about 38,000 next year.

Currently, Nanaimo's downtown has about 400 "quality rooms", according to Mayor John Ruttan, while the VICC can seat 1,300 people at a time while feeding 950. Adding more quality rooms near the centre, he said, will attract more delegates and ultimately benefit all local hotels.

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