Province sweetens deal on hotel room tax

By John MoorhouseThursday, May 31, 2007 http://www.pentictonherald.ca/stories.php?id=46365

OSOYOOS -- Introduction of an additional two per cent hotel room tax could open the door for Osoyoos to receive additional "resort enhancement" money from the province. Mayor John Slater said the room tax is expected to generate about $1 million over five years, with 50 per cent to be directed to outside marketing. Pending government approvals, the tax should come into effect Oct. 1. Slater said there was some reluctance among local motel owners over implementing the tax, but noted the additional provincial government funding made the tax much more palatable. The province will provide additional tax revenue for certain approved capital projects. "Because we’ve been designated as a resort community, we need to have this in place to get that other equal funding from the province," he said. A previous attempt to introduce the additional room tax in 2005 failed to gain enough support from local motel operators and was temporarily dropped by the Osoyoos Hotel and Motel Association. But town council later picked up the ball again. Last week, it gave final approval to the hotel room tax bylaw and is now applying to the province to enact the room tax within town boundaries. Penticton and Kelowna have introduced similar room taxes to boost tourism marketing efforts, but do not qualify for additional resort funding. The $10-million Resort Municipality Revenue Sharing Program, funded through the Ministry of Community Services, allows qualifying municipalities to receive a portion of the eight per cent hotel room tax. Osoyoos is one of 13 such resort communities which can direct these funds to resort-oriented projects determined by the municipality. The funding hinges on the municipality implementing the additional two per cent hotel room tax and having a resort development strategy in place. Three of the designated resort communities -- Whistler, Rossland and Golden -- have already signed agreements with the province. Osoyoos is the only Okanagan community involved. Tourism in Osoyoos has expanded rapidly in recent years -- and a new $75-million development on the former downtown packing house property is now underway. The four-storey Watermark Beach Resort will include 123 suites and 30 beachfront residences, as well as a restaurant, spa, convention centre and other amenities. When not being occupied by their individual owners, the suites can be put into an optional rental pool managed by Boutique Hotels and Resorts. About 70 per cent of the suites were sold in an initial offering last October, with the remainder expected to be purchased by the end of this summer. The resort is scheduled to open in the fall of 2008.