City pushes to end exemption

Tourism Prince George Executive Director Scott McWalter is asking the city to advocate for an end to that exemption, a temporary targeted change to the rules or another funding mechanism capable of protecting tourism revenues.

McWalter brought the issue to the city’s Standing Committee on Intergovernmental Affairs in a letter dated July 29.

His request comes as Prince George prepares for several major projects that could bring an influx of construction and industrial workers into the community. Many of those workers could be housed in local hotels for longer than 27 days, making their stays exempt from the MRDT.

McWalter described the expected economic activity as positive for Prince George, its hotels and the wider region. Tourism Prince George is not seeking to discourage projects or prevent accommodation providers from accepting long-term workforce bookings.

Instead, the organization is looking for a way to ensure the hotel sector and construction industry can grow without weakening Prince George’s ability to attract visitors, conventions and events.

“Prince George is entering an exciting phase of construction and industrial activity,” McWalter said. “What we have here is a great problem to have.”

The organization estimates there are approximately 2,000 hotel rooms in Prince George. Those rooms currently generate about $1.75 million in MRDT revenue annually.

Tourism Prince George modelled several scenarios to illustrate what could happen if a substantial share of the city’s hotel inventory is occupied by workers staying for more than 27 days.

At the lower end, 20 per cent long-term workforce utilization could reduce annual MRDT revenue by approximately $350,000. At the higher end, 60 per cent utilization could produce a reduction of about $1.05 million.

McWalter emphasized that the figures are planning scenarios rather than forecasts. However, he said they demonstrate the potential scale of the financial exposure facing the organization.

A reduction in MRDT funding would affect more than advertising campaigns. Tourism Prince George uses the money for destination marketing, event attraction, visitor services, hosting support and destination development.

The funding also supports the city’s visitor information centre and efforts to generate business and event-related travel.

Tourism Prince George is asking for the issue to be addressed before Prince George reaches the height of the anticipated construction activity.

“It’s really a matter of just being proactive and having these conversations now rather than 2027 or 2028 arriving, and then all of a sudden we’re reactive to an issue at hand,” McWalter said.

Prince George City Councillor Garth Frizzell supports taking the concern to the provincial government.

Frizzell said the MRDT has provided significant benefits to the city for approximately 15 to 20 years. By using a fee collected from hotel guests to support destination marketing, the model has limited the need to provide additional tourism funding through the municipal tax levy.

“It means no increases to our local taxpayers,” Frizzell said. “That’s because when tourists and visitors are coming, that additional fee that they pay at each hotel stay subsidizes Tourism Prince George as a destination.”

Frizzell said the city cannot wait until tourism revenues begin declining before seeking a solution.

“We can’t just see that train wreck coming and do nothing about it,” he said. “We are going to absolutely advocate to the provincial government on this.”

The city’s Intergovernmental Affairs Committee has recommended that the matter be forwarded to council. Frizzell said the city also intends to raise the issue with the Union of B.C. Municipalities because other destination marketing organizations could experience similar challenges.

The provincial exemption is intended to distinguish long-term accommodation from conventional short-term hotel use. However, Tourism Prince George argues that extraordinary workforce demand could create an unintended result for communities hosting major projects.

Hotels could be full and local economic activity could be strong while the organization responsible for attracting visitors experiences a substantial reduction in revenue.

Longer workforce bookings could also reduce the number of rooms available for tourists, sports groups, conferences and major events.

Tourism Prince George has proposed several possible responses, including a temporary exception limited to communities experiencing extraordinary workforce demand, a pilot program or an alternative funding model.

McWalter said further consultation would be needed with hoteliers, hospitality businesses and other industry stakeholders before a specific change is adopted.

If the provincial government is unwilling to modify the exemption, Frizzell said the city will have to consider other options. He said transferring the full cost to local property taxpayers should not be the automatic response.

“This is a first step, and if this doesn’t work, we’re going to try something else,” Frizzell said. “Absolutely, tourism has to be supported.”

The proposal is ultimately aimed at ending the exemption’s effect on destination funding while allowing Prince George hotels to benefit from the expected increase in workforce demand.

by Nick Dube

City pushes to end exemption

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