The City of Kingston is moving ahead with its first ever hotel room tax on visitors.

Councillors voted at their March 6 meeting to approve a new four percent levy, in principle, while staff works on an implementation timeline and a strategy to spend the extra revenues.

“The sooner the better,” said Coun. Laura Turner, who applauded the new revenue stream.

City officials say the tax – to be charged to anyone staying overnight at a local hotel, motel and bed and breakfast – will generate an estimated $3.2 million in annual revenues. They say the money will be funneled back into tourism promotion and growth.

“All of that money needs to be reinvested in tourism promotion or tourism development. It can’t be used to renovate roads, for example,” said community services commissioner Lanie Hurdle, who recommended the tax to council.

It’s estimated that over 50 businesses will have to include the so-called municipal accommodation tax in their room rental rates. It will add $8 to a nightly room rate of $200, for example.

“It is a mandatory tax. It is not a voluntary tax,” explained Hurdle.

College and university campus residences that are rented will be exempt from the city-wide tax, which could be implemented as early as 2019. Hurdle says staff hope to finish a report on the implementation strategy by the end of this year, which means it will likely be up to new council to finalize the tax.

The tourism industry supports the levy.

“This is such a great opportunity for us,” said Rob Kawamoto of Tourism Kingston.

He told council the new tax will enable the city-funded agency to do more to promote Kingston as a tourism destination. The tax revenues could be used to do more media marketing opportunities in larger Canadian and U.S. cities, bid for sporting events such as the Brier, or prepare Kingston’s dock space to welcome larger cruise ships.

Kingston may use hotel tax revenues to provide deep water docking facilities for larger cruise ships

“We need to continue the momentum to build our brand,” said Kawamoto.

Kingston Accommodation Partners (KAP) is a non-profit organization of hotels and restaurants that also supports the tax.

“Toronto, Montreal and Ottawa are not cheap to buy media (advertising),” explained spokesperson Megan Knott.

KAP is no stranger to the concept of raising funds through a tax on room stays. It’s been collecting a voluntary fee since 2004, known as a destination marketing fund, raising about $1.7 million a year from 24 hotels with 1,800 rooms that opted to charge it. Another 31 hotels, motels and B&B’s decided not to impose the same tax on their customers.

Kingston to charge 4% mandatory tax on everyone who stays in a hotel, motel or bed and breakfast

Unlike the KAP fundraising model, the city’s four-percent accommodation tax would apply to every overnight stay. It would also completely replace the KAP tax.

The 2017 provincial budget gave municipalities the power to impose its own mandatory hotel tax as a way to raise money to promote tourism-related activities. The provincial law also requires the city to share hotel tax revenues with organizations like KAP.

Even if the city were to give KAP $1.7 million a year – to match what it currently collects – that would still leave about $1.5 million in annual revenues that the municipality could spend on tourism promotion and marketing, plus other projects.

Kingston’s four-percent room tax is based on what other cities are either implementing or considering. Ottawa and Mississauga have already decide to bring in the tax, while Toronto, Niagara Falls and London are pondering it.

Councillors endorsed a two phase accommodation tax; first applied at all hotels, motels and B&Bs, and later, to collect the same tax from private room renters, such as Airbnb.

“There is a desire that there be a level playing field,” said Coun. Jim Neill of need to apply the same tax to the largely unregulated private accommodation industry.

Hurdle says charging the four percent tax on homeowners who rent their own places will take time, noting the city is still working on a potential municipal licensing program for services like Airbnb.