New data released this week by the B.C. government shows the pandemic has been particularly hard on a key part of the Okanagan tourism sector.
Year-over-year hotel tax revenues decreased by 37% to $2.2 million in Kelowna and 18% to $550,000 in Penticton from January to October 2020, according to the most recent figures available from the B.C. Finance Ministry.
The levy – set at 3% in Kelowna and 2% in Penticton – is charged on all short-term accommodations, such as hotels, motels and vacation rentals, and handed back to host communities to fund tourism marketing or affordable housing.
It’s not a perfect indicator, mainly because it doesn’t account for changing room prices, but it paints a fairly accurate picture of what’s been happening in the sector – and it hasn’t been pretty.
“Like other destinations, Kelowna saw a complete halt to visitation in early 2020 as the global pandemic reached British Columbia and travel restrictions were imposed. Over the summer months, when travel restrictions were eased, Kelowna and the Okanagan saw above provincial and national averages for visitation and overnight stays, though these were still much below 2019 levels. Visitor spending was also down,” Tourism Kelowna president Lisanne Ballantyne said in an email Friday.
“Coming into the end of 2020, travel slowed and restrictions and recommendations against non-essential travel were again imposed, resulting in limited overnight travel. Naturally, overnight stays and spending in destinations is far below 2019 levels, which, for Kelowna, was the highest year on record for accommodation levels and revenue.”
Even the hotel tax data itself was affected by the pandemic, when the B.C. government in March 2020 as part of its COVID-19 relief plan relaxed reporting requirements and in the process killed the possibility of month-by-month statistical comparisons.
One further problem emerges in the tax rate, which increased to 3% in Osoyoos in September 2019, and helps explain how the community of 5,000 saw its take rise by 12% to $668,000 in the first 10 months of 2020 – $138,000 more than Penticton.
Destination Osoyoos didn’t respond to a request for comment Friday, but Travel Penticton executive director Thom Tischik noted the two communities have very different mixes of accommodations.
“Penticton has a more traditional hotel/motel room offering while Osoyoos has a significant number of condo-style suites available,” Tischik said in an email.
“This can affect the average daily rate on a visitors’ stay and perhaps the length of stay during peak seasons.”
Because the decrease in hotel tax revenue will directly impact Travel Penticton and others, the B.C. government has earmarked a $10-million grant to be shared among 61 such organizations.
The cash will “help them retain critical staff positions and offset fixed expenses these organizations face with a reduction in (hotel tax) funds, allowing them to better support economic recovery efforts in the tourism sector when travel restrictions are eased,” the Finance Ministry said in a statement.
In the meantime, tourism groups are preparing as best they can for an uncertain season ahead and trying to boost local businesses in the meantime.
“Travel Penticton is optimistic more travel will be allowed over the next few months, however, we must follow guidelines from various ministries and Destination BC before we go back to our external marketing programs,” said Tischik.
“Travel Penticton will continue to offer co-operative programs and offers to their members to promote local consumer engagement. We will also offer programs and incentives to help get their product messaging out to as far as possible, when the time is right and external market promotion is allowed.”
Approximately 4,300 people were employed in accommodation services in the Thompson-Okanagan region in 2019, according to Statistics Canada.
This article has been corrected to display the correct hotel tax rate for Kelowna