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With its stunning national parks and can’t-miss events like the Calgary Stampede, Alberta has long been a tourism hot spot.
But higher taxes on visitors, along with uncertainty around a potential vote on separation, might have a chilling effect on the province’s tourism industry, according to a new report.
The Tourism Industry Association of Albertan warns the fees could amount to annual losses of $164 million in visitor spending.
On April 1, the province upped the tourism levy from four to six per cent, increasing the fee for anyone booking hotels in the province. Next year, a new rental car tax will kick in, charging customers six per cent of the base cost of the vehicle.
Darren Reader, the association’s CEO, says the fees could dispel some from visiting — including homegrown tourists.
He says Albertans count for three quarters of tourism spending in the province.
“Albertans that have a whole number of maybe summer experiences that they like to engage in are going to start to try to rationalize those costs [and] say maybe we won’t go as long, or maybe we won’t go as far,” Reeder said.
A teen hiker looks at Peyto Lake from Bow Summit in Banff National Park on the Icefields Parkway. (Ronnie Chua/Shutterstock)
The Alberta Hotel and Lodging Association says the levy increase risks visitor spending at a time when cost of living is front of mind.
“Accommodation is the foundation of the visitor economy, and increasing these costs weakens our competitiveness as a destination,” Tracy Douglas, CEO of the association said in a statement.
Separation unknowns
The report also suggests concerns around a referendum on separation has businesses within the industry reconsidering spending.
More than 40 per cent of tourism businesses surveyed said they have already postponed, scaled back or redirected investments, like adding new experiences or expanding their locations.
“Investors typically wait until they can take risk out of the environment before moving to the next stage,” Reeder said.
It could amount to an estimated $271 million dollars in capital investments stalled, he said.
And because every dollar of tourism investment translates nearly four-fold in visitor spending, Reeders says that loss could end up costing the industry $1 billion in tourism dollars.
Minister defends fee increase
Tourism is a major driver of the province’s economy. Travel Alberta estimated $15.2 billion in visitor spending last year, making tourism the province’s fourth-largest driver of international trade.
Reeder worries any hit to the industry could compromise the provincial goal of $25 billion in annual visitor spending by 2035.
Tourism Minister Andrew Boitchenko says the province is still on track to hit that target. And he says Alberta continues to outperform the national average when it comes to tourism growth.
Speaking at the legislature Thursday, he defended the increased fees.
“Every dollar that we are collecting from levies, it goes back to general revenue to support Alberta and Albertan families,” said Boitchenko.
“We have to make sure that tourists to our province pay their fair share of fees, taxes, when they come to our province, because they’re all using our infrastructure.”
Boitchenko also pointed to major upcoming events that should bring a lot of tourism dollars, like this fall’s Grey Cup, with an estimated $50 million in visitor spending, and next year’s World Juniors, projected to generate the same amount.