How will Yellowknife use the money from its new accommodation levy?

As operators of hotels and Airbnbs in Yellowknife begin collecting a new tax, one of their biggest questions is how that money will be used.

The municipality rolled out a four-percent tourism accommodation tax at the start of April. Operators of hotels, bed-and-breakfasts or short-term rentals such as Airbnbs are required to collect the levy and transfer the funds to the city quarterly.

The city plans to use the money to develop and promote Yellowknife’s tourism sector. Councillors must now decide how that will work.

During a meeting on Monday, city staff recommended that council establish a tourist accommodation tax reserve to hold revenue from the levy before it is given to a destination marketing organization, or DMO, to promote Yellowknife to tourists.

“We’re really going to get scrutinized on how much money we collect and where we put that money,” said Kerry Thistle, the city’s director of economic development and strategy.

“This will be the easiest, most transparent way for us to be able to say, ‘this is how much money came in as a part of the tourist accommodation tax and this is how much we transferred out to the DMO.’”

The next question councillors must decide is what that marketing organization will look like.

Thistle said the city could create a new non-profit, which would require hiring staff and finding office space, or hire an existing DMO. She recommended that councillors enter into a three-year contract with NWT Tourism, the existing industry body for tour operators in the territory.

“They have a ton of experience in the market,” Thistle said. “They have contacts internationally, contracts internationally, and strategically a lot of our goals align.”

Donna Lee Demarcke, chief executive officer of NWT Tourism, said such an agreement would elevate work the organization is already doing.

“I really see this as a win for the City of Yellowknife,” she said. “The reality is, when Yellowknife is doing well, so is the rest of the territory.”

Thistle said three years will give the city and NWT Tourism enough time to see how much revenue is being generated by the tax and assess how the relationship is working out.

The city estimates the tax could generate up to $1.5 million annually, although Thistle said that estimate is likely high.

Another committee?

Thistle further recommended that the city create a DMO advisory committee made up of industry representatives to provide recommendations on tourism marketing goals and initiatives for council to approve.

“The formation of a committee that reports to council gives the local tourism industry that ability to participate in the marketing and use of those funds,” she said. “This is what tour operators and industry want.”

Councillors were largely supportive of the first two proposals, but not everyone was pleased with the idea of creating another committee.

“We’re asking tourism operators to come to another meeting where they tell a committee, which tells council, which tells staff, which tells NWT Tourism,” Tom McLennan said. “Let’s just have them talk directly.”

Ryan Fequet said he was in favour of less red tape and having tour operators give recommendations directly to NWT Tourism rather than to council.

Other councillors said they supported the proposal and suggested having council review the committee in three years, at the same time the contract with NWT Tourism would end.

“I think having the committee is a great opportunity for Yellowknife providers to be able to have their voices heard,” Stacie Arden-Smith said.

Future of the visitor centre

Finally, Thistle recommended that the city continue operating its downtown visitor centre for the next few years.

The city took over operation of a tourist information centre in 2018 from the Northern Frontier Visitors Association, which has since dissolved. The old centre was abandoned over structural issues and a new one opened.

Thistle noted the new visitor centre does not currently sell anything, so as to not compete with local businesses, and relies on government funding to operate. She added that 2024 was the first year in which the centre, which opened in 2022, was not affected by Covid-19, a municipal strike or wildfire evacuation.

Councillor Rob Warburton said council has long discussed tendering operation of the centre to a private contractor. He expressed concerns about scope creep.

“We just want to have things in-house and we keep creeping,” he said, “and my worry is that it sticks and it becomes yet another division, department, and then it grows and needs more staff.”

Thistle said city staff believe it is best for the municipality to continue operating the centre until it has a better idea of how the centre is doing.

She said that would also allow NWT Tourism to ensure it can manage the new role of specifically marketing Yellowknife before potentially taking over operation of the centre.

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