The Greater Toronto Hotel Association says A hotel tax increase introduced for FIFA World Cup matches in Toronto next year could be having a negative effect on tourism and non-tournament travel to the city.
A 2.5 percent increase in the Municipal Accommodation Tax (MAT) began in June and the City hopes to raise $56.6 million by next July.
While that’s not a huge increase, Sara Anghel, president and CEO of the Greater Toronto Hotel Association (GTHA), told CBC Toronto that it could be a deterrent for some visitors and those looking to host other large events in the city.
“The more we increase our taxes, the less competitive we will be against other cities that we compete with for conventions, for example,” he said.
Last year, the city council voted to temporarily increase the MAT to 8.5 percent to cover some of the costs of hosting six World Cup matches. The increase went into effect on June 1 and will be in effect until July 31, 2026.
“I understand the city’s shortcomings and we want the games to be a success,” Anghel said. “But overall it’s a significant increase.”
She feels the tax was already too high and worries that Toronto will be passed over for conventions and events across the city because of it.
“If you add in some of the challenges we face in the city: traffic jams, congestion, community safety concerns… All of those factors make Toronto less competitive,” Anghel said.
Vancouver has taken a similar approach for its seven FIFA matches by creating a new 2.5 per cent tax on short-term accommodation that took effect in February 2023.
US host cities rely on corporate sponsorship
But none of the host cities in the United States or Mexico have done so, Anghel said. Instead, they rely on major corporate sponsorships and other initiatives.
After a busier-than-expected summer (and a so-far successful playoff run for the Toronto Blue Jays), Anghel believes Toronto hotels could be raising the necessary funds faster than expected.
She sits on the city of Toronto’s FIFA advisory committee and plans to ask the city to track what it has earned so far. If the city raises the money it needs in advance, he believes any surplus should be invested in tourism initiatives that promote the city during the tournament.
“Staff continues to monitor MAT performance and, in the event of any overperformance beyond initial projections, staff may recommend appropriate adjustments or budget allocations through future variance reports or budget processes in consultation with the Mayor, City Council and in consideration of possible [FIFA] requirements and the tourism sector,” he stated City spokesperson Elise von Scheel said in an emailed statement.
Meanwhile, higher hotel prices are unlikely to be a deterrent to the thousands of World Cup spectators expected to visit Toronto next June and July.
Destination Toronto CEO Andrew Weir told CBC Toronto that those visitors will be an immediate boon for many of the city’s business sectors.
“In many cases they will be here for long periods of time and attend games and participate in other types of activities, restaurants and attractions throughout the city,” he said.
Additionally, Weir said he believes the World Cup will have the long-term effect of attracting more visitors from around the world.
“Anyone around the world watching the World Cup at that moment is watching Toronto,” he said. “That’s a time when our city is going to look great. It’s June, the weather is going to be great and the city is going to be very energetic, so the broadcast conveys that kind of momentum.”
In December, when FIFA is expected to announce which teams will play which games in which city, Destination Toronto will also step up its efforts to promote tourism in the places where the most people will be watching, Weir said.
“[It’s] an opportunity for Toronto to really showcase the energy and vitality of our city and have it seen by millions and millions of people, especially in markets that we can target once we know which countries will be here.”
