Hotel owners in Northeast BC says taxes should be levied on homeowners renting on a short-term basis to “level the playing field” in a surprisingly tough market.
Despite what is a perceived as a gas-fueled booming economy, local hotel owners say occupancy levels are down sharply from a year ago.
Sam Mangalji, owner of the George Dawson Inn in Dawson Creek, said hotels in the community were reporting a decrease between 4 and 60 per cent from a year earlier as 2013 ended.
These numbers didn't pick up over the usual busy months, he added.
Mangalji said that these hotel owners are facing a strain because of people illegally renting out suites, which he described as an "underground economy" for people who want to make money from transient workers.
"It has resulted in homeowners renting out bedrooms, converting garages into multi-room units; duplexes have been turned into fourplexes," Mangalji told Dawson Creek city council "This has created a strain on legitimate businesses who are meeting all provincial and municipal regulations to operate a hotel, including meeting health and safety standards, paying appropriate taxes, purchasing business licences and providing adequate parking for their guests."
Mangalji urged Council to charge homeowners who rent out "in-suites," duplex owners, and apartment building owners to pay a commercial property tax rate "in an effort to level the playing field between all accommodation providers."
This would mean that these types of properties would likely have to pay additional taxes, since the city's commercial property tax rate is higher than the residential tax rate.
Another Dawson Creek hotel owner, Peter Kwag of the Central Motel, said his business has fallen "dramatically" since last year. He also supported the higher tax rate, and the re-examination of the city’s suite bylaws.
However, the move was met with skepticism from Robert Herman, the owner of Sterling Management, which owns apartment buildings in Dawson Creek.
He pointed out that hotels stand to make more money from their buildings than an apartment owner would. According to Herman, while an hotelier could charge in excess of $100 a night, a similar apartment might instead go for $900 a month – meaning more money for the hoteliers.
“They're on a different income level, tax-wise,” he said.
City Council did not vote to go forward with the tax proposal at its most recent meeting.
Low hotel occupancy rates in B.C. are not seen just in Dawson Creek. Hotels across the province averaged a 50.8 per cent vacancy rate in early December, according to a survey by HVS International. This is the second lowest occupancy rate in Canada, ahead of only Prince Edward Island.
