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Province rolls out destination marketing fee plan

Wellington’s Richard Johnston is chair and president of RTO 9

With at least one sunny and warm weekend on the books—tourists and visitors are once again plying the backroads, dining in fine eateries and discovering the shops, wineries and galleries that punctuate the natural beauty that abounds in Prince Edward County.

An irritant to some, tourism is undeniably the lifeblood of this economy, particularly so for three seasons. And while Prince Edward County is doing better than many regions in Ontario in attracting visitors—the overall tourism sector in Ontario is doing poorly.

The problems started on September 11, 2001 as our suddenly fearful American neighbours chose to stay home rather than venture outside their country, even to friendly vacationland in Canada. Then SARS hit. Then a rising Canadian dollar—sending the cost of a Canadian vacation up 25 per cent for an American in only a few years. Only the Olympics seemed to signal turn in this country’s tourism fortunes. But in January we learned tourism spending in the province last year was down again.

Three years ago the McGuinty government appointed former Finance Minister Greg Sorbara to investigate the decline, and make recommendations about how to stop it.

Sorbara concluded that the province and the tourism sector hadn’t kept pace in terms of marketing and advertising investment. He knew that raising taxes to assist the industry to market itself better wasn’t going to fly. Instead he suggested an accommodation levy—a fee on roofed accommodations that would produce revenue to be used for marketing, research and product development.

An accommodation levy was already in place in major centres such as Toronto and Ottawa— but even smaller markets including Kingston and Cornwall were beginning to collect destination marketing fees. They were raising significant amounts of money.

Sorbara recommended that the province be diced up into 13 Regional Tourism Organizations (RTOs); each with the authority to collect and administer a destination marketing fee and resulting revenue in their region.

Prince Edward County was included in RTO 9, a region that reaches from Brighton and hugs the St. Lawrence River to Cornwall, taking in Sterling and Merrickville along the way.The accommodators, those with three rooms or more, including cottage operators, will vote later this year or early next whether to adopt a destination marketing fee—likely in the range of one to three per cent.

Bed and breakfast operations or inns with fewer than three rooms will not collect the levy. The large majority of tourism operators in the County, therefore, will be exempt from passing on the levy. But does this mean the County will have a diminished voice at the RTO 9 table? Will the County lose control of its own marketing?

It was because of such worries that folks like Taste the County’s Executive Director Kathleen Kennedy and Richard Johnston, Prince Edward County Winegrowers’ Association past president and principal of By Chadsey’s Cairn’s Winery, determined they had to be involved in the formation of RTO 9.

“We knew we had to get in on the ground floor of this or our County voice would be lost,” said Richard Johnston.

Not only did he get involved, Johnston was appointed the first chair and president of RTO 9. “My role is keeping everyone focused on the goal,” said Johnston, “which, if it works, could mean in the range of $5.4 and $6 million a year from a levy, which we could use to improve our marketing.”

Not everyone is on board. Kingston businesses worry funds raised through their market will be diluted up and down the St. Lawrence. Meanwhile businesses in the County fear a loss of brand identity and control in a larger market. Johnston understands the challenges ahead.

“There are natural suspicions,” said Johnston. “My job is to explain the opportunities.

“For example, in the near past, the province would bring us marketing projects offering as much as $125,000 in matching funds. Well, we could barely raise more than $25,000.

“This [RTO 9] allows us to become part of something that will be much bigger. Even though we are just part—we will get more spin than if we are doing something on our own.

“We are going to create a brand for the region— but we are also going to be known as a family of brands. The key is to use the bigger brand to enable the smaller brands to do better. When the RTO 9 is up and fully functioning, the Thousand Islands will continue to be the Thousand Islands and the County will continue to be the County.”

In preparation for the transition to the RTO model, the province ordered those jurisdictions collecting a destination marketing fee currently to stop. In the interim, they have provided an equal amount of funding back to the RTO until the mechanics of the organization have been worked out.

“It looks like we will spend about $1 million this year to advertise the region,” said Johnston. “The rest will be spent on research in terms of product development and how we should be marketing.”

The vote to adopt a destination marketing fee was scheduled to take place this year, but has been postponed until after the October provincial election.