Good morning, and thank you for the opportunity to be here today.
My name is Dave Kaiser, and I am here today on behalf of the Hotel Association of Canada. In my day job, I am the president and CEO of the Alberta Hotel and Lodging Association.
Joining me is Leanne Shaw, who is the vice-chair of the Alberta Hotel and Lodging Association, and also the owner of the Country Inn & Suites right here in Calgary. Leanne is very representative of the many family enterprises that operate hotels across this country.
The Hotel Association of Canada is proud to represent more than 8,000 hotels, motels, and resorts, which encompass the $18.4-billion Canadian hotel industry. Our country's hotel sector directly and indirectly employs over 304,000 people and is a significant contributor to the Canadian economy, generating revenues estimated at $8.1 billion for all three levels of government.
In response to the committee's requested questions, my remarks will centre around measures that would help Canadian businesses be more productive and competitive.
We are here today with two key messages. Number one, we need fair rules for the sharing economy, and number two, we need continued funding to support Destination Canada's important work of marketing Canada to the world.
Last week, the Hotel Association of Canada released a new study, the most comprehensive of its kind. The study examined the short-term rental market in comparison to Canada's hotel sector, with a key focus on Airbnb as the most widely used digital home-sharing platform in Canada.
The results of the study revealed that commercial operators are growing exponentially and are far outpacing actual home-sharing activity. Alarmingly, only 17% of total Airbnb revenues in Canada are generated by true home sharing. This means that approximately 80% of Airbnb's revenues nationwide, which is $462 million, come from rentals where the owner is not present. This unregulated commercial activity has given rise to unintended consequences, including loss of affordable housing, loss of tax revenue for government, disruption in communities, and a risk to guests as there are no health and safety standards in place.
The existing tax laws in Canada are not designed for the 21st century digital economy. These laws need to be updated so that all businesses operating in the accommodation space have a level playing field.
In 2016, guests of Canada's legitimate hotel properties contributed an estimated $2.2 billion in consumer taxes and fees based on room revenues alone. If the same consumer tax and fee rates were to be applied to Airbnb revenues, Canada's Airbnb sector has the potential to contribute $85 million in consumer taxes and fees to the Canadian economy.
Other countries have taken action. Airbnb is now required to collect value-added tax on its service fees in the EU, Switzerland, Norway, Iceland, South Africa, and Japan, among others. Canada should follow suit.
Today, we are calling on the federal government to amend the Excise Tax Act to create a more level playing field for hotels. Airbnb and similar online platforms should be required to charge and remit HST on the service fee charged to hosts and guests.
We also recommend that the finance committee, Finance Canada, and the Canada Revenue Agency work collaboratively with the Hotel Association of Canada on a focused review of tax policies for the short-term rental industry, with the goal of achieving fairness. To be clear, we are not against individuals sharing their home to make extra income. What we are against is commercial operators acting like hotels without the same responsibilities to tax. Competition is a good thing, but it needs to be on a level playing field.
Finally, I would like to thank the government for its commitment in the last federal budget to bolster Destination Canada's funding to $95.5 million. This brings stability to Canada's marketing strategy and will allow for continued maintenance of Canada's current market share. In order to capitalize on this momentum and build towards the fulfillment of the government's new tourism vision target of being one of the top 10 most visited countries in the world by 2025, Canada will need a more competitive investment. The Hotel Association of Canada believes that a performance-based funding mechanism would best achieve this goal.
Thank you for your time. I would be happy to answer any questions you may have.