Thank you, Mr. Chair, and thank you, members of Parliament.
Good afternoon, and thank you for the opportunity to be here today.
My name is Jonathan Lund. I am the vice-chair of the Hotel Association of Canada. In my day job I am a regional vice-president with InterContinental Hotels Group, or IHG.
Joining me today is Alana Baker, director of government relations with the Hotel Association of Canada.
The Hotel Association of Canada is proud to represent more than 8,200 hotels, motels and resorts, which encompass the $20.8-billion Canadian hotel industry. Our country's hotel sector directly and indirectly employs over 306,000 people. Hotels are a significant contributor to the Canadian economy, generating revenues estimated at $9 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 business be more productive and competitive.
Our submission to this committee included nine recommendations that address three broad themes, and I'll speak to each of these.
Firstly, I will address short-term rentals. The growth of Airbnb to nearly 160 million guest arrivals in 2018 tells us that the platform companies for short-term rental accommodations are here to stay, yet the revolution in the short-term rental industry has given rise to unintended consequences.
Increasingly, Canadians are concerned about the impacts this has on their community. This week we released the results of a national study that found that more than 60% of Canadians are concerned, or somewhat concerned, about a neighbouring home being regularly rented on a platform like Airbnb. Only 1% believe that Airbnb has a positive impact on their neighbourhood quality of life.
What started as a true home sharing, where the owner is present during the guest stay, has expanded into growing commercial operations. Over the last two years the commercial side of Airbnb's business—those renting multi-unit entire homes—grew by 108%. Entire home rentals as a whole, including multi-listed hosts, generate 83% of Airbnb's revenues.
Clearly these hosts are running a business through Airbnb, yet the federal government doesn't require, nor does Airbnb provide, any tax information slips so that revenues can be tracked and taxes calculated. Online rental platforms operating in Canada do not currently collect or remit GST or HST. They pay no corporate income taxes on their Canadian activity, and they make it far too easy for those renting rooms on their platform to inadvertently do the same.
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 rates were to be applied to Airbnb's revenue, the sector has the potential to contribute almost $100 million to the Canadian economy.
While many countries have modernized their tax policies in response to the unintended consequences of the 21st-century sharing economy, Canada's federal government has fallen behind.
Our recommendations will ensure tax fairness so that Canada's lodging sector can invest in a market with a level playing field. They allow for the collection of relevant taxes without undue burden on hosts, while ensuring appropriate information sharing with the government. If Canada is to embrace digital technologies, it must modernize its tax policies while ensuring that the sharing economy does not lead to growth in the underground economy.
Secondly, on labour shortages, hotels across Canada continue to face critical labour shortages, both year-round and during peak periods. This shortage will become more acute as the available pool of employees continues to steadily decline. Over the next 17 years, we anticipate a labour shortage of over 10,000 employees. The ability of Canada's hotel industry to promote economic growth and remain competitive will be threatened if this downward trend continues.
Hoteliers are committed to hiring Canadians first, and have gone to great lengths with recruitment efforts. However, we need to do more, particularly when attracting under-represented groups. We recommend that the government develop and implement industry-specific programs to connect Canadian youth and indigenous peoples with vacant jobs in the accommodation sector. We also encourage the government to recognize the seasonal aspect of our industry and develop a program focused on mobility or exchange with suitable foreign countries.
Finally, we were pleased to see funding for Destination Canada set at $95.5 million on an annual basis, as announced in budget 2017. However, for it to remain competitive and attract more visitors, base funding should be supplemented by incremental performance-based annual increases of 10%. This would put Canada at more competitive advantage and ensure that Destination Canada remains innovative and competitive in its approach to marketing performance.
In conclusion, the Government of Canada can encourage investment, growth and employment in the tourism and hospitality sectors while also sustaining the digital economy for short-term rental accommodations by modernizing its tax policies, supporting programs to address critical labour shortages, and providing continued support for tourism marketing funding.
Thank you.