Toronto has the raw ingredients to be a premier destination for group business travel. Among these are a vibrant and culturally diverse population, and world-class hotels and hospitality establishments.
The hospitality industry pre-pandemic generated $1.5 billion in economic activity for Ontario, with over 90 per cent staying in the Greater Toronto Area. However, the city is also competing with a formidable list of other major metropolitan centres – Calgary, Vancouver, Chicago, New York City, Austin, and Orlando, just to name a few. Moreover, recent data on our city from Destination Toronto shows concerning trends: international visitors, including those from the U.S., were down 25 per cent from 2019 levels in 2023; visitors from China, previously our largest market, have dropped to a mere 24 per cent of prior levels; and demand for accommodations was 19 per cent lower than pre-Covid levels.
A major plank of promoting the tourism sector as a vital driver of our region’s economic success is maintaining a competitive cost advantage. Unfortunately, Toronto now ranks among the most highly taxed, and therefore among the most expensive, cities for organizers of business meetings and conventions to select as a destination. Just last year, Toronto City Council abruptly raised the Municipal Accommodation Tax (MAT) from 4 per cent to 6 per cent. Recently, City Council approved another 2.5 per cent MAT increase, in effect from June 2025 to July 2026, stating the reason as relieving budget pressures related to the 2026 FIFA World Cup. This will bring Toronto’s MAT rate to a whopping 8.5 per cent – the highest in the country. This tax will not only be footed by foreign travellers, but also Ontario families who will be forced to pay more when visiting the city.
The hotel industry understands the fiscal realities that major cities face today. However, burdening tourism businesses with more and more taxes every time a budget pressure arises is a short-term fix that will lead to long-term pain. An effective tax rate of 21.5 per cent on hotel stays will undoubtedly hurt our competitiveness on the global tourism market. It would put additional burdens on local hotels, forcing them to absorb costs related to processing credit and debit transactions and associated fees; this of course will negatively hit the property’s bottom line and could lead to reduced staffing hours and/or layoffs for hardworking employees from across the GTA. What’s more, thousands of small businesses that rely on tourism – restaurants, retail, transportation, cultural institutions – would also be adversely affected.
The Greater Toronto Hotel Association continues to advocate that adding new taxes and levies will only further challenge our industry's recovery and the city’s ability to compete for major events and conventions. We maintain that such measures could lead to long-term negative impacts on Toronto's tourism sector, affecting not just hotels but the entire ecosystem of businesses and livelihoods that depend on visitor spending.
For Toronto to thrive as a global destination, it’s crucial that the City and our industry work together to find solutions that meet fiscal needs while preserving our competitive edge. Let’s find a sustainable approach that supports the growth of business travel without compromising the very industry that fuels it.
