BANFF – The Town of Banff expects to collect about $4 million below business licence fee projections this year from hotels as a result of the economic fallout from the COVID-19 pandemic.
To deal with this, there has been a revision of the estimated business licence fees to be collected for 2020, as well as a phased approach for hotels and bed and breakfast homes and inns to pay their fees for the rest of the year.
“The amount that we were originally budgeting from the lodging sector was $5.8 million and we’re estimating actual will be approximately $1.9 million,” said Chris Hughes, the Town of Banff’s corporate services director.
The COVID-19 pandemic left occupancy levels at Banff’s hotels hovering below one per cent, with average rates 75 per cent lower than normal. Banff typically sees four million visitors a year.
In the face of no to low hotel occupancy and a dramatic drop in the number of visitors predicted for the summer and rest of the year, Banff Lake Louise Tourism (BLLT) proposed a change to the lodging sector business licence fees for 2020.
The 2020 business licence fees were based on an estimate of the revenues from the Tourism Improvement Fee (TIF), to be collected between October 2019 and September 2020.
BLLT revised the fee estimate to include actual revenues reported from October 2019 to March 2020; zero revenue from April to June 2020, and 10 per cent of last year’s revenues for July-September.
The tourism organization’s accounting firm Baker Tilly used these assumptions to estimate that the 2020 TIF revenues will be 32.5 per cent of the 2019 level. Baker Tilly then applied that percentage to calculate the 2020 invoice amount for each lodging sector business.
In addition, BLLT proposed that the collection schedule be 15 per cent of fees by June 30, 40 per cent of fees by Sept. 30 and the remaining 45 per cent of what’s owed by Dec. 31.
Hughes said there is no net effect on the Town of Banff’s budget by making these amendments.
“The reduced revenue collected will be fully offset by a reduction in the contracted services paid to BLLT,” he said.
Mayor Karen Sorensen, who sits on BLLT’s board of directors, said BLLT and the Town of Banff have worked closely to come up with this solution.
“I feel strongly that from where I sit on both organizations that there’s an agreement that this is a good solution for businesses,” she said.
Councillor Peter Poole said he wants to see relief given to the other business sectors, too.
“The lodging sector, which I also represent is certainly is hurt, but so too are other sectors,” he said.
“I am concerned that if we are going to provide relief to one business sector, we need to work as a municipality to provide similar, if not exactly the same, direction to administration to find ways to provide relief to the other sectors that are also hurting.”
Town Manager Kelly Gibson said he doesn’t see this as a break in fees for one sector, noting it is simply a correction of the fee based on anticipated revenues of the accommodation sector due to COVID-19.
“We do reconcile this at the end of the year and that was based on what was charged versus what actually happens – this is just a correction of the fee,” he said, noting the lodging sector’s fees are based on actual revenues.
“In no way do we feel that we’re giving a credit or a rebate to the lodging sector necessarily, we’re just truing up an estimate used to create a fee, which will be trued up at the end of the year anyway.”