Visitor-Based Assessments (VBAs) have gained widespread recognition on a global scale, and their significance for Canada's competitive standing in the tourism sector cannot be overstated. To maintain a strong position in the international tourism landscape, the Canadian Destination Leadership Council (CDLC) underscores the urgency of aligning government policies and industry priorities to create an environment that is conducive to investment and growth in various destinations through VBAs. These assessments not only serve as effective funding models but also fortify the dynamic roles of the destination organization industry in Canada, fostering innovation and heightening destination competitiveness. The fundamental goal of VBAs, centered around enhancing the visitor economy, holds the potential to yield benefits like consistent employment opportunities, business revenue generation, and government earnings.
The study reveals that VBA utilization is the norm when it comes to destination organization funding, with over two-thirds of the estimated 250+ destination organizations in Canada integrating this funding mechanism. While legislated VBA models exhibit rapid growth, non-legislated/voluntary models are comparably less prevalent. These assessments are predominantly channeled into destination marketing and business development, though a notable 97% of destination organizations anticipate future diversification of funds into destination development initiatives. While stakeholders assert that VBAs should be exclusive to tourism-oriented projects, certain regions face emerging challenges in maintaining this exclusivity. Both VBAs and destination organizations share a common fundamental objective—collaborative multi-stakeholder success. Amid this diversity, the consensus among destination organizations and stakeholders on the value, benefits, and risks of VBAs emerges as a robust platform upon which to construct a compelling advocacy strategy, thus further solidifying their importance in shaping the trajectory of Canadian tourism.
Visitor-Based Assessments (VBAs) Background
Visitor-Based Assessments (VBAs) play a pivotal role in enhancing the competitiveness of destinations by drawing visitors and cultivating benefits within the visitor economy. Their global prevalence highlights their significance, especially in Canadian locales where they constitute a common financing mechanism for sustaining tourism growth and promotion. These funds, gathered from visitors through user pay systems, distinctively steer clear of residents and businesses. Primarily tied to accommodation room rates, VBAs often involve an extra charge, although their application can extend beyond lodging. Typically calculated as a percentage or fixed sum of the nightly accommodation rate for stays under 30 days, three VBA types are evident in Canada: municipally legislated accommodation tax; provincially legislated accommodation tax; and voluntary destination marketing fees (DMF). While the former two operate under legal frameworks, the latter is often established through agreements between local hotel associations and managed either by the association or the destination organizations. In addition to these models, Tourism Improvement Districts (TIDs) also exist, reflecting elements of legislated tax and DMF structures. Despite gaining traction in the U.S. and sparking interest in certain Canadian destinations, TIDs are not analyzed in this project due to their current absence.
Evolution in Application
The study makes note that over time, the primary evolution in VBA application has been the expansion of funds towards destination development activities, complementing conventional roles like sales, business development, and marketing. The study also highlighted a broader mandate encompassing diverse initiatives, such as: special event marketing programs, industry support, and local business assistance to advocacy, research, destination planning, Indigenous collaboration, and other community-oriented efforts.
The survey supporting the study demonstrates this shift, with over 97% of respondents advocating for VBA allocation towards destination development.
Guiding Principles for VBA Use
The study illustrates some guiding principles to forge a comprehensive path for harnessing these funds effectively for communities. The principles advocate for the generation of substantial funds, dedicated solely to propelling leisure tourism, sports tourism, and business events, while ensuring long-term sustainability. Mandated support hinges on the endorsement of eligible entities by stakeholders, fostering an inclusive impact that enriches both the community and the industry.
In terms of accountability, the principles underscore the need for demonstrable benefits, vigilant oversight, and transparent financial reporting from fund recipients. A commitment to fairness resonates through equitable fee accumulation and communication, heralding the introduction or modification of VBA rates well in advance to both industry insiders and the broader marketplace. These principles collectively illuminate a pathway to informed, responsible, and fair VBA deployment, casting a positive influence on the landscape of tourism and destination promotion.
In the realm of advocacy, two key focal points emerge. The first emphasizes the economic contribution of VBAs. These mechanisms not only attract visitors whose spending generates government revenue, thus lessening the tax burden on residents, but also allocate resources towards amenities that align with community aspirations. This allocation includes fostering tourism-related job opportunities for youth, bolstering community appeal to attract new businesses and residents, elevating local pride, sustaining businesses during off-peak periods, enhancing community vibrancy, preserving cultural and natural assets, and offsetting costs for cultural institutions. Moreover, VBAs extend their positive reach to Indigenous businesses, entrepreneurs, and communities, supporting reconciliation efforts while enabling proactive management of visitor inflows to address local pressures. Beyond leisure tourists, VBAs are strategically invested in attracting business events, which catalyze a range of enduring benefits for the community, that ripple effect into increased investment, fostering talent attraction, and enriching the local and national academic attraction. The second facet of advocacy centers on refining principles to steer VBA deployment effectively. These guiding principles encompass themes of funding commitment, mandated support, accountability, and fairness. By finalizing and disseminating these principles, the goal is to create a standardized framework for governments, destination organizations, and industry stakeholders to effectively harness VBAs. Collaboration with industry associations aims to ensure wide-scale endorsement and adoption, subsequently followed by targeted communication efforts to educate, and implement these principles at various levels. Additional initiatives include exploring economic impact measurement models, advocating for full fund reinvestment into tourism-related initiatives, fostering flexibility in fund utilization, and developing educational resources, mentorship programs, and capacity-building initiatives to empower destination organizations.
A Path Forward
The study makes clear that our industry should view VBAs as essential instruments that not only empower destination organizations and stakeholders to amplify marketing, sales, and destination development strategies, but also to foster community vitality will be critical. By directing VBA funds to harness the potential to spur year-round employment, stimulate business growth, and bolster government revenue, all while fortifying Canadian destinations.
These funds also empower destination organizations to embrace their role as stewards of their destination, striking a harmonious balance between nurturing the visitor economy and preserving the socio-cultural and environmental well-being. As a result, both visitors and residents benefit. What's more, VBA-supported initiatives bring visitors, generating revenue that directly supports local small and medium-sized businesses, igniting job opportunities, and positioning Destination Organizations as engines of economic progress and community enrichment. This funding even allows Destination Organizations to weave their community's essence into the visitor experience, amplifying their uniqueness through branding, targeted business development, and marketing efforts, thereby enhancing a destination's allure and competitiveness.