A move by Toronto hotels to charge a three-per-cent destination marketing fee is being closely followed by industry representatives in Ottawa.

Toronto hotels have volunteered to support the city's beleaguered tourism industry by charging the fee to bring in more marketing dollars. Ottawa's tourism industry hopes to do the same in the next few months.

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On Jan. 1, more than 100 hotels in the Greater Toronto Area began charging each guest a three-per-cent fee. The funds generated, estimated at $15 to $16 million annually, will be given to Tourism Toronto for marketing initiatives.

That organization is creating a sales and marketing plan for 2004 to 2006 to generate meeting, convention and leisure travel to Toronto.

According to Dick Brown, executive director of the Ottawa Hoteliers de l'Outaouais, the majority of Ottawa hoteliers support putting a similar fee in place in their city. However, the situation in the nation's capital is different in one respect: all of the city's hotels must sign up to be a part of the initiative before it can happen.

"Until I have 100-per-cent (support), it's not going to be a go," said Brown. "This is a city-wide initiative."

According to Brown, Toronto and Ottawa have been looking at implementing this type of initiative for the past couple of years. However, it is not the final solution the industry wants.

"We continue to look for a provincial framework similar to what Quebec has for municipalities to decide (whether or not they want the fee)," said Brown. "We are not looking for a provincewide tax and we hope the province will do what five other provinces have done and see the merits in this."

Currently, hotel rooms charge seven-per-cent GST and a five-per-cent room tax that goes toward the provincial government's general tax revenue. A further three-per-cent tax would bring a hotel room's total tax bill to 15 per cent, equal to Ontario's provincial sales tax and GST on sales of goods and services.

Rod Seiling, president of The Greater Toronto Hotel Association, said there are approximately 30,000 hotel rooms under contract to charge the destination marketing fee and he expects more to come on-board.

"This was a hotel-based initiative and there was a general recognition of the need," said Seiling. "We are pleased with the response and pleased with how it's being implemented."

Seiling would not say if his organization would lobby for a legislated hotel tax by the province.

"Right now, (the destination marketing fee) is a viable solution. We've opted to take this direction and we are working to make it as efficient as possible."

According to Jacques Burelle, president of the Ottawa Tourism and Convention Authority, approximately 75 per cent of hoteliers in Ottawa have agreed to sign up for the initiative. He is hopeful the project will get the green light as a temporary solution.

"The OTCA is monitoring the (initiative). (The fee) is meant to be a stop gap until there is a legislated solution from Queen's Park," said Burelle. The tourism authority has an agreement with the hoteliers association on how the money would be spent if the initiative goes ahead.

"The agreement is only for 18 months because both parties want to see a provincial law of an additional three-per-cent room tax," said Burelle.

Burelle worries city hall will think the initiative and its associated revenues of $5 to $6 million are a go and adjust its budget accordingly.

"What we're saying to city hall is don't look at (this fee) as a 2004 solution, it is a 2005 solution in terms of looking at cutting our grant."

The authority's operating budget comes from an annual city grant, currently under review.

There is enough momentum on the issue that implementing a voluntary fee by the spring is a possibility, Burelle said.

However, until Brown has 100-per-cent support from all hotels in the city, he does not want to make too much of an initiative that may not happen.

"It's a sensitive issue that impacts hotels' clients," said Brown. "There's a risk of misunderstanding on the part of the public."

At last week's meeting of The Ottawa Partnership at city hall, Paul Akehurst Sr., chairman of Ottawa's tourism authority, reminded the economic development group that, in a speech to the New York Stock Exchange in December, Premier Dalton McGuinty said Ontario is likely to have a room tax to finance destination marketing in the next 18 months to two years.