Overall, there was unprecedented spending earmarked for tourism recovery to the tune of $1.5B which included support for Destination Canada and major festivals and events, and a Tourism Recovery Fund to support businesses as they build back. There was support for labour programs that could help our industry access more foreign workers, which will be a critical challenge for the sector moving into recovery.
As you will recall, pre-pandemic, our number one issue was fair rules for Short-Term Rental operators, and this Budget included a landslide win. Digital companies like Airbnb now being required to charge and remit GST/HST to their hosts, and foreign owned digital companies will be required to pay a 3% tax on revenue in Canada. This has been a key recommendation of HAC’s since it started work on this file, and a significant win for the Canadian hotel sector.
In the lead up to the Budget, HAC learned that the Federal Government was planning to eliminate the Wage Subsidy (CEWS) and Fixed Cost Program (CERS). HAC spent significant time and energy trying to prevent an abrupt halt of these two programs in June. We fought for every last dollar and we were successful. The extensions of both CERS and CEWS until September 25 will support the industry’s transition to recovery over the summer and there is also an option to extend support to November if the health crisis, and financial conditions, demand it. In addition to this, the Budget included a new re-hiring program that may, in fact, be more generous than CEWS as hoteliers ramp up for the summer. Hoteliers will need to evaluate which program is most beneficial and choose one or the other.
The concerning component of this Budget is the aggressive wind-down of the CEWS and CERS starting in July and ending in September. And while it does signal the Government’s intent to get the economy back open for businesses (a goal the industry shares), that timeline may be premature for our sector.
We met with senior Government officials in the Prime Minister’s Office and the Minister of Finance immediately after the Budget to emphasize the need for travel restrictions to be lifted as quickly as possible once the third wave has stabilized and most Canadians are vaccinated. We have made it clear that lingering restrictions into the summer will badly impact our recovery trajectory, and many operators may not be stable by the Fall.
The Budget assumes a rapid economic recovery and the government has adjusted their programs accordingly. We hope they are correct. But if that assumption proves false and it is evident that the hotel sector remains in peril, we will make the case for the extension of CEWS and CERS or a hotel specific solution.
In the meantime, all eyes are on recovery.