Ontario's Hospitality Industry Advocates for Reinstating Staycation Tax Credit Amid U.S. Tariffs

As U.S. tariffs lead many Canadians to reconsider travel plans to the United States, Ontario's hospitality sector is urging the provincial government to bring back a tax credit aimed at supporting local tourism. This initiative is intended for Ontarians looking to take vacations closer to home.

Tax Credit Could Stimulate Local Travel

The Ontario hospitality industry believes that reviving the 'staycation' tax credit could encourage residents to explore their own province during a time of economic uncertainty, significantly impacted by U.S. tariffs that deter cross-border travel.

Originally launched in 2022, the staycation tax credit was designed to help boost recovery in the tourism, hospitality, and cultural sectors during the pandemic. It provided a 20% return on accommodation costs, covering up to $1,000 per person or $2,000 per family.

Recent data indicates a sharp decline in visits from Canada to the U.S., with approximately 500,000 fewer trips recorded in February 2024 compared to the previous year.

Industry Leaders Call for Action

As Canadians are beginning to look at options beyond American destinations, the Ontario Restaurant, Hotel and Motel Association (ORHMA) has reached out to Premier Doug Ford and other officials, advocating for the reinstatement of this tax credit. They emphasize the benefits it would provide to Ontario's local businesses, workforce, and residents.

According to an industry spokesperson, the previous tax credit benefited over 900,000 families and injected around $180 million into Ontario's economy.

In response to whether the province would reconsider the tax credit, a tourism ministry representative stated that the government would continue to assess the ongoing tariffs and their potential impact.

Jasveen Rattan, director of policy at ORHMA, expressed hope that the government would respond positively, similar to previous measures taken during the pandemic.

She noted that in times of economic strain, travelers may prioritize their expenses, potentially cutting back on outings and trips first.

Impact on Travel Bookings

As reported by Flight Centre Travel Group Canada, there was a staggering 40% drop in leisure travel bookings to the U.S. in February compared to the previous year. Rattan pointed out that Ontario hotels are facing decreased bookings and an increase in cancellations due to the trade situation.

"We strongly urge the government to bring back the staycation tax credit to promote domestic tourism, giving a critical boost to businesses reliant on visitor spending," she added.

Encouraging local travel also has the potential to assist various businesses affected by tariffs, according to Rattan.

Local Tourism's Growing Importance

In places like Toronto, domestic travelers form a significant portion of visitors. Andrew Weir, president and CEO of Destination Toronto, affirmed that local travelers will be even more vital in the coming year.

Toronto's Mayor Olivia Chow recently introduced a plan to support local businesses amid the ongoing trade issues with the U.S. This includes a tax deferral scheme for industrial properties and a campaign promoting local products and services.

Aileen Heatherington, general manager of the Drake Hotel, highlighted the importance of local tourism. She believes reinstating the staycation tax credit could incentivize people to support local businesses, helping to stimulate the economy. "We need to leverage this opportunity as summer approaches to create positive outcomes for everyone involved in the hospitality sector," she stated.

Ontario, Hospitality, Tax, Tourism, Staycation