By: Sara Anghel, President & CEO, Greater Toronto Hotel Association
It’s a familiar moment at checkout: after a several-night stay, a hotel guest sees a line on the folio for a local accommodation tax. It’s reasonable to expect that a meaningful share goes toward promoting the destination and bringing in future visitors. In Toronto, however, only about a quarter of net Municipal Accommodation Tax (MAT) revenues goes to Destination Toronto to promote tourism and attract new business. With a municipal election approaching, that small share deserves a closer look.
Under provincial regulations, municipalities without a pre-existing destination marketing program must share at least 50% of net MAT revenues with eligible tourism organizations. Toronto follows a different formula because a voluntary destination marketing fee was already in place before the MAT was introduced. That formula was meant to protect tourism investment by setting a funding floor based on revenues from the previous program, with adjustments linked to provincial tourism receipts. It protects a minimum level of funding, but does not ensure that tourism investment keeps pace with MAT revenues. Toronto consequently directs a much smaller share to destination promotion than municipalities operating under the 50% formula.
There’s much to be gained for Toronto by investing in tourism promotion. In 2025, the city welcomed 28.2 million visitors, generating $9.1 billion in direct visitor spending. Major meetings alone brought in approximately 378,000 delegates and an estimated $982 million in economic impact, according to Destination Toronto. Hotels depend on that business, as do restaurants, attractions, transportation providers and neighbourhood shops.
Maintaining that business requires Toronto to compete on the cost and quality of its offering to event planners. Other destinations are investing in their capacity to attract major events. Austin, for example, is redeveloping its convention centre and already accepting bookings for 2029 and beyond. Toronto needs to give planners compelling reasons to choose our city as they make those same long-term decisions.
We recognize that the City faces budget pressures and has limited taxation tools. Visitors use municipal services, and accommodation-tax revenue helps pay for them. But future revenue also depends on Toronto continuing to attract visitors. Reinvestment in tourism promotion should be evaluated against the business it can help secure and the benefits that spending brings to the wider economy.
A larger share of MAT revenue would give Destination Toronto more capacity to win business through targeted sales efforts and site visits that show prospective clients what Toronto offers. It could also support carefully designed event incentives that strengthen bids. The results should be measured in additional room nights and visitor spending.
The Greater Toronto Hotel Association is asking Toronto’s mayor and council to amend the funding agreement so that at least 50% of net MAT revenues goes to Destination Toronto, with transparent reporting on spending and results. This would give the City more resources to compete for visitor business without increasing the tax paid by hotel guests.