A Destination Marketing Fee (DMF) is voluntarily collected by hotels in some communities. These funds are used for destination marketing and tourism promotion. DMFs are not legislated by government, and they are not a tax or a levy.
DMFs are used to support tourism marketing and product development. They exist in a number of communities in Alberta and around North America. As destination marketing programs are administered locally, questions about how their initiatives are delivered should be addressed directly to specific DMF collectors.
Every property in Alberta with more than four guest rooms is required to collect and remit the Tourism Levy, however not every property participates in a destination marketing program. Hotels may charge a variety of fees, including parking, WiFi, and destination marketing. It is in the sole discretion of the hotel to apply any such fee. Properties that charge a DMF should inform the guest about the fee at the time of reservation and/or upon check in. Guests who want to know whether their hotel charges a Destination Marketing Fee should confirm this at the time of reservation and/or upon check in.
The AHLA encourages consumers who have questions about DMFs to ask the General Manager of their hotel, or to the DMF collector in the community where they are staying.
The AHLA supports the transparent and accountable collection and expenditure of DMFs to promote tourism marketing for the benefit of all Albertans.
Consider Before Implementing A DMF
Hotel groups considering implementing a DMF in their area are encouraged to consider the following questions:
- Do you have a strong local hotel group with engaged members?
- Is your community a tourism destination?
- Do you have enough local room nights annually to generate the amount of revenue required to mount a meaningful marketing campaign?
- Do you have a destination marketing organization (DMO) with the capacity to develop and execute the marketing plan?
- How will you define and measure success?
- How will you hold the DMO accountable?
- Who will act as your trustee?
Properly Calculating DMF
If your hotel collects DMFs, you must ensure you are calculating them correctly. DMFs form part of the cost of accommodation. Both the GST and Tourism Levy are calculated separately on the DMF amount.
For a hotel that added a 2 % DMF on a $100 guest room, the calculation on the folio should be:
|Tourism Levy on DMF||$0.08|
|GST on DMF||$0.10|
DMF Voluntary Code of Conduct
The AHLA developed the Voluntary Code for DMFs for DMF collectors based on the AHLA’s Recommendations for the Governance and Administration of DMFs
The Code advises DMF collectors to:
- Create the DMF collector as a legal entity with its own bylaws;
- Develop a strategic plan and business plan for the DMF collector, and a marketing plan for how funds will be used;
- Engage stakeholders; and
- Develop policies that promote accountability.
DMF Task Force
In 2011, the AHLA Board of Directors created a task force to develop an industry-driven solution for the implementation, governance, and administration of DMFs that complemented the existing tourism marketing model. When the task force was created, there were concerns about DMFs that had the potential for consumers and elected officials to question their legitimacy, including:
- Disparate and increasing DMF fee levels;
- Inconsistent application of DMFs across the province;
- Inconsistent governance, participation, and partners between communities;
- Inadequate measures of the effectiveness of the DMF programs; and
- Inconsistent accountability and transparency of the administration and management of DMFs.
After consulting with individuals involved in private and community DMFs, the Task force recommended:
- The AHLA work with industry to encourage DMFs to review and implement the elements contained in its Recommendations for the Governance and Administration of Destination Marketing Fees; and
- The creation of a voluntary code of conduct for DMFs based on key elements of the Recommendations.
Since most tourism marketing dollars are generated through direct taxes and fees on our industry, AHLA members should ensure the accountability of tourism marketing expenditures on all levels. DMFs are not effective in all areas and, in some cases, are promoted by municipalities to encourage economic growth rather than tourism.