Hotels, Taxpayers Have Vested Interests in Explore Edmonton’s Survival

As council approves $6M in funding for the tourism organization to "tread water," it hears about how much tax revenue the City has lost thanks to a COVID slump in the hotel business
Delta Hotels by Marriott Edmonton Centre Suites

In the words of Explore Edmonton CEO Traci Bednard, the organization can continue to “tread water” in 2024, thanks to an injection of a little more than $6 million from the City.

The funding, which will come from the City’s already depleted reserve was approved 13-0 by council this week.

Explore Edmonton, which had more than $1 million in tax arrears forgiven earlier this month, is the organization that runs K-Days, administers the Northlands areas, runs the Expo and Convention Centres, and is in charge of promoting Edmonton as a tourist destination. It works to attract sporting events and major conventions to the city. It receives about 20 per cent of its funding from the City, with the feds, province and private sources making up the rest.

But, as the organization drained funding through the pandemic, it came to council asking for what amounted to emergency funding. In fact, it could not wait till council’s spring budget review.

“In the interim, without additional certainty or commitment of funding, we would need to take actions that would permanently impact the visitor economy,” said Bednard. “We would need to cancel programs, remove ourselves from bids, remove ourselves from sales processes — and that is not something we could recover if we waited until April.”

Explore Edmonton gets base annual funding of $11.7 million from the City.

The city’s reserves, because of already existing budget shortfalls, are $40 million below the minimum, and this gap needs to be eliminated within three years.

But, had Explore Edmonton been forced to slash its programs and abandon bids, the effect on the hotel industry would be expensive to the City, and would have bit taxpayers in the end. That was the contention from Barnie Yerxa, who manages both Delta hotels in the city. He said the city’s ability to attract conventions and major events is vital.

“It doesn’t just put extra occupancy in our hotels from the compression that it creates in the city, but it also creates higher average daily rates that can be charged, which also has a significant impact on the profit and loss statements of our properties, which impacts the valuation of the hotels,” he said. “At the end of the day, the valuations are about the bottom line.”

Why are the valuations important? Council heard that the assessed value of hotels have not returned to “anywhere near the value” they had before the pandemic.

Administration told council that taxes from hotels came in at $18.2 million in 2020. By 2023, that had slumped to $9.3 million. It has since rebounded to $12.6 million, but it’s still far short of pre-pandemic numbers. So the argument is there — that Explore Edmonton’s work in attracting events to the city is needed in order to bring back the value of hotels.

Yerxa said the conventions and major events act like ads for the city. People visit the city for a convention, and then may be inspired to return for a vacation.

In the coming months, there will be discussions about Explore Edmonton’s mandate, and how long-term funding can align with those goals.