Toronto hotels not telling guests they don’t have to pay DMP fee

Pop Goes The News — Guests at Toronto hotels are forking over millions of dollars every year in fees they are not obligated to pay.

Hotel operators and tourism officials are more than happy to keep tourists in the dark about the extra 3 per cent on their bills, which generates more than $20 million a year.

Guests at many of the major hotels in Toronto are charged a “Destination Marketing Program” fee for something typically labelled only as “DMP.” The 13 per cent HST is added to the fee.

A $150 room, therefore, gets about $5.09 added on for the DMP.

What the vast majority of hotel guests don’t know, though, is the DMP is completely voluntary and must be removed from their bills upon request.

This came as a surprise to Diane, who was lined up to check-out of the Chelsea Hotel in downtown Toronto recently. Her bill included $25.63 in DMP fees and tax.

“I just assumed it’s a hotel tax,” she said. “There’s nothing on the bill that says I don’t have to pay it.”

Diane noted that the 3 per cent fee appeared in an email confirmation of her online booking as simply “DMP” but was spelled out as “Destination Marketing Program” on the printed bill that was slipped under her door on the last night of her stay.

No where on the Chelsea Hotel bill, though, does it explain that the DMP is voluntary and can be removed from the bill.

The back of the Chelsea Hotel bill makes no mention that the DMP fee is optional and can be removed.

(The front desk clerk at the Chelsea Hotel immediately removed the DMP charges when told to do so.)

Since the City of Toronto is prohibited by provincial law from collecting any tax on lodging, the Greater Toronto Hotel Association (GTHA) launched the DMP to allow hotels to collect an extra 3 per cent. Not all of the 170 hotels represented by the GTHA participate in the DMP.

Revenue from the fee is paid to the GTHA, which turns over most of it to Tourism Toronto, the agency that promotes Toronto around the world. According to Tourism Toronto’s 2014 annual report, the GTHA contribution accounted for 59 per cent of its revenue, up from 41 per cent in 2013.

The DMP fee is an added blow to visitors who are required to pay 13 per cent HST on their hotel stays. Prior to adopting the HST, Ontario charged only 5 per cent provincial tax on hotel rooms (3 per cent less than the PST) as a way of encouraging tourism.

DMP fees are not unique to Toronto, of course. Other cities in Ontario, including Ottawa, charge guests a similar “destination marketing” fee. Hamilton is currently considering allowing DMP fees on hotel stays.

Tourists in Niagara Falls, Ont. are charged 3 per cent at many hotels and restaurants, which shows up on bills as “DMF” (Destination Marketing Fee), “DMDF” (Destination Marketing & Development Fee) or “TMF” (Tourism Marketing Fee). The extra revenue stays with the business and is not turned over to any tourism agency.

It is completely voluntary and must be removed from a customer’s bill upon request but hotels and restaurants — which are together collecting anywhere from $13 million to $20 million in additional revenue from the fee every year — are not required to disclose that the fee is optional.

(Last year, Niagara Falls Review writer John Law called the fee a “black eye” for the city and wondered: “Does our tourism industry have so little regard for visitors that deceiving them is acceptable?”)

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DMP fees also appear on hotel bills in cities like Vancouver (1.5 per cent), Saskatoon (2 per cent) and Calgary (3 per cent).

In some Canadian cities there are legitimate hotel taxes, ranging from 2 per cent in Halifax to 3.5 per cent in Montreal.

For its part, the Ontario government encourages hotel operators and associations to be transparent about the DMP fee and to ensure it is displayed on bills as a separate item.

“Staff will be trained to ensure that they understand and can explain the fee, in particular that the fee is not a government tax or levy,” reads a directive, which also states “all price advertising will include clear notice of the fee prior to booking so that visitors are not surprised when presented with their bill.”

Tourists, though, aren’t likely to be told that they don’t have to pay the DMP fees. There is no mention that the fee is optional on any of the hotel websites surveyed by Pop Goes The News or on the Tourism Toronto website.

The GTHA explanation of the DMP makes no mention of the fact that the fee is optional.

“The funding generated by the Destination Marketing Program will ensure that Toronto and Mississauga are able to tell millions of people about the many great things our cities have to offer and the terrific experiences you can enjoy,” it explains.

On travel forums like Trip Advisor, the DMP has raised the ire of many visitors.

“Their decision to surreptitiously pass this marketing cost along to hotel guests as a check-out surprise will only discourage, not encourage, visits to Toronto,” opined a guest of the Marriott Bloor-Yorkville.

An overseas guest at the Novotel posted: “Beware of this kind of tricky business.”

A Chelsea Hotel visitor wrote: “Refuse to pay for it unless they can show you proof that it’s compulsory.”

In December 2014, Merchant Law Group said it launched class action litigation against major hotel chains seeking compensation “on behalf of all Canadian consumers who have been charged a destination marketing fee.”

A guest at another Toronto hotel said asking tourists to pay 3 per cent more to help fund marketing programs is akin to “McDonald’s adding 3 per cent to your bill to pay for their commercials.”

Brian Hunter said hotel clerks in Toronto and Ottawa always remove the fee from his bill when he tells them to do so — but none have ever told him beforehand that it’s optional.

“They could easily raise room rates and use some of the profits to fund marketing programs,” he said. “That’s their right. But they’d rather have competitive rates and hope that people don’t know that [the fee] is voluntary.”