Item - 2017.ED25.5

The Economic Development Committee recommends that:

1.  City Council request the General Manager, Economic Development and Culture, and the Acting Chief Planner and Executive Director, City Planning, and other appropriate City Divisions to review the potential for the implementation of a hotel accommodation replacement policy and or strategy to protect the existing amount of hotel space in areas designated Mixed Use Areas and Regeneration Areas in the Official Plan.

A strong and vibrant tourism industry with a sufficient number of hotel rooms and meeting space is essential to the economic health of Toronto. In recent years a number of hotels have been redeveloped into residential condominiums, removing hotel supply from the market at about the same rate as new hotel properties have been coming on stream.

As a result, the number of available hotel rooms in the city of Toronto has stagnated since 2000. At the same time, room supply in the rest of the GTA has grown robustly. A number of factors contribute towards the lack of hotel room growth in Toronto, especially in the downtown area, such as high costs associated with building and operating a new hotel, better ROI for investments in alternative developments, and proliferation of short term rentals.

While the net total hotel room supply has been stagnant in the city of Toronto, tourism has been growing, which is confirmed by the hotel key performance indicators. At the same time hotel employment growth has been slower than the average for the city of Toronto.

The Meetings, Convention and Incentive Travel (MCIT) market segment is by far the most lucrative tourism-related sector. Competition among cities for major conventions is intense. The ability to attract large business events depends on a reliable supply of hotel rooms concentrated in close proximity to one another. The potential impact of a reduced hotel room capacity in certain locations such as in the downtown exacerbates existing issues related to the reduced room blocks being made available. This may affect Toronto's ability to bid for large scale events that bring in significant economic benefits for the city.

The Toronto Official Plan supports the hotel industry by providing short, medium and long term opportunities for hotels and convention space in strategic locations in Toronto and enables the industry to locate, operate, expand, evolve and adapt to its market over time.

Given the net flat growth of hotel developments in the city and the desire to grow the MCIT sector by attracting lucrative conventions and conferences, it is proposed that EDC, City Planning and other partners review the potential for the implementation of a hotel accommodation replacement policy and or strategy to protect the existing supply of hotel space in designated Mixed Use Areas and Regeneration Areas in the Official Plan.

The proposed Downtown Plan policies resulting from the TOcore Secondary Plan study are currently out for public consultation. The proposed Secondary Plan contains policies to strengthen the hotel, tourism, hospitality and convention industries by prioritizing the development of non-residential uses which include hotel facilities in an expanded Financial District and in a new Health Sciences District. Council will be considering the recommended Secondary Plan in the second quarter of 2018.