The 2026 FIFA World Cup will be the biggest event Vancouver has hosted since the 2010 Winter Olympics.
Over the past year, there have been some questions about how the City of Vancouver will foot the significant bill for the municipal government portion of the hosting costs. This is not to be confused with the separate costs incurred by the Government of British Columbia, such as performing upgrades to BC Place Stadium and tournament-time operating costs.
In April 2024, the provincial government announced the total FIFA World Cup costs had risen to between $483 million and $581 million, which includes about $246 million in City of Vancouver costs for public safety and security, creating team training sites, organizing the FIFA Fan Festival at the PNE, city decorations, traffic management, and other required municipal services.
However, what is perhaps lost in the confusing discourse is that the vast majority of the City of Vancouver’s costs will not be borne by residents from property taxes or covered by the municipality’s general revenues.
The City of Vancouver’s $246 million portion of the costs will be covered by overnight visitors to the city’s jurisdiction — those who stay in hotel rooms.
In October 2022, the provincial government approved the City’s request to create a new Major Events Municipal and Regional District Tax (Major Events MRDT), which is an added 2.5% sales tax on hotel bookings within Vancouver specifically to cover the City’s FIFA World Cup costs. This is in addition to the regular hotel tax paid.
With a 2.5% rate, for example, this means a $500 nightly rate would produce $12.50 in Major Events MRDT revenue for the municipal government specifically for FIFA World Cup costs.
The added FIFA World Cup hotel tax first began on February 1, 2023, and the current agreement with the provincial government sustains the tax for seven years through 2030 — well after the tournament’s conclusion.
“The hotel tax is a way of having guests who are visiting the city fund it. And, you know, I think what citizens of Vancouver need to realize as well, this is good,” said Vancouver Mayor Ken Sim in a mid-term review interview with Daily Hive Urbanized on Monday, when asked about the FIFA World Cup hotel tax.
Upon inquiry, City staff also told Daily Hive Urbanized this week that the FIFA World Cup hotel tax could generate about $230 million in revenue for the municipal government over the seven-year term.
The temporary tax’s first year in 2023 — which was not a full calendar year, as it spanned 11 months from February to December — collected $29.2 million. This puts the tax on track to reach $230 million.
If the 2023 monthly temporary tax revenue average were used as a baseline, hypothetically, at least an additional $191 million could be raised through the tax’s remaining term from 2024 to 2030. However, with a worsening hotel room shortage due to growing tourism and without any meaningful net new hotel room supply until toward the end of this decade, already-high hotel room rates will continue to climb, which also serves to increase the temporary tax revenue as a percentage of the inflated price of room bookings.
“I think the residents of Vancouver will be like, ‘they’ll be good,’” said Sim, when it comes to the public’s understanding of the tournament’s costs and having visitors pay through the hotel tax.
However, there is also always a risk that the municipal government’s costs could grow over that $230 million prediction. When asked whether the temporary hotel tax could be further extended beyond 2030 as an option to cover any cost overruns or if there is a revenue shortfall, Sim said that the option is on the table.
Like the regular hotel sales tax, the new temporary Major Events MRDT is regulated and collected by the provincial government and then remitted to municipal governments and/or regional districts to cover the local costs related to major international events that bolster provincial tourism and the economy.
According to Destination Vancouver, there were 23,292 hotel rooms across 163 properties in the Metro Vancouver region as of 2022. Most of this supply is within the city’s borders; 13,290 rooms within 78 properties are located in Vancouver, which are the only rooms that apply to the temporary FIFA World Cup hotel room tax.
This limited-time tax does not apply to hotel rooms in Burnaby, Richmond, North Vancouver, New Westminster, and other cities in the region; curiously, the Major Events MRDT is not being applied to the approximate 10,000 other hotel rooms in the region that are located outside of Vancouver, even though the FIFA World Cup is a significant regional and provincial event that sees its benefits transcends far beyond municipal borders. And during the tournament itself, a significant influx of visitors will fill up hotel rooms across the region, not just those in Vancouver.
But based on how the limited-time hotel tax is designed, as the enactment of the Major Events MRDT needs to be spearheaded by municipal governments for their respective jurisdictions, there is no financial nor political incentive for them to voluntarily request the provincial government to enact the tax in their jurisdiction to help support the City of Vancouver’s costs.
If the tax applied to all hotel rooms in Metro Vancouver, the City would be able to recoup its costs sooner.
“If I had a magic wand and I could wave it, yeah, we’d apply it to the whole region. That wasn’t in the cards,” said Sim when asked about this conundrum.
More broadly, Sim also shared that the City of Vancouver is eager to support hosting more major events and initiatives. However, a key challenge lies in the lack of financial incentives for the City to recoup its costs, as the benefits, such as increased sales tax revenues from higher visitation, go to the provincial and federal governments, for example.
Vancouver’s municipal government incurs major costs for hosting Metro Vancouver’s largest events, such as the Honda Celebration of Light. This event draws in not only Vancouver residents but also vast numbers of suburban residents, drastically increasing the city’s “daytime population.” However, despite hosting regional-scale events, the City does not enjoy a regional tax base to cover the regional-scale costs, especially for policing needs.
Even with the City’s financial support for hosting the inaugural Web Summit tech conference in Vancouver (formerly known as Collision Conference, previously held in Toronto) starting in 2025, Sim says the various economic spinoffs expected — from increased sales tax revenue from visitation and the long-term revenue gains from trade deals — do not directly benefit the municipal government’s treasury.
“I think one of the challenges we have at the City of Vancouver is we want to promote all these events. But we don’t have the financial resources to do it. And when we commit resources to it, we do not get the economic payoff from these events,” he told Daily Hive Urbanized.
As for the overall economic and tourism promotion gains to be seen from the FIFA World Cup, Sim says, “We can’t just rely on what happened in the Olympics. We’re in a competitive situation. The second thing people have to realize as well is a lot of these things aren’t expenses.”
“It’s going to pay dividends for decades going on. It’s going to brand Vancouver. We can’t just rely on what happened in Expo 86,” he added.
Similarly, in 2007, the provincial government granted the Resort Municipality of Whistler’s request to create a temporary 4% Resort Area Tax — on top of the existing 2% hotel tax — to help cover the municipal government’s costs related to hosting the 2010 Olympics.