A group of local hotel owners plan to start charging a three per cent fee to Hamilton hotel bills this year — even as a similar concept is causing contention and near fist fights in nearby Niagara Falls.

The Hospitality Hamilton partner steering committee says it will raise as much as $1 million per year from a surcharge on stays at six Hamilton hotels.

The money, said member P.J. Mercanti, will be used to attract conferences and visitors to Hamilton, thereby boosting the city's tourism industry.

Hoteliers will volunteer to participate and get a vote on how exactly the money is spent. The group will co-ordinate efforts with Tourisma Hamilton, Mercanti said, and the Ontario Restaurant, Hotel and Motel Association will distribute the money.

The group has been working on the plan for more than a year, Mercanti said. Now it's just hammering out software issues.

Niagara Falls has a destination marketing plan fee at hotels and restaurants, but it's has some issues. (Charles Platiau/Reuters)

"It's just the technical stuff we're looking at now," said Mercanti, whose company Carmen's Group manages the Hamilton Convention Centre. "Everyone has bought in, so to speak."

About 20 cities across Canada have destination marketing plans, the Hamilton group said. Last year, the steering committee asked the city boost its tourism budget at the same time, although city council eventually committed far less than the suggested amount.

The province has guidelines for such programs. Among them: making sure the fees aren't "misrepresented as taxes," the province says.

Businesses should also "make the amount to be charged known in advance to the prospective visitor and accurately describe its purpose," the province says.

But the concept has raised some ire in Niagara Falls.

Trouble in Niagara Falls

The fee at hotels and restaurants there is supposed to be voluntary for the customer, although few people know that, a CBC Marketplace investigation has shown. In the last year, some hotels have refused to remove the fee when customers ask.

In one case, CBC News found, a man asked a hotel to remove the charge. The hotel refused, cancelled the man's reservation and, he said, "left my family and I stranded."

Unlike the Hamilton plan, though, there's no independent body overseeing the distribution of money there. The fee appears on people's bills under various names, including the Tourism Improvement Fee (TIF), Attractions and Promotions Fee (APF) and the Niagara Falls Destination Fee (NFDF).

It's also crept upward. A CBC investigation shows Embassy Suites at Hilton Hotel raised the fee from 3.8 per cent to 10 per cent last year. The hotel said the TIF contributed millions to the convention centre, fireworks displays, festivals, and events.

Then last weekend, Cody Gaillie of New Brunswick nearly came to blows over the marketing fee. It was his first visit to Ontario, and he went to a chain restaurant in Niagara Falls. A server there warned him of the surcharge.

Gaillie went to another restaurant that day, and noticed the seven per cent addition to his bill. That annoyed him, he said. But he was even more annoyed when he learned of the murkiness around who manages the fund.

Gaillie said as he stood outside the restaurant, he told people entering about the surcharge. He and the manager argued, he said, and the manager threatened to "smash my head in."

"Anyone who goes in and questions it should get a direct answer about where the money is going," he said.

Kitchener-Waterloo is also looking at a destination marketing fee of three per cent.