Hotel rooms in Churchill will soon cost travellers five per cent more after the province approved a new accommodation tax for the town.

Mayor Mike Spence, who owns the Seaport Hotel, said the new tax will bring in between $150,000 to $200,000 to the struggling town, which has been hit hard by the shutting down of the port last summer and closure of the Hudson Bay Railway earlier this year.

The money will go towards enhancing public utilities such as waste management, as well as tourism development.

"We're a destination of choice, we attract a lot of tourists; they utilize our services," said Spence.

The town council approved the tax in 2015, Spence said, but it was only this month that the province approved it.

David Daley owns the Aurora Inn and is the president of the Churchill Chamber of Commerce and the Churchill Hotel Association.

"We need the money for the town here so that's one way to recoup it, is from the hotels, from the tourists."

The added cost might deter some tourists, but he said hotel rates in Churchill are already low, because of the expense of travelling to the town.

Also, the funds raised by the tax will go toward making the town more attractive for tourists by beautifying public spaces.

"I think it's needed," said Daley.

Many other Manitoba communities already have an accommodation tax, including Winnipeg, Brandon and Thompson.

"Let's be proactive in terms of, this is for the betterment of the community. By sharing that information to the respective tourists that come through, they'll understand," said Spence.

Tour operators in Churchill have faced cancellations after spring flooding damaged the Hudson Bay Railway, the main mode of transporation for tourists coming into Churchill. Some tourists have paid for more expensive air travel, but many others simply had to cancel.

Daley hopes the railway can be fixed before the winter polar bear season, but Denver-based Omnitrax, which owns the railway, has said it won't pay for the repairs, which it estimates will cost between $20 million and $60 million.