Boston, Cambridge hotels seek OK for tourism fee

New room charge could raise $10.5m initially

HOTELS IN Cambridge and Boston, frustrated with the lack of funding for tourism, are seeking approval for a new room fee that would be used to attract visitors to the communities.

Cambridge officials have already signaled their support and the Boston City Council, after holding a hearing on the proposal Monday, is likely to take action within the next 45 days. The new hotel fees, authorized under economic development legislation approved on Beacon Hill earlier this year, could start being collected as early as October 1.

Martha Sheridan, president and CEO of the Greater Boston Convention and Visitors Bureau, told members of the Boston City Council that all hotels with 50 or more rooms in Boston and Cambridge would impose a 1.5 percent fee—called an assessment—on short-term room rentals. The assessment would be collected by the Massachusetts Department of Revenue and invested back into the district to promote tourism in the area. The relatively nominal fee would tack an extra $4.50 onto a $300 hotel stay. 

Sheridan said the funds would be managed by a board consisting of 15 voting members, all of them local hotel owners, plus two at-large non-voting members. The projected first-year revenue for Boston and Cambridge would be $10.5 million. The majority, about 82 percent, would go to sales, marketing, and promotions; 3.3 percent would be set aside for the Cambridge Office of Tourism; 7 percent for administration and starting costs, and the remainder into a reserve fund. Sheridan said the goal will be to grow the budget to $30 million within five years.

City Councilor Lydia Edwards likened the development of the tourism destination marketing district plan to a business improvement district, which both cities already have in place to generate funds to support local businesses.

Both the tourism fund and the business improvement district are examples of the private sector raising funds to supplement what government is providing. Historically, Boston’s $7.4 million budget for tourism is measly compared to other states. It competes with cities such as Atlanta, Miami, Nashville, and Philadelphia, all of which have over $30 million to work with. 

Lawmakers have long recognized the discrepancy between budget and need in the state. Now, with hotels and the tourism industry reeling from the effects of the pandemic, a window has opened to push the policy again. “Hotels are bleeding money,” said Sheridan. “We don’t expect that this trajectory will be fast but we do need these funds to help at least jumpstart us up towards recovery.” 

Sheridan said competition to net a share of the tourism market will be especially fierce as the industry attempts to recover from a devastating two years. Without more funding over the next four to five years, she said, Massachusetts’ cities won’t be able to hold their own. 

Tourism districts aren’t a new idea—183 are already in use across the country and have proved lucrative. Hotels in these districts get back between $3 and $25 for every $1 invested in the program, according to Sheridan’s presentation.

Meet the Author

Lily Robinson

Summer intern, CommonWealth
All five Boston city councilors attending the hearing spoke in support of the measure. Seventy-eighty Boston hotels and 19 Cambridge hotels signed a petition in favor of the plan. The signatories represent 70 percent of hotels with at least 50 rooms in the area. Additionally, Edwards said, the council received five letters of support for the program and none in opposition.

Under the state law authorizing the new tourism districts, they could be created with the support of 62 percent of hotel owners in the district. After a public hearing, the city or town’s governing body would vote, by majority vote, whether to approve the district. Once a district is formed, every hotel within the district would have to pay a special assessment of up to 2 percent of room revenue to the district.