Lodging tax revenue skyrockets, except in bigger cities
Is it ‘revenge travel’ or something more permanent?
Lenox, a tourism mecca in western Massachusetts, has seen a record-setting rebound in visitors in the wake of COVID.
According to a recent story in the Berkshire Eagle, Lenox’s lodging tax revenue fell to $1.7 million during fiscal 2021 at the height of the pandemic, but then more than doubled to a record-setting $3.8 million in fiscal 2022 and is on track to increase again in the current fiscal year. Town officials were thrilled with the sharp uptick in tax revenue, but uncertain whether it will last.
“The reason for the cautious optimism is our inability to discern whether it is a sustainable trend or if it is merely ‘revenge travel,’’’ Town Manager Christopher Ketchen told the Berkshire Eagle, a reference to pent-up demand in the wake of COVID.
A check by CommonWealth of lodging tax numbers for a handful of other communities around the state uncovered an interesting trend. Like Lenox, many smaller, touristy communities have seen their lodging tax revenues soar to new highs in fiscal 2022. But larger communities are lagging behind, perhaps because business travel has not rebounded as quickly.
Revenge travel may be real, but if it is not all communities are experiencing it the same way. For example, Chatham, Provincetown, Edgartown, Nantucket, and Rockport saw no downturn in lodging tax revenue due to COVID and all hit record highs in fiscal 2022, which ended last year in June.
Nantucket saw its lodging tax revenue jump from $3.8 million in fiscal 2019 to a whopping $12.5 million in fiscal 2022. Edgartown went from $1 million to $3.8 million. Rockport went from $409,000 to $903,000. And Provincetown rose from $596,000 to $1.4 million.
Like Lenox, a number of other smaller communities saw a downturn in lodging tax revenues in fiscal 2021 (July 2020 through June 2021) but then a sharp spike upward in fiscal 2022. Salem fell to $554,000 in fiscal 2021 but then more than tripled to $1.8 million in fiscal 2022. Falmouth dropped to $600,000 before rebounding to $1 million. Northampton and New Bedford followed similar trendlines.
By contrast, most of the state’s bigger cities still haven’t recovered all of the lodging revenue they lost during COVID.
Boston hit $100.6 million in lodging tax revenue the year before COVID hit, plunged to $15.6 million in fiscal 2021 and rebounded to $75 million in fiscal 2022.
Cambridge followed a similar pattern, falling to $1.4 million at the height of COVID and rebounding to $8 million in fiscal 2022, half of what it brought in during fiscal 2019.
Worcester followed a similar pattern, while Springfield has yet to make any rebound.
All of the revenue numbers come from the Department of Revenue, which collects the state’s 5.7 percent room occupancy tax and remits to local communities their local lodging tax, which is typically 6 percent everywhere except Boston, which is 6.5 percent.
The state’s lodging revenue hit $294 million in fiscal 2022, which was more than double the revenue number from fiscal 2021 and $11 million higher than the fiscal 2019 pre-COVID number.
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