EASTHAM — The Cape Cod Chamber of Commerce is proposing to generate money for tourism marketing with a new 1.5-percent tax on stays at hotels and motels with 15 or more rooms. The funds would go to advertising, incentives for visitors, and workforce housing for the “shoulder season,” according to Chamber CEO Paul Niedzwiecki.
The Eastham Select Board was the first on Cape Cod to hear the Chamber’s proposal for a Tourism Destination Marketing District (TDMD) on Dec. 4.
The response was mixed: board members Jamie Demetri and Suzanne Bryan were doubtful that labor and housing supplies are sufficient to handle increased tourism, while chair Art Autorino and Eastham Chamber of Commerce Executive Director Jim Russo expressed enthusiasm for an increase in the tourism marketing budget.
The board did not vote on the proposal. A second discussion will take place after Niedzwiecki and Russo collect any approvals from Eastham hotel and motel owners and submit them to the board along with input from residents.
The Chamber needs to present the plan to each town’s select board and get its endorsement for that town to participate. After that, 62 percent of the eligible hotels and motels — which Niedzwiecki estimates to be 165 businesses — must petition the state to create the district.
The additional revenue created by the new tax was estimated at $3,570,000 per year by Civitas Advisors, a consulting firm the Chamber has retained for about $75,000 per year.
The proposed budget for the plan allocates 60 percent of the revenue to sales and marketing, 25 percent to economic and community development initiatives (including workforce housing), 8 percent to administration, and 7 percent for contingencies.
The sales and marketing effort could include television advertising, strategic sponsorships, and attendance at trade shows. Economic development initiatives could include addressing traffic congestion in certain areas, capital improvement projects, or expanded worker transportation.
Labor and Housing
At the Dec. 4 meeting, Demetri expressed concern about how motels and hotels could manage increased business, given the Outer Cape’s labor shortage.
“Right now, we’re maxed out here,” she said. “These businesses don’t have enough staff to manage an influx in October.”
The Independent reported in 2021 that 70 percent of business owners in Provincetown said they did not have enough workers because of housing costs. The same issue weighs on Eastham, where hundreds of thousands of dollars have been dedicated to workforce housing through programs like the Family Support Package.
Niedzwiecki responded that the plan will help create workforce housing by supporting the conversion of underperforming motels and hotels to worker housing. In a later interview, Niedzwiecki added that the plan could “attract private capital” to support such conversions.
Patricia Bureau, a regional director for JMR Management who oversees the Sheraton Four Points and Ocean Park Inn in Eastham, said that housing staff is a major hurdle for the hotel.
In the summer, the Ocean Park Inn houses J-1 employees, which “takes away from our revenue,” Bureau said. “They need a safe place to live,” she said, but that means sacrificing rooms during the most lucrative season.
At the meeting, Demetri also expressed concern that the added tax would create a barrier for middle-class families who want to visit the Cape.
“One-and-a-half percent adds up, and the middle class is where all those little one-and-a-halfs end up,” she said. “There’s no benefit in taxing people who are already under stress in order to encourage them to take a vacation,” she told the Independent later.
“I defer to [business owners] on whether it would scare people away,” Niedzwiecki said. He said that hotel and motel proprietors who want to participate “don’t see that as an impediment — they see that as an opportunity to raise revenue in order to promote their businesses.”
The tax on hotel and motel rooms is currently 14.45 percent; adding 1.5 percent would bring the total surcharge to 15.95 percent.
Asking for Transparency
The TDMD idea was welcomed by Autorino, who sees advantages in increased marketing — but only if businesses in Eastham are open to the plan.
“I think the more money we can get to promote ourselves and to promote tourism is beneficial,” he said.
“There’s a lot of opportunities here to build up the businesses we have,” Russo told the Independent. “We definitely don’t need anything for the height of the summer, but for the shoulder season, that’s very important.”
Some hotel and motel managers are also enthusiastic. “It would really help,” Bureau said. Shoulder seasons “are hard right now.”
Ted Wilson, owner of the Wellfleet Motel & Lodge and a member of the Wellfleet Chamber of Commerce, had not yet heard about the TDMD. But he said, “I think we could definitely use some extra dollars for marketing for that time of year.”
Wilson keeps his motel open from mid-April through late October. For him, staffing is not an issue, even in those less popular months; instead, he opens his motel because he wants “to get people back to work.”
Wilson emphasized that transparency and the even distribution of funds across the Cape would be crucial for him to support the plan. “Hopefully, the money would be spread out to try to attract tourists to all different parts of the Cape,” he said.
Transparency is what drew Bureau to support the plan and join its steering committee.
“They have to list where this money is going,” she said. “If not, they will dismantle the whole program.” The program also is required to demonstrate that the funds are directly helping any hotel or motel that charges the extra fee, according to Niedzwiecki.
The Mass. Department of Revenue will review and disperse the funds collected by the plan, according to its website.
The Big Picture
Massachusetts first entertained TDMD legislation in 2021 as a part of an economic development bill. The idea is spreading across the country, with 157 TDMDs (also called Tourism Investment Districts) nationally as of 2016, according to Civitas. In 2021, Boston and Cambridge introduced theirs, creating a 187-percent increase in tourism funding in the first year of the plan, according to Civitas.
The plan would remedy what Niedzwiecki sees as chronic underinvestment in tourism on the Cape. “Annually, we get around half a million dollars to market the Cape,” he said. “Areas around the country that are similar to the Cape spend as much as $6 million annually to promote themselves.”
According to the Chamber of Commerce, Portland, Maine instituted a Tourism Investment District in September 2023. Newport, R.I. implemented one in September 2017 and now allocates $5.7 million to its tourism budget.
The state legislation for TDMDs excludes short-term rentals and bed-and-breakfasts. Niedzwiecki said that’s because there are far more short-term rentals in Barnstable County than there are hotels and motels, and it would be very difficult to organize a petition. Short-term rentals also employ far fewer people than hotels and motels, he said.
The Chamber convened a steering committee of seven stakeholders on the Cape to vet the plan in early 2023. Of the seven, only Bureau is directly involved with a hotel on the Outer Cape. None of the members live on the Outer Cape; Bureau is based in Middleborough.
Most members of the steering committee are affiliated with national chains, including Linchris, EOS Hospitality, and Marriott. The Independent reported last week that Linchris now owns more than 30 percent of the hotel rooms in Provincetown. Its representative on the steering committee is Rachel Thayer, general manager of the Cape Codder Resort and Spa in Hyannis.
Niedzwiecki said that with more funding for marketing for these larger chains, more of the Chamber’s current funding could be directed toward smaller businesses. He believes additional marketing will provide ancillary benefits for these smaller businesses, even if they do not receive direct funding.