PROVINCETOWN — Two town residents have put forward a petitioned article that aims to prevent further consolidation of the town’s hotel industry.
Article 24 on the warrant for Provincetown’s April 1 town meeting would amend the town’s general bylaws to limit the number of lodging licenses any one person or entity could have to three. Businesses that already have more than three licenses would be “grandfathered in” and allowed to keep them.
The petitioners, Elias Duncan and Brent Daly, said that they submitted their petition in response to out-of-town real estate enterprises buying up more hotels in Provincetown in recent years. (Duncan is a freelance contributor to and former staff reporter for the Independent.)
“I don’t think any community wants a business that isn’t based here and where the shareholders don’t live here to be operating the biggest businesses here,” Duncan said. “There’s a level of accountability when the owner of a property or a hotel lives in the community.”
According to data from Provincetown’s licensing and tourism offices, 40 percent of the town’s 1,380 licensed hotel rooms are now owned by three companies: Linchris Hotel Corp., Sawyer Realty Partners, and the Lexvest Group. All three are based in Massachusetts, but none is headquartered on Cape Cod.
Linchris Hotel Corp. is the largest hotel operator in Provincetown and owns 31 percent of the town’s hotel rooms. The company bought the Surfside Hotel in 2000, the Harbor Hotel in 2018, the Brass Key Guesthouse and Crowne Pointe Inn in 2021, and the Provincetown Inn and Foxberry Inn in December 2023.
The company paid $24 million for the 102-room Provincetown Inn and $3 million for the 12-room Foxberry Inn, which it plans to repurpose for staff housing, the Independent reported in January.
Sawyer Realty Partners bought the Waterford Inn, the Ellery Hotel, and the Mercury Hotel in 2022. The Lexvest Group bought the Cape Colony Inn in 2012 and the Breakwater Hotel in 2018.
Linchris Hotel Corp. and Sawyer Realty Partners did not respond to multiple requests for comment, while a spokesperson for the Lexvest Group declined to comment.
Duncan and Daly told the select board on March 11 that their proposal was intended to resist corporate control of the town’s identity. They pointed out that Linchris had recently announced a plan to turn its Cape Codder Resort in Hyannis into a “Margaritaville Resort.”
“How much does one person or corporation get to own of paradise?” Daly asked.
The select board thanked Duncan and Daly for bringing attention to the issue but ultimately voted to reserve its recommendation on their proposal.
Board member Erik Borg commented, “I just want to say that encouraging competition is great, but this also seems like a safeguard against cultural homogenization” of the town.
The town would be “going up against people with lots and lots of money for lawyers,” said board member Austin Miller. “I think there’s a process we need to go through to fully vet these things.”
A Novel Approach
Limiting lodging licenses could be a new way of fending off consolidation in the tourism industry. Paul Niedzwiecki, the CEO of the Cape Cod Chamber of Commerce, told the Independent that he is not aware of any other proposal to limit lodging licenses elsewhere on the Cape.
Duncan said that Article 24 was inspired by the town’s adoption last fall of general bylaw restrictions on the number of short-term rental certificates one person or business is allowed to hold.
Provincetown’s formula business bylaw, which governs the aesthetics and location of franchise or chain stores, relies on the town’s zoning powers rather than its licensing authority.
Though the license limitation does not have a direct precedent on Cape Cod, some states have used similar restrictions for decades to prevent conglomerates from dominating certain business sectors.
Pennsylvania has a longstanding law that requires funeral homes to be owned by licensed funeral home directors and prohibits any one director from owning more than two establishments. That law was challenged in federal court in 2008, but the Third Circuit Court of Appeals ultimately upheld the restrictions.
In North Dakota, a 1963 law that requires every pharmacy to have a licensed pharmacist as its majority owner has kept big box stores and national drugstore chains from opening pharmacies there. The law has faced multiple challenges, including one that went to the U.S. Supreme Court, which upheld it in 1973.
In 2014, Walmart spent several million dollars backing a ballot initiative that would have repealed the North Dakota law. It was soundly defeated, however, with nearly 60 percent of voters choosing to keep the law in place.
“I don’t see any reason that a community like Provincetown couldn’t use the same approach to prevent consolidation,” said Kennedy Smith, a senior researcher at the Institute for Local Self-Reliance, a national nonprofit organization that advocates for locally controlled economies.
The select board’s Miller told the Independent that the measure to limit lodging licenses in town was a “really great way to start a conversation,” but that he was worried about litigation.
“Whenever we’re creating new regulations that have a high probability of being challenged, particularly by folks with deep pockets, it’s really important that we fully understand the legal aspect of it,” said Miller.
Duncan told the Independent that he had also worried about litigation and was relieved when Provincetown’s town counsel agreed to help draft Article 24.
Enforcement Questions
If Article 24 is adopted on April 1, town officials may have to consider a new way of tracking licenses so that no one person or entity receives a fourth lodging license. Corporations commonly create a new limited liability company for each property they acquire, both to simplify accounting and to protect the parent company from liability.
On the Provincetown Inn’s lodging license, for example, the name “Linchris Hotel Corp.” does not appear, even though Linchris owns the property and lists it on its website. The current lodging license form requires only a “Doing Business As” name, which in this case is just “Provincetown Inn.”
“Linchris” also does not appear on the licenses for the Harbor Hotel, the Brass Key Guesthouse, or the Crowne Pointe Inn.
Niedzwiecki said that adding corporate ownership disclosure requirements could be “burdensome” and that big businesses often find a way to skirt regulations through subsidiaries and shell companies.
Provincetown’s bylaw amendment to restrict how many short-term rental certificates one person may hold requires that applicants disclose the names of the “natural persons” who own LLCs, S corporations, and trusts rather than just a company name.
That bylaw has still not been approved by the state attorney general’s office, however, according to Assistant Town Manager Dan Riviello.
If Article 24 is approved, the town may need to decide what information it will require of license holders to prevent shell companies from doing an end run around the measure.
