Boston hotels rush to adopt new assessment, bringing in millions for tourism promotion

Ringleader Martha Sheridan told the crowd that the 1.5 percent assessment — she won’t call it a tax, because it’s self-imposed and all funds stay within the industry — will increase local tourism funding five-fold, from $7.5 million in 2019 to $40 million when the hotel business returns to pre-pandemic levels. No one can say when that will happen, especially with another COVID variant cruising around. But even if hotel occupancy holds at current levels, the bureau should see its budget roughly quadruple next year, thanks to this new “tourism destination marketing district.”

These funds arrive at a crucial time for the industry, said Sebastian Colella, a vice president with hotel consultancy Pinnacle Advisory Group. That’s not just for hotels, but for all Boston businesses that rely on travelers’ dollars. The average occupancy rate for local hotels in 2021 is 45 percent, or roughly half of what it was in 2019, and room rates are down by about 20 percent from before the pandemic. Colella doesn’t expect a full recovery here until 2024 at the earliest.

Maybe a massive tourism campaign, funded by this new assessment, can speed that up a bit.

Getting to this point hasn’t been easy for the Boston tourism bureau. You can understand why Sheridan, the bureau’s chief executive, and her colleagues might take a few moments to celebrate.

The concept of a hotel assessment had been kicking around Beacon Hill for several years, not really going anywhere. It gained some traction when Sheridan’s group, the state’s largest and most prominent tourism bureau, backed it in 2019 not long after she took the job. She argued at the time that the state collected nearly $300 million in hotel taxes every year and sent just $10 million back to the industry, to be split among the state’s tourism office and local bureaus such as hers.

It really took the pandemic to get legislative leaders to take the idea seriously, as Dan Donahue of the Saunders Hotel Group explained at the annual meeting. The once-booming tourism sector was suddenly battered, with thousands of people out of work.

Sheridan got the call at 3 a.m. last January from her lobbyist, Matt LeBretton: The tourism district language had made it into the final version of an economic development bill, passed in the last late-night moments of the two-year legislative session, and was headed to Governor Charlie Baker for his signature.

Sheridan’s work wasn’t over yet. She needed local approvals too — at the Boston and Cambridge city councils — and support from at least 62 percent of eligible hotels, those with 50 or more rooms, across the two cities to raise the hotel surcharges. In Boston, the nightly total would go from 14.95 percent to 16.45 percent.

Nearly 100 hotels qualified. Sheridan and her cohorts persuaded 70 percent of them to sign on in June. Only one was clearly opposed.

Then came the politicians.

Boston Councilor Lydia Edwards jumped at the opportunity. When the tourism sector shut down, she said, the city had no emergency dollars to spare for the industry, at least not immediately. The new marketing district could change that. She said she views this effort as a way to promote Boston’s neighborhoods, beyond the usual attractions.

Boston’s council voted for it in August. By that point, Cambridge was on board as well. (At the annual meeting, the tourism bureau singled out Edwards and high-ranking state reps Aaron Michlewitz and Mike Moran for their help.)

Dow, the US Travel boss, noted that Boston has been one of the most underfunded tourism operations of any major US city. The dramatic increase in marketing spend, he said, should put Boston “in the big leagues” alongside the likes of New York, Chicago, Los Angeles, and San Francisco. Similar assessments, he added, helped turnarounds in places such as Memphis and San Diego.

So who’s next in line in Massachusetts? Probably Springfield. That’s where Mary Kay Wydra is waiting patiently. The Greater Springfield tourism bureau chief first introduced the idea to the Legislature, but she couldn’t get far without Boston’s buy-in. Her region’s hotels are typically smaller than in Boston and run by local owners struggling with staffing shortages, and she has more communities to cover than Sheridan did. So Wydra held off on a campaign to create a marketing district until now but hopes to have one formed in the spring.

In Boston, Sheridan and her team got a head start by teaming up with Colette Phillips Communications and Daren Bascome’s Proverb agency to win a tourism contract with the city, funded primarily by federal stimulus dollars. The campaign, dubbed “All Inclusive Boston,” launched in the spring and has been extended to spring of next year, costing about $4 million in all.

The goal is to highlight a more diverse city than the one seen in travel brochures, or in movies and TV — in terms of geography and demographics. The campaign essentially acts as a launchpad for a more ambitious effort at the tourism bureau to rebrand itself and the city. For many tourists, all they know of Boston is what they see in Dunkin’ ads, “Saturday Night Live” skits, or Ben Affleck flicks.

In particular, tourism officials worry that Boston is being held back by persistent stereotypes: elitism, arrogance, racism. They want to use marketing to help combat these perceptions and to make the city more inviting to a broader audience. Or as Donahue put it: We’ve had a bad rap, and we’ve got to get back out there and fix that.

Boston has a new story to tell. Now, the city finally will have the money to tell it.

Jon Chesto can be reached at [email protected]. Follow him on Twitter @jonchesto.