Town Administrator Thatcher Kezer and Finance Director Aleesha Nunley Benjamin met with nearly two dozen local business owners March 14 to discuss proposed meals and room taxes, which are set to be voted on at the May Town Meeting.
The proposed taxes, outlined in warrant Articles 24 and 25, include a 0.75% local meals tax and up to a 6% tax on rooms in hotels, bed-and-breakfasts, and
-term rentals. If approved, the taxes are expected to generate significant revenue for the town, with initial estimates of $400,000 a year and potential future earnings up to $1 million annually.
However, some local business owners expressed concerns about the effect these taxes may have on their ability to compete.
“Marblehead is very different from the surrounding towns, especially our direct competitors,” said Carolyn Conway, owner of the Harbor Light Inn. “Salem has over 500 hotel rooms. We have 32 between myself and Hotel Marblehead. There are also over 200 rentals via Airbnb and VRBO, with some homes having five or six rooms.”
Conway pointed out that the proposed taxes would disproportionately affect her business and Hotel Marblehead. A hotel or inn can be considered a form of short-term rental, but there are distinctions in how these terms are generally used. Short-term rentals range from vacation homes to apartments, often listed on sites like Airbnb. Hotels and inns provide similar short stays but with more services and a regulated framework.
“This really does kind of unfairly target myself and Hotel Marblehead because this is our main [business],” she said. “We also pay all the inspections, permits and licensing fees.”
Marblehead is currently one of the few cities and towns in Massachusetts without a meals tax, room tax or short-term-rental community impact fee. In contrast, neighboring towns have collected substantial tax revenue from these sources.
According to data presented by Nunley Benjamin, Salem collected $1.5 million from the meals tax and $1.6 million from the room tax in the last fiscal year. Swampscott generated $267,300 from the meals tax and $80,000 from the room tax, while Beverly earned $1.1 million from the meals tax and $405,000 from the room tax.
Kezer and Nunley Benjamin emphasized that the proposed taxes aim to create a fair competitive environment for all accommodations, including hotels, bed-and-breakfasts and short-term rentals like Airbnb and VRBO. They also highlighted the town’s need for additional revenue to address its $4.2 million structural deficit.
“Every little bit of revenue is critical,” Nunley Benjamin said. “Our revenues are constrained by popular options.”
Conway also raised concerns about the lack of support for tourism in Marblehead, asking, “Is some of that money going to be put back into tourism? Because I will say, while we are competing with Salem, I have to do a lot to make my prices so that people will want to come.”
Kezer acknowledged the need for increased support and engagement with the business community, stating that the proposed taxes would help fund a new community development department focused on these issues.
“We don’t do enough reaching out to the business community,” Kezer said. “We just don’t have the personnel and the resources to have more engagement. I would say this is probably the start of increasing engagement.”
As the town prepares for the May Town Meeting, public forums and discussions with local businesses and stakeholders are planned to gauge the impact and gather input on the proposed taxes.
