As expected, the passage of the controversial lodging tax in Massachusetts is having a significant impact on vacation rental homeowners as well as their guests. In addition to meeting registration and insurance requirements and having to collect and remit the tax, many homeowners are very anxious about the impact of the tax on their bookings. And as a result, they’re considering several options to make their homes more inviting to sticker-shocked vacationers.
One tactic some homeowners are considering, however, is a big mistake: incorporating the lodging tax in their posted rental rates. Doing so only shoots them in the foot, placing them at a significant disadvantage to their competition.
Keep in mind that vacationers have the ability to search for homes using a price cap. If including the tax in your rates bumps your price over a vacationer’s price cap, your listing won’t even appear to them in a search.
Even if you were to advertise on your listing that your prices include the tax, they will not see that notice until and unless they have clicked all the way through into your listing.
And most of your competition is not including the tax in their rental rates. So when vacationers compare listings by price (in addition to location, size, and amenities), yours would appear more expensive.
Like a sales tax, when hotels or retailers quote their rates, they do not include taxes. Taxes are paid by the consumer, not the vendor. Why would the vendor include them in their rates? And why would you?
Consider lowering your rates instead
If you do decide to lower the rate, and we recommend this only as a last resort, you could post an Owner Special with something like this: “Summer rental rates reduced from $XXXX to $XXXX to accommodate the new lodging tax.” Creating an Owner Special is free and can be very effective.
Remember that while some vacationers are experiencing sticker shock at the tax, they soon realize that they will have to pay this tax no matter which rental home they choose.
How can you improve your marketing strategies?
Looking for ways to distinguish your home from your competition and increase your bookings? Take a look at these Blog posts: Top 10 Marketing Tips, Marketing to Last-minute Vacationers, and Tips to Convert Last-minute Inquiries to Bookings.