Lodging Tax Marketing Your Vacation Rental

Absorbing the lodging tax in your rental rates is a bad idea

Written by Elizabeth Weedon
Absorbing the lodging tax in your rental rates is a bad idea
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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.

About the author

Elizabeth Weedon

Elizabeth Weedon - Although I’ve worked for WeNeedaVacation.com since 2008, I’ve been a loyal homeowner on the site since early 1998, just a few months after the website was launched by the Talmadges. I grew up summering on the Vineyard and have managed my family's rental home there since the mid-1980’s. I’m passionately devoted to the Vineyard – and to WeNeedaVacation.com, which I credit with enabling me to hold onto the special property that has been in our family since the 1920’s. An enthusiastic member of the WNAV.com Homeowner Support Team, I am particularly involved with our new listers, providing assistance with the sign-up process and advice about how to create the most effective listing to ensure their booking success with us. I have recently taken over our press and public relations needs. And, with owner Joan Talmadge, I am also responsible for editing and writing much of the content on our website, our monthly newsletters, and the blog posts. My husband and I live in Wellesley where we have raised our 2 grown kids and our Black Lab, Maisie. Email Elizabeth

3 Comments

  • What if I amend all my lease agreements to ensure they are 31+ days in duration. A 14 day stay in August + a 18 day stay in December. The new law doesn’t stipulate consecutive days.

    • Hi, Rick. Yes, unfortunately, it does. A rental is only exempt if the stay consists of 32 consecutive days. Just to be sure, Joan reached out to her contact at the DOR, and they confirmed this. Also, in the DOR’s FAQ’s, they state: “A short-term rental is a rental that is not for more than 31 consecutive calendar days.”

  • Thanks for this. I actually thought the bill was worded to clearly state we must keep the numbers separate: tax on rental and all other add-ons that qualify such as cleaning. Good psychology as well.