Given the likelihood that Massachusetts will pass a Lodging Tax bill at some point after January 1, many homeowners are wondering how to proceed with their bookings in the meantime. Should they inform their past guests about the tax? If so, how and when? Should they price their homes any differently given this significant new tax? Should homeowners absorb some or all of the tax themselves rather than pass it all along to their guests?
We will address the issues of pricing in a future post, but here are some suggestions about contacting your past guests to inform them about the proposed tax.
Reaching out to your past guests – and even anyone who may have inquired about your home recently – is a courtesy to let them know that any lease signed prior to the passing of the tax would not have to include a tax, even if the date of the tenancy or collection of the funds occurs after the passing of the tax bill. So if your guests are planning to return to the Cape or Islands next season, they might want to consider booking earlier than usual to avoid the tax.
How do we recommend you inform your guests?
Here’s sample template of an email you could send:
Subject line: Have you made your 2019 vacation plans yet?
Dear [past guest],
We so enjoyed having you and your family stay at our home last summer. We are writing to let you know that our rental availability and prices for 2019 are now posted online, and we are taking reservations for the upcoming season.
You may not be aware that Massachusetts will likely be passing a Lodging Tax bill this winter assessing rental home vacationers a tax of up to 14.45%. Any contracts that are signed prior to the passing of the bill would be exempt from this tax. So, it would be in your best interests to book your rental home before the bill passes in order to avoid having to pay the tax.
Feel free to call or email us if you have any questions or would like us to reserve a particular week for you.
When should you contact your guests?
Don’t wait too long! Although it’s highly unlikely that a bill would be passed by the end of 2018, it might get pushed through fairly quickly in the beginning of 2019. There will probably be a grace period between the date of the bill passing and when it will be enforced, but better safe than sorry. And the sooner you inform your guests, the more time they will have to make their plans.
How can you respond to their objections or concerns?
Keep in mind that it’s unlikely that vacationers already know about the proposed Lodging
Tax bill, especially if they do not live in Massachusetts. So be prepared for their reaction.
Tell your guests that Massachusetts is the last state in New England to impose a lodging tax, and that it’s similar to what visitors to hotels and inns have had to pay for many years. Let them know that 2.75% of the tax is for wastewater management – addressing a dire need to protect the fragile ecosystem and beauty of this region that is so dear to all of us.
The bottom line: the sooner you inform your guests about the tax and confirm your bookings for next season, the better the odds are they won’t have to pay the tax for the upcoming season.
Stay tuned for our upcoming post about the impact of the Lodging Tax on your pricing for next season.
For more information about the proposed Lodging Tax bill, see our Lodging Tax FAQ’s post.