Vermont Lodging Association urges caution on new taxes and fees, cites rising costs and workforce housing squeeze

Representatives of the Vermont Lodging Association told the House Ways & Means Committee on Feb. 5 that rising taxes, fees and operating costs are squeezing small lodging operators and could harm the statewide visitor economy.

Brian Macchiato of the Inn of Manchester (co‑founder of the Vermont Lodging Association) and Kim Donahue, owner of the Inn at the Round Barn Farm in Waitsfield and chair of the association, described how property-tax increases, higher utility bills and rising payroll costs are affecting operators across Vermont’s rural communities.

Donahue said the lodging sector supports a broad supply chain of local businesses and is a major local employer. “There is no part of our industry that is not intimately connected to every other facet of the state of Vermont,” she told the committee. She noted data the association uses to justify relief: lodging and tourism represent roughly 9% of Vermont’s GDP and the industry employs more than 31,000 people; in some rural communities lodging is the largest employer.

Local impacts and examples: Donahue said property-tax increases in resort and mountain towns have exceeded 50% over two years in some cases, creating unexpected operating gaps for small proprietors. She described higher utility costs (an average 20% increase over two years) and higher payroll costs (a 25–30% increase over four years). Macchiato and Donahue warned that the cumulative effect of fees, taxes and rising input costs can make small, family‑run inns and B&Bs financially unsustainable.

Competitiveness and fees: Committee members discussed whether shifting some fees to guests (local option occupancy taxes or other visitor fees) could be part of the response. Donahue said pricing must remain competitive with out‑of‑state venues for weddings and large events; she noted that a single large event can generate $250,000 to $1,000,000 in local spending and is often the deciding factor when clients evaluate competing destinations.

Workforce and housing: Lawmakers asked about workforce housing and child‑care costs. Witnesses said some operators have converted rooms to employee housing or otherwise subsidized staff housing, but that practice reduces available visitor inventory and can reduce meals & rooms tax revenue. Donahue said municipalities seeing conversions of motels or inns to housing was a mixed outcome for local economies and raised concerns about long‑term inventory loss.

Requests and next steps: The Vermont Lodging Association asked legislators to weigh the full economic role of lodging when considering tax and fee increases and to consult the association as committees consider proposals that affect the visitor economy.

Ending: Association leaders said they are available to provide data and to work with lawmakers on targeted solutions that preserve tourism jobs and the economic activity that visitors bring to Vermont communities.