Massachusetts is a great state — one we should be proud of for many reasons. And Cape Cod is one of its most valuable assets: a global destination, a major economic engine, and a place that helps fund the public services we all rely on.
Yet when it comes to how the Commonwealth invests in travel and tourism, Cape Cod continues to be underfunded and unevenly treated — even as it delivers outsized returns for the state.
Since 2018, Massachusetts has deposited $10 million per year of occupancy tax revenue into the Travel and Tourism Trust Fund. Those dollars — along with 1% of certain gaming revenues — are split 60/40 between the state’s 16 Regional Tourism Councils and the Massachusetts Office of Travel and Tourism.
Except for a one-time infusion of federal relief during the pandemic, that $10 million figure has never changed.
Over that same period:
- State spending has increased by more than 50%
- Occupancy tax revenue has grown by 62%
- Cumulative inflation has exceeded 27%
In real dollars, state investment in tourism has declined — even as tourism continues to generate more revenue for the Commonwealth.
That’s not just frustrating for tourism regions. It’s bad fiscal policy.
Tourism Is the Cape Cod Economy
Tourism is not one sector among many on Cape Cod — it is the foundation of our regional economy.
In FY2024, Cape Cod generated $2.8 billion in visitor spending. Between April and September, 47% of all spending at local businesses came from visitors. Every year-round resident, second homeowner, and municipal government is tied to the health of this industry.
Municipal budgets depend on it as well. In 2023, local-option occupancy taxes generated $80 million for Cape Cod towns. In 2024, that figure grew by another $10 million — nearly a 12% increase in a single year.
That growth far exceeds the revenue impact of the additional 1% local-option tax proposed in the Governor’s municipal empowerment bill — a clear example that growing the economy is more effective than simply raising taxes.
To put this in statewide context: 25% of all local-option occupancy tax revenue in Massachusetts is generated by just 15 Cape Cod towns.
And yet, the regions producing the most tourism revenue are not seeing a commensurate reinvestment.
A Distribution Formula That Misses the Mark
The state’s historic underinvestment in tourism is compounded on Cape Cod by a distribution formula that prioritizes equal geographic allocation over performance and impact.
Rather than reinvesting tourism dollars where they are generated, the formula increasingly spreads funding across all 16 Regional Tourism Councils — regardless of scale, visitation, or economic return.
The result is that tourism dollars generated by Cape Cod are effectively used to subsidize regions with limited tourism infrastructure, sometimes with only one or two hotels.
Meanwhile, Cape Cod supports:
- 190 hotels and motels
- Over 200 bed & breakfast establishments
- More than 20,000 registered short-term rentals — 42% of the state total
At the same time, we shoulder the real costs of tourism: traffic congestion, infrastructure strain, and a severe housing crisis tied in part to a seasonal, service-based economy.
With over 500 miles of coastline — one-third of the Massachusetts total — land costs on the Cape are higher than the state average, while wages are lower, reflecting the realities of a tourism-dependent region.
Cape Cod deserves to be treated accordingly.
Shrinking Tourism Funding, Growing Transportation Revenues
Other sources that once supported tourism promotion are also eroding.
Revenue from the Cape Cod & Islands specialty license plate continues to decline as more specialty plates enter the market. Both Martha’s Vineyard and Nantucket now have their own plates — yet still receive a share of the Cape plate’s proceeds.
The new 250th Anniversary license plate, while visually striking, directs 100% of its revenue to the Department of Transportation — none to tourism promotion, none to the Massachusetts Office of Travel and Tourism, and none to the Regional Tourism Councils.
This comes at a time when transportation funding has already been significantly bolstered by the “millionaires tax,” which raises billions of dollars annually and is constitutionally required to be split 50/50 between transportation and education.
Tourism promotion, by contrast, has no such dedicated growth mechanism — despite its proven ability to generate new state and local revenue year after year.
Even the limited license plate revenue that remains is split five ways, with only 30% supporting tourism.
Tourism Investment Is Revenue Generation
The Commonwealth is facing real fiscal challenges. That reality should be acknowledged.
But Regional Tourism Councils are not just another line item or “mouth to feed” in the state budget. Decades of data demonstrate that every dollar invested in regional tourism promotion returns multiple dollars to the state through occupancy, meals and sales taxes.
Tourism marketing is not a subsidy — it is an investment strategy that helps the Commonwealth raise revenue without raising taxes.
Cape Cod’s tourism industry alone delivers tens of millions annually to state coffers. Yet as overall tourism funding stagnates and distribution formulas shift, the regions generating the greatest returns are asked to do more with less.
Limited Options to Help Ourselves
The state often points to Tourism Destination Marketing Districts (TDMDs) as the solution — but on Cape Cod, this tool is extraordinarily difficult to implement.
TDMDs require:
- Town-by-town approval to establish collection boundaries
- A petition from 62% of qualifying hotels
- Proof of direct return on investment to participating properties
This structure may work in dense urban areas with one or two municipalities. It is far less practical in a region of 15 towns, including communities with no hotels at all.
As a result, TDMD funds could not be used to address truly regional challenges — such as promoting Cape Cod as open for business during the 7–10-year replacement of the Sagamore and Bourne bridges, a looming economic threat beginning as early as 2028.
At precisely the moment when sustained tourism messaging will be most critical, state investment is flat, alternative funding sources are shrinking, and the distribution formula continues to move resources away from Cape Cod.
Already Carrying More Than Our Share
Cape Cod’s lodging industry already bears the highest tax burden in the Commonwealth.
Since 2018, an additional 2.75% special excise tax on overnight stays has generated tens of millions for the Cape Cod and Islands Water Protection Fund, providing a 25% subsidy for wastewater projects across the region.
This funding is essential — the environment is the heart of the economy on Cape Cod — but it also reduces the state’s direct obligation to fund infrastructure that protects one of its most valuable economic assets.
Once again, Cape Cod is contributing more than its share.
Time for a Course Correction
Cape Cod is not asking for special treatment — just fair treatment.
A tourism funding model that reflects performance, recognizes regional impact, and reinvests where returns are greatest would strengthen not just Cape Cod, but the entire Commonwealth.
The state needs to stop taking Cape Cod’s tourism economy for granted and start viewing it for what it is: one of the most effective revenue-generating tools Massachusetts has.
Help us — or at least help us help ourselves.
Cape Cod deserves a fair shake. And the time for change is now.
—Paul Niedzwiecki
CEO, Cape Cod Chamber of Commerce