On November 4, 2024, Councilor Kate Sykes proclaimed, “We are in a crisis, so everything we can do needs to prioritize the building of housing, not the building of hotels.” She then called on the Council to support a six-month moratorium on new hotel development, along with a study aimed at increasing the inclusionary fee (a $4,700 per-room tax paid by hotel developers)—or risk being labeled “anti-housing.”
Sitting in the chamber, it struck me that this was less about constructive policy and more about public shaming—part bullying, part false choice—and ultimately a ploy that adds unnecessary cost and complexity for those working to create jobs, prosperity, and vibrancy in Portland. Unfortunately, the measure passed on a 6–2 vote, with Mayor Dion and former Councilor Rodrigues courageously standing as the only “no” votes.
That same night, the Council also voted unanimously to pass ReCode—a major milestone after a decade of hard work by the Planning Department. Its passage was and is cause for celebration, and Planning deserves high praise for their tireless work. Yet behind the scenes, compromises with serious consequences were made to secure passage. One such concession, tying into this misplaced ant-hotel sentiment, was the removal of hotels from the list of allowed uses in secondary, yet still urban business zones like B2b.
While no one can fault Planning for doing what was needed to obtain passage, this capitulation has consequences, erodes economic vitality, stifles opportunity, and how it happened eroded the public confidence in what was otherwise a very transparent process.
Inconsistencies and Public Confusion
Days before the ReCode vote, a constituent and affected property owner identified and aired a glaring inconsistency. In the zoning charts (page 68), boutique hotels are listed as a permitted use in B2b — aligning with longstanding policy. Yet in Section 6.4.19 (page 79), hotels are expressly prohibited in B2b zones.
This internal contradiction (allowing hotels—a previously approved use in the former zoning—in one section, while prohibiting them in a sub-section/fine print) meant that affected property owners had a change forced upon them without notice. We can try to pass this off as a ‘miss’ or clerical error, but the consequences are too high. Trust in government relies on transparency and accuracy—both were undermined by this inaccuracy, the failure to correct it, and the passage of ReCode with this change.
The Argument in Favor – Of a Pause and Increased Tax
The rationale for the moratorium and the increased penalty on new hotels seems to rest on three key premises:
-
A pause will stop more people from submitting hotel applications.
-
Making hotel development more expensive will push property owners to choose housing instead.
-
Funds raised through this tax will help Portland build more affordable housing.
The Problem with The Argument
-
There’s no surge of hotel proposals. It’s not as if people are lining up with new hotel plans— there’s no “emergency” driving a flood of applications.
-
Hotel vs. housing is rarely a real choice. Developers aren’t choosing between hotels and apartments on the same lot. Sites suitable for hotels are often inappropriate for housing. Denying hotel development doesn’t magically result in more apartments or condos. The two are not interchangeable.
-
The revenue impact is minimal. So few hotels are being built that this fee increase—unless extreme—won’t significantly help affordable housing efforts. Worse, it will likely act as a deterrent, much like the original inclusionary zoning policy adopted five years ago under the “Green New Deal,” which unintentionally led to less housing, and less affordable housing.
-
We should be wary of these kinds of reactive, feel-good measures. Instead of relying on penalties and mandates, we should let the free market meet this moment.
In Summary - Let’s play out the logic
-
If we never build another hotel, will that result in more housing? No.
-
If we overtax those who create new hotels and they walk away or reduce the number of rooms (and thus reduce the per-room fee), will that create more housing? No.
What it will do is result in a host of unintended, negative consequences, which I’ll touch on next.
Bad Policy and Bad Economics
More troubling than the inconsistency is the underlying policy itself. Making it harder and more costly to open hotels, especially in our second-tier business zones, is economically and socially harmful. Here's why:
1. Hotels Supercharge the Local Economy — Even Before Opening
The economic impact of hotel development starts well before the first guest arrives. Local surveyors, soil testers, engineers, architects, contractors, artists, consultants, bankers, brokers, and countless suppliers all benefit during the planning and construction phases. The American Hotel and Lodging Association notes that hotel construction generates millions in direct and indirect economic activity per project — and in secondary markets, this can be transformative.
2. Ongoing Jobs and Economic Ripples
After opening, hotels create a wide range of jobs — from entry-level to management — across industries including hospitality, farming (local food sourcing), art, event management, and maintenance. Guests staying in boutique hotels inject spending into local shops, restaurants, services, and attractions — creating an economic "wake" far larger than the hotel itself.
3. Boutique Hotels Serve Housing Needs Too
In residential areas where condos and apartments often have just one or two bedrooms, boutique hotels provide critical "overflow" for visiting friends and family. They also serve newcomers who haven't yet found permanent housing — a reality in cities experiencing growth pressures.
4. Hotels Offset Airbnb Pressure
Hotels provide legitimate short-term lodging alternatives and reduce the incentive for residential units to be converted into short-term rentals. Studies, such as those by the Urban Institute, show that cities with balanced hotel availability have lower Airbnb-induced housing market distortions.
5. Emergency Shelter Capacity
In times of crisis — whether weather disasters, fires, a pandemic or shelter overflows — hotels offer crucial temporary housing stock, as seen in numerous FEMA responses nationwide.
6. Appropriate Scale and Fit
Boutique-sized hotels (100 rooms or fewer) complement, rather than overwhelm, the surrounding neighborhood fabric.
7. The Myth: "Hotels Crowd Out Housing"
There's no credible data to support the idea that building hotels takes away from housing. Boutique hotels do not cannibalize residential projects. Instead, they preserve housing by providing purpose-built lodging. In fact, cities like Austin and Seattle have actively zoned for small hotels to protect residential housing stock while supporting local businesses.
8. Parking Concerns Can Be Managed
Boutique hotels are accountable for meeting their own parking needs. Cities routinely use approval conditions to ensure this, balancing neighborhood concerns with project viability.
9. Fear of "Hotel Overbuilding" is Misplaced
Hotels, particularly boutique hotels, are notoriously difficult to finance. Lenders demand third party demand studies and proven market viability before funding. Developers won't build speculative hotels where the market doesn't exist.
10. Proven Success Stories in Portland
The Francis and The Longfellow are shining examples. These boutique hotels fit their neighborhoods (out of the Old Port and down-town) beautifully, create quality jobs, support local businesses, and have been widely praised, not opposed.
11. National Examples: Proof It Works
Cities across the U.S. have embraced boutique hotels in mixed-use districts.
-
The Ramble Hotel in Denver’s RiNo District is a particularly strong example. RiNo, like inner Washington Avenue, blends residential, commercial, and creative spaces — and The Ramble became an anchor for revitalization without displacing housing.
-
The Perry Hotel in Key West’s Stock Island district is another example — revitalizing an industrial area while boosting the local economy without harming housing supply.
Who cares? We all should!
-
As elected leaders, Councilors have a duty to ensure consistency, transparency, and public trust.
-
As property owners, we deserve accurate information and the ability to plan based on stable rules.
-
As residents, we need thoughtful policies that support housing and economic vitality — not false choices.
At a time when local businesses are struggling, retail and office vacancies are rising, and remote work threatens downtown cores, Portland can’t afford to strangle smart, modest growth. We need more housing, more jobs, more customers for locally owned businesses and we need more ways to spread critical tourist dollars beyond the Old Port and downtown into neighborhood business areas.
More hotels, especially outside of downtown, are one of the best ways to do exactly that.
They stimulate the economy. They ease housing pressures. They sustain local businesses. They enliven neighborhoods. They provide resilience. They make sense.
What Now?
I urge the Mayor and City Council to lift the pause on new hotel development, maintain the current inclusionary fee per room (or better yet, eliminate this tax all together), and direct Planning to revise zoning in our secondary business districts—such as B2 and B2b—to once again allow hotels as a permitted use.
If we’re serious about addressing the housing crisis, there are far more effective, impactful ways to do so. I outline many of them in my book Priced Out of Portland and expand on them in an upcoming white paper, soon available at Home with Tom Landry. Let’s commit to real solutions—not false choices with costly consequences.
Want Proof? Here is what the research says.
Hotels as Catalysts for Economic Vitality
Job Creation and Local Spending:
Hotels directly employ local residents and rely on nearby suppliers, which ensures that a large portion of their revenues stay within the community. According to research from the American Hotel & Lodging Association (AHLA) and Oxford Economics (2023), the hotel industry supports 8.3 million
jobs nationwide and contributes $211 billion in taxes at the federal, state, and local levels. Source: American Hotel & Lodging Association and Oxford Economics, 2023 Economic Impact Study
Stimulating Local Economies:
Hotels, especially midscale and economy properties, play a crucial role in stabilizing and stimulating local economies by supporting small businesses and generating consistent visitor spending. Analysis shows that for every $100 spent at a hotel, an additional $222 is generated in local spending across restaurants, retail, transportation, and entertainment.
Source: American Hotel & Lodging Association, “Economic Impact Report” (2023)
Hotels and Housing Affordability
Buffering Housing Price Increases:
Research indicates that developing more hotel accommodations can help alleviate pressure on local housing markets. By offering sufficient lodging options for visitors, hotels reduce the demand for converting long-term residential units into vacation rentals. A study published in Research in Transportation Economics found that adequate hotel supply is associated with less strain on rental housing and helps maintain greater housing affordability in high-tourism markets.
Source: Research in Transportation Economics, “The Impact of Tourism Accommodation on Housing Markets,” Volume 91 (2022)
Supporting Local Businesses
Economic Diversification and Local Business Growth:
Hotels contribute to the diversification and vitality of local economies. Research shows that hotel guests spend significantly on local services and businesses, creating a ripple effect that supports a wide range of industries, from food service to transportation to cultural attractions. Areas with strong hotel industries typically experience faster small business growth and more stable job markets.
Source: Lodging Magazine, “Hotels’ Role in Local Economic Development” (2023)
Contact: Tom Landry
Broker/Owner, Benchmark Real Estate
207-939-0185 | tomlandry@benchmarkmaine.com
About Benchmark Real Estate
Benchmark Real Estate, based in Portland, Maine, is a locally owned and operated firm specializing in residential, luxury, and investment properties. Led by top-producing broker Tom Landry, Benchmark is known for market expertise, client-first service, and a results-driven approach.
