
Portsmouth’s picturesque downtown draws tens of thousands of tourists annually, and developers and investors looking to cater to them.
Portsmouth’s tourism boom has turned into a bust for some critics.
Alarmed by the proliferation of new hotels built to capture the flood of tourists now flocking to the picturesque Seacoast city, some are calling for a halt to new hotel construction – or at least a new local hotel room tax to pay for city services that they say are being strained by hundreds of thousands of overnight visitors each year to Portsmouth.
“The people I represent believe there are too many hotels,” said City Councilor Deaglan McEachern. “There’s not been anyone who has come up to me and said ‘We don’t have enough hotels.’”
McEachern and other city officials stress they themselves are not against construction of new hotels – nor are they “anti-hotels.”
They say they welcome Portsmouth’s newfound popularity among national and international travelers, prompted by recently glowing reviews of the historic city in publications such as National Geographic Traveler, Fodor’s and Thrillest.
But they say the time has come to find a way to pay for city services required by hotels, such as fire and police protection, and to provide property-tax relief to local homeowners struggling to pay tax bills.
And they think they have the answer in a proposed local hotel room tax that’s now being debated at the state level in Concord. The legislation would allow local governments to impose a room tax of up to $2 per night, potentially raising millions of dollars a year for local governments across the state.
23 Hotels and 2,200 Rooms
The New Hampshire House has been receptive to the local room-tax idea, but Gov. Chris Sununu and many in the New Hampshire Senate have made clear their opposition to the so-called “pillow tax.”
And, needless to say, the lodging industry also opposes the tax proposal.
“We’re strongly against it,” said Mike Somers, CEO of the 800-member New Hampshire Lodging and Restaurant Association.
Hotels are already paying their fair share in taxes, Sommers said, via a 9 percent state rooms-and-meals tax and via local property taxes – and another new tax isn’t needed.
“It would be just one less reason to come here,” Somers said of out-of-state-travelers potentially balking at higher room prices. “We’d rather retain the New Hampshire advantage. We’re a low-tax state.”
Mark Stebbins, owner of major regional hotel developer PROCON Inc. and of three hotels in Portsmouth, said he’s also against a new local room tax – if it’s not accompanied by a meals tax on the more than 300 food establishments in Portsmouth.
One thing is clear: Portsmouth has undergone a major hotel building boom in recent decades, from only a handful of establishments a generation ago to 23 lodging facilities today. That’s more than one hotel, inn or bed-and-breakfast for every 1,000 people in Portsmouth, with a population of just under 22,000
Stebbins’ PROCON alone has developed five hotels over the past 11 years, he notes, selling off two and maintaining ownership of three. PROCON’s most recent addition to its portfolio: The 156-room AC Hotel by Marriot, which opened in January at 299 Vaughan St.
PROCON has proposed yet another hotel, an 80-room Portsmouth Moxy hotel, on Green Street, Stebbins said.
Meanwhile, Deer Streets Assoc. has a proposal pending for a 5-story hotel at 165 Deer St., as part of a larger private-public development project along the city’s Foundry Place and a change from their original plans for multifamily housing. Officials at Deer Street Assoc. declined comment for this story.

Deer Streets Assoc. has a proposal pending for a 5-story hotel at 165 Deer St., a change from their original plans for multifamily housing. Image courtesy of Legat Architects
Jim Splaine, assistant mayor of Portsmouth, said there’s a “lot of justification” for a local hotel room tax to help pay for city services, such as police, fire, water and traffic-related services.
Like McEachern, Splaine said he’s not against new hotels per se – just against the financial burden they can put on city services.
So Far, Boom Not Slowing
Curiously, not all members of the lodging industry are against the local room-tax idea.
Amanda McSharry, co-owner of the nine-room Sailmaker’s House at 314 Court St. and the nearby Water Street Inn in Kittery, Maine, said she could support a $1 per night room tax, though she’s not sure about a $2 per night room tax.
As for more hotels in the city, she said she’s not opposed to them – “as long as we’re not taking away from our history.”
“It’s not like they’re tearing down historic buildings for new hotels,” she says of the lodging industry in Portsmouth. “It’s nice when new buildings go up that are in places that may need [development].”
Most of the city’s new hotels have been built in its North End, an area leveled during mid-20th century urban renewal programs.
Peter Melvin, manager of the 32-room Hotel Portsmouth, located in a 120-year-old former mansion at 40 Court St., says the whole debate over a room tax is overblown. He said he previously worked in the hotel industry in Texas, where taxes on occupied hotel rooms totaled as much as 18 percent per night – and tourism didn’t suffer in Texas as a result.
“A tax on travelers doesn’t impact business much,” he said. “I don’t think [a room tax] will have much of an impact here.”
As for additional hotels in Portsmouth, Melvin said he’s “maybe a little apprehensive” about the possible impact of more lodging facilities on existing hotels and inns. Then again, he said there’s been “no negative impact” on the Hotel Portsmouth since last month’s opening of the new AC Hotel by Marriot.