Proliferation of Airbnb-type rentals hits Door Co. housing market, traditional lodging


STURGEON BAY – Since 2015 the vacation lodging options among online sites similar to Airbnb, VRBO, HomeAway and FlipKey have skyrocketed.

The rental options in Door County listed on these websites have grown by 270 percent in just three years. In 2015, there were 191 properties permitted by the Door County Tourism Commission to offer lodging. That number swelled to 706 properties in 2018, according to information from the commission, which collects room taxes from permitted properties.

While the online listings increased by 515, not all are Airbnb-type rentals; some are from the increased use of online booking sites by commercial properties including traditional resort and bed-and-breakfast establishments, hotels and motels, said Kim Roberts, commission administrator. 

In fact, the plethora of options and amount of vacationers turning to Airbnb earned Door County hosts the third highest amount of revenue out of Wisconsin’s top 25 performing counties in 2018, according to information from Airbnb.

Door County trailed Milwaukee and Dane counties with Airbnb listings garnering 21,000 guests who generated $3.2 million in income for their Door County hosts, according to the news release.  Milwaukee County topped the list with 71,000 people using Airbnb, which generated $7.1 million in host income.

Although Airbnb and other online sites enable homeowners to rent out property to vacationers, the trend is squeezing the housing market for people who live in Door County and affecting the traditional lodging market. 

When Kimberly Hazen of Madison started renting out her vacation home on the shore of Lake Michigan to guests in 2016, she collected enough rent within one month to pay the property taxes that year.

“I thought we might be on to something, here,” Hazen said. “I started renting it out because my kids were getting older and not so interested in summers at the lake. I didn’t do it as a business venture, it was more to have it used and maybe it would be a way to help with the taxes.”

Last year, Hazen bought a small cabin on a bluff overlooking Green Bay, which she renovated along with the property’s garage. Renovations were completed in time for the tourist season and she hasn’t regretted her decision to purchase the property for renting to vacationers.

While Hazen’s two properties have become a rental business, it’s a job that involves a lot of time and energy on her part, which is why she favors clients through Airbnb.

“It’s extremely important you do your vetting (of potential clients) properly because you can get really great people to stay there and have them coming back,” Hazen said. “If you don’t do your research, you can end up with people who aren’t respectful of the neighbors or your home.”

Besides the customer rating the location and the property owner, Airbnb also features rating of lodgers by the property owners, which is a way to vet potential clients.

“I will not rent to someone who does not have a good record on Airbnb,” Hazen said.

Hazen said she’s only had one regret with the move to online rentals, and that was she didn’t discuss her plans with neighbors. 

“My one mistake was neglecting to talk to neighbors first and now I’m working with my neighbors, because it’s important that they’re satisfied, too,” she said.

Room-tax fees fund marketing region to vacationers

The number of permitted lodging venues, including those posted online or in classified advertisements, are closely monitored by the Door County Tourism Commission to ensure that room-taxes are collected and remitted to the commission office.

The 5.5 percent room tax mandated by a countywide ordinance is distributed back to the communities and Door County Visitor Bureau. Every community gets 30 percent of the tax paid while 66 percent goes to the Visitor Bureau to promote and market the county as a tourist destination. The remainder covers the administrative costs for the commission, which permits lodging facilities and collects room taxes.

Tracking the statistics associated with the county’s lodging options is critical to understanding the short-term rental market, making sure rentals have permits and anticipating potential trends, said Kim Roberts, commission administrator.

“Data allows us to identity trends in our lodging industry and evolve along with them,” Roberts said.

While all of the room tax revenues for 2018 haven’t been tallied, the numbers available show that the yearly trend of growth is continuing, she said.

“What this shows is that the room taxes are doing their job,” Roberts said. The portion of the tax funding the Visitor Bureau’s marketing and promotion of the region is attracting more vacationers every year to the county, she said. 

“The online sites, like Airbnb, are bringing people to our area,” Roberts said. “It’s a new way to travel and to find accommodations and we have to embrace it.”

 Airbnb started in 2007 as a site where home owners could post their spare bedroom to rent and would include breakfast or an invitation to join the family dinner.

The idea caught on and now there are several online options to view from a home computer and leisurely scroll through the possibilities — from renting a cabin on a Door County farm to booking a stay for your family and friends at a house overlooking Lake Michigan.

A lack of housing for locals

The swelling market in renting homes and apartments to tourists is making it difficult for people living in Door County to find an affordable home.

“When I made the decision to move to Sturgeon Bay, I honestly didn’t think it would be this hard to find a two-bedroom apartment or house to rent,” said Katie Potter who moved about two years ago from Green Bay.

A $1,000-a-month rental isn’t affordable for mid-income single parents similar to Potter, who said she felt lucky to find a rental she could afford in a triplex-style building. Eventually, Potter found a larger house to rent which was affordable with a roommate to share expenses.

While Potter was renting her former apartment, she learned one of the units was rented to only tourists. When Potter told her landlord she wasn’t’ renewing her lease, the landlord told her she was planning to convert the apartment to an Airbnb style-rental.

“When that happens, that means there’s less housing for people who actually live and work here,” Potter said.

The status of available housing throughout the county is being studied and will be released in February, said Door County Economic Development Corporation Director Jim Schuessler.

“Affordable housing for working families is an issue and it’s one of the components of this study,” Schuessler said.

Collecting, paying 5.5 percent room tax 

It’s imperative that communities have a process to ensure online rentals are charging and paying the room-tax fees, otherwise, the market become unfair, said Trisha Pugal, president of the Wisconsin Hotel and Lodging Association.

“I commend the work Door County is doing because they are working hard to make sure people (placing homes for rent with online sites) are educated and understand that there are rules to follow and taxes to collect and remit,” Pugal said.

It’s a time-consuming job to monitor online sties and other media to find property owners who aren’t permitted, Pugal said.

While the growth in online rental sites are attractive for a segment of the visitor market, some owners of traditional lodging venues in Door County are facing a growing shortage of customers which impacts hiring for staff.

“It started about two to three years ago and it’s impacting the amount of people I hire,” said Nancy Bertz, manager at Stone Harbor Resort, Sturgeon Bay.

The decline in customers tracks the increase in Airbnb-type rental permits in Door County.

“We need a level playing field and we simply don’t have it,” Bertz said. 

Apartments and homes rented to vacationers don’t require the same level of inspections and quality of products or materials demanded of hotels and motels.

“We have fire inspections twice a year, health inspections, there’s ADA (Americans with Disabilities Act) requirements, emergency lightning requirements and our kitchens need to be licensed for commercial grade,” Bertz said. “These places rented online through places like Airbnb don’t have all those inspections and all those requirements.”

Melanie Jane, manager and a co-owner of the Holiday Music Motel in Sturgeon Bay, said, “Winter has always been difficult for hotels in this area, but with more people using these sites like Airbnb it’s a struggle to survive. So many people in this community fought against the development of another hotel in the city (along the city’s west side waterfront). Now, we have all these houses being rented out online and it’s created a very uneven playing field.”

The city and other Door County communities could regulate the growth by limiting the number of permits.

“I know other tourist destinations in the state are doing something to regulate this, but not Sturgeon Bay,” Bertz said.

State sets rental property regulations

The state sets the standards and regulations for rental properties and traditional hotel, motel and resort venues, said Josh VanLieshout, Sturgeon Bay city administrator and chairman of the Tourism Commission. 

All facilities, before getting a permit to rent to vacationers, need to pass an inspection to ensure regulations are followed, VanLieshout said. The state also passed a law regulating the extent to which municipalities can regulate the short-term rental market, he said.

The state allows homeowners to rent out a room, or their house, for seven to 29 days at a time and allows cities to regulate rentals that are less than seven days. Under the law municipalities and counties can limit total consecutive days of rental activity to 180 days. 

“Within the city, now, there is little we can control and when we can it’s only by zoning,” he said.

Regulations and inspections are required of Airbnb-type rentals before a site is permitted, but the requirements aren’t as detailed as those for a hotel or motel, he said. 

Matt and Mary Horton of Baileys Harbor also found that online lodging sites were a way to supplement their family income.

“We have a house in Baileys Harbor (on State 57) and during the summer there’s so much traffic and that’s also increased the noise,” Matt Horton said. “But we love our house and didn’t want to sell it so we started renting it out and we made money.”

The couple ended up with two additional rental properties also near the village center.

“We enjoy it and we’re making some extra income,” Horton said.

He explained Baileys Harbor has been a quiet and small community for decades and visitors are beginning to discover the attributes of the small-town life and local scenery.