This story is part of a series on the state of the short-term rental industry in Door County.
More than 500 new short-term rental businesses have been created in Door County since the start of 2018, a Knock analysis of public records has found.
Moreover, the total number of short-term rental units in the county now exceeds the number of hotel and motel rooms for the first time, the records show.
Short-term rentals – which include homes listed on websites such as Airbnb and Vrbo – have grown dramatically in Door County and other parts of the country over the past decade.
With their rise on the peninsula have come questions about their effects on the housing market, the workforce capacity of service industries to meet the increased demand, and how to balance the economic benefits of the short-term rental business model – which has long been a source of income for some residents – with concerns about the sustainability of its growth.
The industry also is somewhat in a state of flux. While more than 500 new short-term rental businesses have been created in the county since 2018, an additional 200-plus have stopped renting since late 2017.
Shifting regulations, interest rate hikes and increases in nightly rental rates have contributed to questions about whether short-term rentals are reaching their peak. People involved in the industry who are both proponents and skeptics of it say issues around short-term rentals are complicated, and there’s no black-and-white answer about how the community should navigate their future.
Knock is publishing a series of in-depth stories this fall examining the state of the industry and exploring those questions. This story, the first in the series, is based on an analysis of room tax permit records kept by the Door County Tourism Zone Commission, the government body that administers the county’s room tax and tracks changes in the lodging industry. Knock obtained the records through a public records request.
Lodging businesses in Door County are required to have a permit and collect room tax, and the permits contain information such as which municipality the business is in, its address, how many units it includes and the owner’s name and address.
The Tourism Zone Commission sorts lodging businesses into several categories, including hotels and motels; resorts; inns; bed-and-breakfasts; cottages, cabins and houses; individually owned condo units; and other businesses such as retreat centers. Campgrounds that rent space for tents or RVs are not required to obtain permits or collect room tax for those rentals.
The vast majority of Door County rentals listed on sites such as Airbnb and Vrbo are in the cottages, cabins and houses category or the condo units category, said Juliana Behme, the Tourism Zone Commission’s administrator. Some hotels and motels also have begun listing some of their rooms on those sites.
Knock chose to focus on the cottages, cabins and houses category for this analysis, because rentals in that category most reflect questions in the community about the industry’s effects on residents. Rentals in the condo units category include a mix of residential condos and those at vacation resorts.
There were 1,083 businesses in the cottages, cabins and houses category representing 1,366 units, as of September, the permit records show. The condo units category includes 186 businesses representing 286 units.
Growth has accelerated in past two years
The growth of the short-term rental industry has accelerated since the start of 2021, the analysis found.
Among current permit-holders, there were 538 new permits for cottage, cabin and house rentals issued since the start of 2018, representing 618 units. Of those, 289 permits representing 314 units have been issued in 2021 and 2022.
That reflects a significant jump in the number of new permits from 2020 to 2021. In 2020, there were 72 new cottage, cabin and house rental businesses representing 92 units. In 2021, those numbers rose to 157 and 169, respectively.
This year, that increased volume has continued. Through Sept. 23, when Knock received the permit records, there had been 132 new businesses, representing 145 units.
“We process a lot of new permits,” Behme said. “It’s somewhere in the range of 10 to 25 a month that come in.”
Among the 1,423 current lodging permits and 5,116 units in the county, cottage, cabin and house rentals make up about 76 percent of the permits and 27 percent of the units. About 30 rental businesses in the cottages, cabins and houses category are marked as being on hold for some part of 2022, meaning they still have an active permit but are not renting.
An increasing share of the lodging industry
Looking at data from past Tourism Zone Commission annual reports – which include all lodging businesses operating in a given year, not just current permit-holders – shows a short-term rental industry that has grown dramatically even as other parts of the lodging industry stayed flat or declined.
Over the past 10 years, the number of cottage, cabin and house rental units in the county rose from 861 to 1,366, an increase of nearly 60 percent.
During the same period – from December 2012 to September 2022 – the number of hotel and motel rooms in the county increased from 1,190 to 1,311, and the number of resort units declined from 1,944 to 1,759. When current permits for hotels, motels, inns and bed-and-breakfasts are combined, they total 1,635 units.
The increase in short-term rental permits reflects the reality that there are a lot of new rental businesses, and not just increased enforcement of the permitting requirement, said Josh VanLieshout, the Tourism Zone Commission’s chair.
“It’s really a growth of the industry,” VanLieshout said. “The commission’s investigation tactics and methods have evolved and gotten better through time, but that’s always been a space we were in.”
The rise of websites such as Airbnb and Vrbo – referred to in the industry as online lodging marketplaces – has led to the growth of short-term rentals by making it easier to operate one independently, VanLieshout said.
The marketplace websites provide property owners with all the software tools they need, VanLieshout said, including a booking website and a payment processor. They also make marketing rental properties easier.
“(Marketing) previously was done either privately through word of mouth, newspaper ads, or privately through a vacation rental business,” VanLieshout said.
Just as the marketplace websites have made it easier to start a rental business, they have also made it easier to exit. That’s likely reflected in the hundreds of properties that have stopped renting in recent years, VanLieshout said.
“People have found it’s not for them,” he said.
More prevalent in the northern part of the county
Many short-term rentals are concentrated in the northern part of the peninsula, records show.
The three municipalities with the greatest numbers of cottage, cabin and house rental permits are the Town of Liberty Grove (172 permits), the Town of Gibraltar (113) and the Town of Baileys Harbor (96).
But most of the municipalities with the fastest growth – in terms of the percentage of their current permit-holders whose permits were issued since the start of 2018 – are in the southern part of the county.
The City of Sturgeon Bay is among the fastest-growing: Of the 93 current permit-holders in the city, 70 of those permits were issued since 2018.
Several other municipalities have seen similar trends: The Town of Nasewaupee has seen 37 of its 61 current permits issued during that time, while in the Town of Gardner, it’s 19 of 31.
Two municipalities with smaller numbers of current permit-holders have seen almost all of their permits issued since 2018. In the Town of Clay Banks, it’s eight of nine permits; in the Town of Union, it’s 10 of 13.
The Village of Sister Bay also has seen more than 60 percent of its permits – 46 of 72 – issued since 2018.
VanLieshout said his role as the City of Sturgeon Bay’s administrator has given him an additional perspective on the industry.
“I don’t know that we could fairly cast it all as good or all as bad,” he said. “I don’t think that would be fair.”
Coming soon: Part two: How short-term rentals have affected other lodging businesses and the housing market.
Methodology: How we analyzed the growth of short-term rentals
In reporting this story, we performed an analysis of room tax permit records from by the Door County Tourism Zone Commission. Read more about our methodology by clicking here.