HOLLAND, MI — short-term rental report have set off a lengthy legal drama in a small Lake Michigan town. As the case sits in court, a new report is trying to assess the economic impact of vacation homes.
A group of rental advocates in Park Township, a small township along the lakeshore adjacent to Holland, commissioned a survey to better determine the value of rentals in the township’s economic ecosystem.
Survey questions went out to West Michigan business owners and Park Township rental owners this spring. The Frost Center for Social Science Research at Hope College administered the survey and analyzed results.
RELATED: Lake Michigan town bans short-term rentals but lawsuit blocks enforcement
Vacation homes have existed in Park Township, in some form, for decades but the rise of Airbnb and VRBO has stuck many municipalities with determining new definitions, caps or bans around rentals.
The rental group, Park Township Neighbors, say the tourism dollars that come with the 2 million beachgoers each year at Holland State Park are the main revenue paying for the maintenance and taxes of beach homes.
The township argues short-term rentals are closer to hotels than homes, therefore violating zoning ordinances in residential areas.
Currently, the township has a ban on short-term rentals, however a lawsuit from rental owners is blocking that ban from being enforced this summer. The two parties are set to return to Ottawa County Circuit Court on Nov. 21.
The Frost Center compiled responses from 84 Park Township rental owners and 38 businesses around the Holland and Saugatuck area.
Given the small township, Frost Center Director Daryl Van Tongeren acknowledges the sample size is small and specific to this area. The center intentionally did not open the survey to the public because they did not want political opinions to skew economic impressions.
Here are five insights from the Park Township report.
How much are short-term rental guests spending in the community?
The Frost Center report estimates the average short-term rental in Park Township generates $14,112 in the neighborhood and $35,280 in overall tourism dollars in the area for a 12-week season.
Multiplying those figures by the approximate 248 listings in Park Township, short-term rentals are estimated to generate $8.7 million, with $3.5 million spent in the neighborhood of the listings.
The Frost Center was unable to send survey questions to Park Township guests because of privacy and sample size issues.
To determine how much the average guest spends while staying in Park Township, The Frost Center used a national 2023 Airbnb survey that reported guests spend $210 per day on average.
Of that vacation spend, 40% was concentrated in the neighborhood surrounding their listing, according to the Airbnb survey.
The report is clear that these national numbers may not exactly reflect vacationers in West Michigan. Short-term rentals may not be the sole or direct cause of this tourism spend, considering how desirable Lake Michigan beaches have become as a destination spot.
What is the impact on local businesses?
Businesses that responded to the survey were primarily in the retail, restaurant and service industry.
The survey respondents ranged in location, years in business and number of employees.
When asked about their top line revenue business owners most frequently reported $1 million to $5 million as their top line revenue from 2019 to 2023. However businesses in this revenue bracket increased over time.
From 2022 to 2023 there was a 43% increase in the number of businesses that reported being in the $1 million to $5 million revenue bracket, moving up from the $750,000 to $1 million bracket.
The majority estimated less than 30% of their average annual sales were from tourism. The most frequently selected answer, 41%, was less than 10% of sales came from tourists.
The results did vary based on industry. Retail and restaurant owners indicated 50% or more of their sales come from tourists.
Those least likely to have sales from tourists were those in the service industry, such as cleaning, HVAC and lawn services.
However, a majority of short-term rental owners indicated hiring three or more companies to support their properties. If a short-term rental ban was enforced, the majority of owners said they would cut nearly all of those services.
How much are short-term rental owners making on their listings?
The majority of survey respondents, 58%, said they earn an average annual net income of $10,000-$50,000 from their properties.
A quarter of short-term rental property owners indicated earning $50,000 or more in net income from short-term rental properties annually.
Owners were split on how much of their overall income was coming from the short-term rental revenue stream. Forty-four percent said their rental property income was less than 10% of their overall income for the year.
A majority of property owners, 56%, said their rentals accounted for 10% or more of their income, with a large portion falling within the 10%-29% range.
If a short-term rental ban is enforced will property owners keep their vacation homes?
For 41% of respondents, these rentals are investment properties. Another 41% say its their second residence. Additional responses included primary residences, inherited properties and shared family vacation homes.
A majority, 64%, of owners indicated they would not plan on further investing in properties in the area in general if a short-term rental ban was enforced.
If a Park Township ban was enforced, 30% said they would invest in other neighboring areas outside of Holland but still in West Michigan and 17% said they would still invest in the Holland area.
For 20% of owners, a ban would convince them to not invest in West Michigan and 4% said they would leave the area permanently.
How would a short-term rental ban affect the housing market?
The Frost Center estimated there are 248 short-term rental listings in Park Township, although that was self-reported from Park Township Neighbors.
The report notes that opposition to short-term rentals is the concern that increased noise, traffic or crime from guests could impact the neighborhood’s property value.
These “neighborhood disamenities” could be perceived negatives but it is not reflected in the data that they are driving down housing prices, Van Tongeren said. These “income asset” properties would be more likely to drive up prices, he said.
Short-term rentals have “a relatively modest impact” on property values and rent prices currently, according to the report.
If all short-term rentals were removed, the report projected rental prices would be reduced by 0.8% and housing prices decreased by 0.6%.
Park Township has an owner occupancy rate of about 75%, slightly higher than the U.S. average, so removing short-term rentals may not have a strong impact on the housing market compared to densely populated zip codes, Van Tongeren said.
