The Danger Of Single Data Points

To the editor: I read with great interest your October 3, 2023 article titled “Nantucket’s Short Term Rental Tax Hits New Record in Summer 2023”. The author, Jason Graziadei, is to be commended for offering a balanced view from both sides of this contentious debate, and for including the data that generated the story.

I am concerned the overall message is based on a single data point being used to add fuel to the fire, painting short-term vacation rentals on Nantucket in a negative light. It is a well-known phenomenon that proponents of various points of view can weaponize data to support their positions by drawing conclusions that are premature or outright incorrect. Demonizing short-term vacation rentals based on this single data point is to take it completely out of context.

The single data point confirms homeowners paid 10% more Room Excise Tax dollars in the first fiscal quarter of 2024 (June, July and August) than in the same 2023 period, but that is all the data tells us. It does not tell us why! It does not tell us how many houses were rented, nor how many actual persons were in these houses, nor how many nights they stayed, nor how many unique leases (turnovers) were written nor, and perhaps most importantly, how much per night they paid. The single data point further does not tell us anything about variations in the timeliness of tax payments, which seem to vary substantially in previous years.

One could easily create a scenario, whereby a 10 percent increase in tax receipts occurred, while rental activity in terms number of visiting vacationers was the same or lower than the previous year. For example, an average rental price increase of only 5% would account for half the increase shown. Every realtor and STR operator I know would tell you rental rates have gone up significantly since the pandemic. The fact that Labor Day was early this summer (September 4 vs 5) means 1.1. percent more of the high season’s tax revenues were required to be paid in the September period. Short-Term Rental Working Group data and NAREB information suggests rising rental rates lead to shorter leases (one week versus two or more), and one-week leases typically are at a higher nightly rate than longer leases. Again, the same number of vacationers, but higher rental and tax receipts.

Instead of looking at only one data point and drawing conclusions, let’s consider all the data presented to find any reliable trends. From 2021 through 2023, STR tax revenue is up 37.8 percent while traditional lodging is up 139 percent, a massive difference. What conclusions might be drawn here? Are these revenue swings pandemic-related? Are hotel and B&B beds growing enormously? Are they causing traffic jams and nuisance problems? Are their rates up astronomically? Could that mean STRs are becoming a better value proposition, pushing vacationers toward STRs?

Hopefully, these thoughts illustrate the point that making crucial conclusions from one data point is very dangerous. My conclusions from the totality of the data presented: 1.) There is insufficient data to answer any question about this summer's trend accurately, 2.) Either side could be right, or wrong, partially or in full, 3.) The data for the second fiscal quarter 2024 (i.e. December receipts), when added to September is needed to accurately compare this summer, 2023 and last summer, 2022, and 4.) This is more proof that we need the Board of Health registration system up and running and collecting critical information like the number of days actually rented by each homeowner. This is the only way we will truly know whether STRs are growing, level or contracting.

This confusing debate further illustrates the importance of passing both Warrant Articles 1 and 2 at Special Town Meeting on November 7, so Nantucket can: begin collecting immensely valuable data needed to best understand the issue; fully implement the necessary controls on short-term rentals; eliminate the growth of corporate-owned STRs, and end frivolous lawsuits that pit neighbor against neighbor in our great community.

In full disclosure, I have been a seasonal resident of Tom Nevers for 40 years and have rented my home for various amounts of time each year, sometimes as many as 10 weeks and sometimes as few as two. I rent to cover the huge costs of maintenance, cleaning, landscaping, repairs, taxes, insurance and the like, all of which contribute to the island economy. I have followed the STR debate since it was created over three years ago. And I am a member of NantucketTogether because I believe in their mission.

Respectfully submitted,

Ron Kokot