Nantucket's Record-Breaking STR Tax Revenue

06.12.2023 - 04:21 / skift.com / Srividya Kalyanaraman / Dustin Abney

Nantucket’s short-term rental occupancy tax revenue reached an all-time high this summer. Short-term rentals operating on the Massachusetts island during June, July, and August generated $4.8 million in taxes for the Nantucket Finance Department, according to data obtained by the Nantucket Current.

This marked a 10% increase compared to the same period in the previous year, representing the highest quarterly collection since the implementation of the state’s short-term rental tax in 2019. In contrast, room occupancy taxes collected from traditional lodging establishments like inns and hotels declined 6.7% year over year to $2.2 million for the summer.

Taxes collected by the Town of Nantucket from Accommodations and Lodging.

_{Source: The Town of Nantucket Finance Department/The Nantucket Current}

Officials attributed this surge in short-term rental tax revenue to increased rental rates rather than a surge in available rental properties. For the fiscal year 2023, the town’s revenue from room occupancy taxes, encompassing both traditional lodging and short-term rentals, exceeded $13.2 million, constituting over 10% of the town’s total revenue.

Penny Dey, president of the Nantucket Association of Real Estate Brokers, told the Nantucket Current that despite a dip in occupancies, rentals were all too expensive. While specific data for this year is not available yet, Dey said that based on both anecdotal evidence and her expertise, there has been a decrease in rentals ranging from 12% to 22% compared to the previous year.

“Pricing is one strategy,” says Dustin Abney, the CEO of Charleston-based vacation rental property management firm Portoro. “We’re instead focused on driving occupancy to get the revenue up.”

I am surprised to see those tax revenue figures after the Boston Globe reported a low-demand summer on Cape Cod. But the key seems to be the right “average daily rate mix,” as Abney called it. 

That’s where dynamic pricing determines the most feasible price at which to push low occupancy nights to guests. 

“All these metrics are intertwined and related,” he said. “What I suspect is you have to focus average daily rates on main travel days. Even though occupancy is down, there is more price sensitivity in the mid-week. So the right average daily rate mix is the key.”

Vacation rental property manager Casago announced that it expanded its partner operations to 51 destinations, marking a 168% increase from 19 destinations in 2021. Casago’s franchise brand now covers a wide range of local destinations, including Florida, California, South Carolina, Texas, and more, with over 7,000 privately owned homes and units under its management.

Bnbfinder, which connects travelers with bed and breakfasts, inns, and