Sturgeon Bay, Wisconsin

Sturgeon Bay is located at the southern end of Door County, Wisconsin, and is known for its scenic views, waterfront attractions, and proximity to outdoor activities. As a highly sought after tourist destination within the Great Lakes region, Sturgeon Bay has seen a gradual rise in short-term rental (STR) properties, making it an increasingly attractive venture for investors.

The local economy has a diverse foundation, relying on tourism but also supported by sectors such as manufacturing, retail, and services. The region attracts visitors year-round, with peak seasons in summer and fall, when the natural beauty of Door County is at its best. Visitors come for the scenic views, outdoor recreation, and local wine and culinary offerings, creating a good market opportunity for STRs.

As of October 2023, the average daily rate (ADR) for short-term rentals in Sturgeon Bay is reported at $339.36. When analyzing performance indicators, consider the following metrics:

• Occupancy Rate: Sturgeon Bay's average occupancy rate hovers around 65% annually. This figure can fluctuate seasonally, reflecting the influx of summer tourists and weekend visitors.
• Revenue per Available Room (RevPAR): Based on the ADR and occupancy rates, RevPAR is approximately $220.58, which indicates a strong revenue-generating potential for property owners.
• Average Length of Stay: Commonly, guests stay for an average of 2-3 nights, allowing for multiple turnovers within busy periods.
• Market Supply and Demand: The supply of STRs in Sturgeon Bay has grown slightly over the past few years. Approximately 300 units are currently active in the market, with demand generated from both leisure and business travelers.

Over the past decade, Sturgeon Bay's short-term rental market has experienced positive growth. The following are key observations:

• Increase in Listings: In 2013, there were only about 120 registered short-term rental units. By 2023, this has grown to nearly 300 units—a 150% increase, driven primarily by increased visibility on platforms such as Airbnb and Vrbo.
• Revenue Growth: Average rental incomes have increased alongside the number of listings. In 2013, average monthly revenues were around $1,500 for a typical rental, while they reached an average of $5,000 per month in 2023 in peak seasons.
• Visitor Increase: Total visitor numbers to Door County, including Sturgeon Bay, have also risen, with tourism statistics showing an increase of over 20% in total visitors over the last decade.

Sturgeon Bay represents a potentially lucrative investment for short-term rental owners. Here are some factors that contribute to this assessment:

• High Revenue Potential: With an ADR of $339.36 and a RevPAR at $220.58, investors can anticipate a profitable return on investment, particularly during the summer months when demand peaks.
• Tax Incentives: Wisconsin offers various tax incentives for businesses, including eligible small-scale lodging facilities, which could positively impact profitability.
• Diversification: Sturgeon Bay lessens risk through its mixed-use tourism. STRs can serve seasonal travelers, event-goers, and business attendees alike.
• Appreciation Potential: Property appreciation in Sturgeon Bay has steadily followed the trends of the Door County real estate market, with investments potentially increasing in value over time.

In Sturgeon Bay, seasonal fluctuations significantly influence STR performance:

• Peak Season: Summer months (June to August) witness the highest occupancy rates, often exceeding 80%, correlating with family vacations, outdoor events, and festivals.
• Shoulder Season: Spring and fall (April to May and September to October) see moderate activity as visitors come for hiking, foliage, and holiday events, maintaining occupancy around 50%-70%.
• Off-Peak Season: Winter (November to March) generally has the lowest occupancy, with rates dropping to 30%-40%. However, the winter holidays can still attract guests seeking a quiet retreat.

Understanding these patterns assists investors in strategy development, enabling tailored marketing efforts and pricing models.

Different types of properties in Sturgeon Bay reflect varied performances based on guest preferences and market demands:

• Single-Family Homes: Generally, single-family homes yield higher occupancy and average daily rates due to their spaciousness and appeal for larger groups and families.
• Condos: More affordable than single-family homes, condos cater well to couples and smaller groups. Their average occupancy is robust, although the ADR is slightly lower.
• Cabins and Unique Stays: Properties with unique features, such as waterfront locations or historic architecture, tend to command higher rates and attract specific niche markets, although supply is limited.

Understanding the unique advantages and market positions of these property types is crucial when considering investments.

Analyzing the preferences of short-term rental guests in Sturgeon Bay can help inform investment decisions:

• Amenities: Guests tend to prioritize amenities like Wi-Fi, kitchen facilities, waterfront access, and outdoor spaces. Properties offering hot tubs or fireplaces often do better in differentiation.
• Experience: Unique local experiences, such as winery tours or guided outdoor activities, can enhance a guest's stay and encourage repeat visits, impacting long-term occupancy rates.
• Safety & Cleanliness: Given recent global events, guests are increasingly wary of cleanliness and property safety protocols, making exceptional hygiene practices essential to maintaining a competitive edge.

Staying attuned to guest preferences aids property owners in creating appealing listings and attracting clients.

Investors should navigate the regulatory framework governing short-term rentals in Sturgeon Bay and Door County. Key points include:

• Licensing: STR owners must comply with licensing requirements, which include health and safety inspections and adherence to local zoning ordinances.
• Taxes: STR owners must collect a hotel/motel tax from guests, which can impact pricing strategies. Understanding local tax regulations is vital for compliance.
• Restrictions: Some neighborhoods may have specific restrictions on rental durations or the total number of rental days, so it's crucial to analyze local ordinances before investing.

Investors must remain up to date on changing regulations, as they can directly affect profitability and operational practices.

Understanding the dynamics of various neighborhoods in Sturgeon Bay can influence investment strategies:

• Downtown Sturgeon Bay: Offers access to shops, restaurants, and the waterfront; properties here may attract a younger crowd and tourists seeking adventure.
• Near the Fish Creek Area: Known for its picturesque ambiance and outdoor spaces. STRs here cater well to families and groups.
• Outskirts of Sturgeon Bay: Generally quieter, these areas may appeal more to guests seeking solitude and nature, especially in cabins or large homes.

Neighborhood character, amenities, and attractions will notably affect occupancy rates, so prospective investors should consider location carefully.

Looking forward, the short-term rental market in Sturgeon Bay shows signs of consistent growth, influenced by several trends:

• Increased Popularity of Outdoor Activities: With an increasing number of travelers opting for nature-based vacations, Sturgeon Bay's scenic environment positions it well for continued rental interest.
• Shift Toward Longer Stays: Emerging trends indicate that guests are now more inclined to opt for longer stays, favoring properties that offer home-like amenities and flexibility.
• Remote Work Influence: The rise of remote work may present opportunities for STRs to cater to workers seeking temporary residencies and alternative work environments, especially during the off-peak months.
• Sustainable Practices: Greater awareness of sustainability is prompting travelers to seek eco-friendly accommodations. Properties that incorporate these features could see increased bookings.

By noting these trends, investors can strategically prepare for shifts in the market landscape.

1. What is the average nightly rate for short-term rentals in Sturgeon Bay?
As of October 2023, the average daily rate for short-term rentals in Sturgeon Bay is approximately $339.36.

2. What are the most effective strategies for marketing short-term rentals in Sturgeon Bay?
Engaging social media campaigns, offering unique local experiences, and maintaining an appealing listing with professional photos and detailed descriptions are effective marketing strategies.

3. Are there limitations on how long I can rent out my property?
Yes, regulations may vary by neighborhood. Some areas may limit the number of rental days, so it's essential to verify local regulations before investing.

4. What types of properties perform best in the short-term rental market?
Single-family homes and unique properties (like cabins) generally show higher occupancy and can command higher rates compared to condos or smaller units.

5. How can I ensure compliance with local regulations for my short-term rental?
Stay informed about local ordinances, obtain necessary licenses, and consult with local authorities to ensure compliance with safety, health codes, and tax regulations.

In conclusion, the short-term rental market in Sturgeon Bay, Wisconsin, presents a promising opportunity for investors due to its attractive pricing and consistent visitor interest. Careful consideration of performance indicators, neighborhood characteristics, regulatory standards, and guest behaviors will position any investor for long-term success in this market.