In general Cruise Ships bring in relatively little income to the local economy of the ports. This can be characterised in various ways, but one way of putting it is just to say that it's part of the business of a Cruise Line to capture as much of the spending of their customers as possible, and they're pretty good at it.
What you do get is a kind of crowding out of notionally free public spaces, e.g. crowds walk around a quaint village in Maine, pushing out other more economically valuable tourists at the margin.
The solution here is high docking fees or high passenger disembarkation fees, both to pay for additional public facilities, and at the margin to reduce the tax burden on other tourists (or long-term residents).
Can someone sell us on what's nice about going on a cruise? Being stuck on a giant floating hotel sounds deeply unappealing and I always think about that Curb episode where the dinner party couple tells Larry about their trip. Being on a long ferry or fishing trip sounds cool just in terms of the nature aspect of it (unless there's a storm).
It's kind of like being at an ocean resort where there's no beach, but in exchange the resort delivers you to some interesting destinations. Instead of having to navigate your own travel between these destinations, you can swim the resort pool, watch the ocean from the resort deck, eat at decent resort restaurants, etc. It's kind of fun, though I think the quality of the cruise depends a lot more on if you enjoy your excursions at the destinations than cruise companies would like to admit. (You'll notice cruise advertisements spend a lot of time talking about their ships and less time selling you on the places where the cruise will visit.)
Dr. Johnson once said, “No man will be a sailor who has contrivance enough to get himself into a jail; for being in a ship is being in a jail, with the chance of being drowned.” At another time he claimed, “A man in a jail has more room, better food, and commonly better company.”
In Europe I think the appeal is to visit several places without having to deal with navigation or language barriers. My mom used to be more adventurous, but now that she’s a senior she usually does a cruise when she’s gone to Europe (instead she should pay for me to accompany her and be her guide, of course)
"...have a problem with others being able to do what they enjoy doing...."
Really? Nothing fills me with greater fury than the idea that other people are doing what they enjoy doing. How can you sleep at night, when you think about those other people taking pleasure in their own experiences? And sometimes it is innocent pleasure, that hurts no one else -- god, it's maddening even to contemplate.
I’ve been on many (I’m 47 - all but one were before I was out of college) and here’s the allure:
- Your itinerary is defined up front
- Your port plans CAN be pre-planned by the cruise line (for a price)
- The food is predictable when on the ship, and some lines have really good options
- Where you sleep every night is predictable
- There’s onboard entertainment
- The drinks are nearly always good
- If you’re low-mobility, the ship has all the accommodations you need
- For the less adventurous, the ship has a lot of people that look and sound like you…and you can experience the places you port visually. No, this isn’t my recommendation but there’s a market for this.
When you travel to a bunch of port cities, there’s a lot of mental energy that goes into the planning. We just spent 2 days before a cruise near Athens, 11 days ON the cruise, and 4 days afterward. The days in Greece were a lot more difficult to navigate mentally. They were fine…but I get why people cruise.
They greatly reduce the hassle of traveling with kids: You get to see many places but don’t need to constantly pack and unpack all the kids’ stuff. You know there will be child-friendly food and snacks are plentiful. There are a range of activities and entertainment that appeals to everyone. And there is “camp at sea” where staff watch your kids while you do other stuff. It’s honestly pretty great.
In 2017, I rode a cruise ship to visit St. Petersburg. At the time, it was the only way for an American to visit Russia at all without dealing with the expense and bureaucracy of getting a formal visa. (Today, I would assume that cruises between Europe and Russia do not exist anymore, due to sanctions, but such sanctions did not exist at the time, as Russia had not invaded Ukraine yet).
“… capture as much of the spending of their customers as possible, and they're pretty good….”
Nicely put, and ammunition for places like Venice that want to drastically reduce the number of cruise ships coming in. They are forgoing less revenue than it might seem.
Based on how often I see some variant of this in articles on cruise ship/city conflicts, this seems to be fairly well-known, at least among anyone who would be making decisions on it. I wonder how the cruise lines keep the cities from closing ports, imposing taxes, etc., to reduce load and get more of the revenue? Is it like American spot s franchises who convince cities to “keep” them by building new stadiums that never provide enough jobs and tourism to offset the costs?
That feels like a blah answer. They get fees, but not jobs and supported businesses. The tourists who stay in hotels drive a lot of revenue streams and are more likely to spread the impacts (positive and negative) out across the area.
I’m probably missing a lot of relevant information, but my intuition is phasing out cruise ship contracts would be a win for places with problems from over tourism
I always find it funny when the residence of Venice and the greater province complain about Cruise Ship. They make most of them in that bay! They could just stop building them.
?? Am I missing something? All cruise ships disembark in massive numbers, and then the tourists spend money at local businesses. Their customers want to get *off* the ship for a bit, that's part of the appeal. This was just as true when I lived in Alaska as in Maine. Small towns in Alaska like Ketchikan are even more dependent on cruise ship tourists than Maine is. Almost their entire economy is based on them. Not sure about this take
The problem is they don’t actually spend that much. That’s especially true of the larger ships. As Jonathan Hallam pointed out, the cruise lines are very good at sucking up most of the money from tourists.
As example, a friend of mine did a cruise in Greece. They got off to see the big tourist things but ate on the ship, bought their trinkets on the ship and otherwise spent almost no money locally. Why would they? So much was bundled with their ticket
Also part of the Alaskan allure is that passengers disembark for much longer times, and do glacier viewing, wildlife tours, and flightseeing, which is obviously more expensive and cannot be substituted by the cruise vessel
May depend heavily on the location. I can go see the Parthenon fairly cheaply while I'm in Greece, but in Alaska I much more want to pay for excursions than to just see Juneau itself.
I guess it depends on how many days the average Alaska cruise tourist is in state. Spending $100 a day doesn’t seem unreasonable for one meal a day and a couple bigger souvenirs total. And it would be less than people who are eating three meals a day on shore, even ignoring lodging spending.
In Alaska there are frequently day cruises that one can do from various places. I’ve never done a big Alaska cruise, but I’ve been to Seward and done a day cruise on a locally owned boat to Kenai Fjords National Park, which isn’t on the road system - highly recommended! It was the highlight of my trip to Alaska, well worth the $150 or so. If folks are doing excursions like that on local providers, it could be worth it for the communities.
For heavily touristed places, it's not locals vs cruise shippers. It's cruise shippers vs. people who stay in hotels or come in by train, car, foot, bike, etc. Those tourists are a better class for overcrowded tourist destinations. Probably every destination.
But on-ship meals should be taxed like restaurants.
A cruse ship is just a temporary increase in the supply of and demand for tourism services. That should be part of the tax base like any other supply and demand
How would you do that as a visited port? They’re not registered there. I don’t think cities have authority that would allow them to tax services provided on the ship
You could certainly just charge a docking fee that estimates the tax for services on board. And if you want to rationalize the incentives, you could charge larger than expected docking fees by default, but allow companies to avoid them if they provide itemized receipts for on-board services and pay taxes proportional to those. (The rationalization is that this gives both the ship and the city incentives to get guests to eat meals in town rather than on the ship.)
I suspect that would still be tricky legally, other than just making the docking fee high. My suspicion is that the best answer for most cities is reducing available docking slots while making cruise companies bid on them every few years
I think most tourist spend (aside accommodation, but, let's exclude that on the grounds that building more hotels is the whole issue in contention) is on food and drink, but, most cruise ship passengers have food+drink packages on board, so, they're disincentivised to have meals ashore (ice creams and drinks, perhaps less so). Even if they do fancy a meal ashore the ships are so large that the number of people would overwhelm the number of dining-covers in a small destination, and it's not necessarily worth expanding the number of covers unless you're regularly going to have a ship in. Contrast with a hotel, which will try to sell out every room every night bringing in a constant stream of diners.
Similarly, with excursions, if you don't book them through the cruise line there's a risk the ship could leave you behind if you're delayed. Obviously excursions booked through the cruise still take place onshore, but, they're using their size and pricing power to make sure they capture most of the value of that.
Attraction entry-fees they'll of course still pay (although, again, cruise organised tours will use their pricing power to beat down on the amount they pay local providers) - and more to the point, the capacity of must-see local attractions is probably one of the limits for tourism overall, so, in this scenario a low-value cruise passenger is displacing a high-value shore tourist*.
Souvenirs (plus snack foods like ice creams etc) are probably the main thing that cruise passengers actually buy... you can see how this works well if you have high-value-added domestically-manufactured products... local woodcarving etc... but the shop-keepers cut of something manufactured elsewhere may not be great (and, again, the cruise lines can also buy this stuff and sell souvenir packages etc...)
*probably more true in Venice or Maine than it is in Alaska.
One of the big complaints in Venice about the cruise ships is that the passengers all go to Saint Mark's and look around and maybe do the tour of the Doge's Palace or the Cathedral and buy one gelato and that's it, and they would like to make more of them go to Murano and buy a bunch of souvenir glassware.
I think the only way to do this would be to ban anything bigger than a vaporetto (the waterbus) from entering the lagoon and build a floating dock on the outside of one of the Lidi (the barrier islands). Then passengers would disembark, cross the Lido to a big vaporetto (waterbus) dock and then they'd have to spread out across Venice because there would be waterbuses to all different places but not enough seats for everyone to all go to Saint Mark's at once and all come back. If the ship stayed for a while, then there would be time for everyone to get there eventually, but being in Venice for 2-3 days would encourage passengers to go to some of the other sights rather than just holing up on the ship until the time came for their excursion to Saint Mark's.
Given the way Venice sells waterbus tickets, they'd likely require everyone coming by ship to buy a three-day whole-city pass to use the waterbus at all (and they can probably force cruise passengers who want the tour of the cathedral* or to enter the Doge's palace to buy a multi-attraction pass) - again encouraging them to spend more time in the city to get their money's worth (and therefore getting them to spend money in the city).
*As with all cathedrals in Italy and most in Europe, you can enter the cathedral for free to pray or for a religious service, but if you want the tour, or you want access to certain places that are of tourist interest but not of religious relevance, then you have to pay. As with any church, those attending a service will be expected but not required to contribute to the costs of operating the church through a collection.
I’m not so sure about your point on the excursions. Cruise excursions are substantially more expensive than just booking your own tour guide would be. So I’d bet the amount that goes to the tour operators is probably similar whether booked through a cruise or booked directly by a land-based tourist, with the cruise ship capturing its profits on the markup.
Yup, I just went to Bar Harbor, and I usually don't like this kind of ban, but I think they got this one right. The town is so much more pleasant without the crush of people. I hate going for a hike, working up an appetite, and finding out that every restaurant in town has a 75 minute waiting list for dinner. But now you can actually get a table! And the restaurants are still full.
(On the other hand, I'm not sure I needed a 10 minute lecture from my BnB host about why the ban was important and his role in the fight)
The only cruise destination I know much about is Venice and they have been trying to extract more from cruise ship customers for decades. They have already applied their tourism tax to cruise ships' disembarkees, the next thing they want to do is to ban ships above a certain size from the lagoon, so stopping the cruise ships from coming right up to Saint Mark's and instead forcing them to dock on one of the Lidi (the barrier islands on the outside of the lagoon) and then make all of the cruise tourists buy tickets for the vaporetto (the water bus), giving the city even more revenue. This will also mean that the tourists have to spend more time in Venice (they can't just step off the ship at Saint Mark's spend a couple of hours admiring the area and step back on), which will also mean that they are more likely to buy food and drink in the city rather than returning to the ship.
[The reason they haven't done this yet is that they have to build a deep-water dock for cruise ships on whichever Lido they choose and there is the usual argument over paying for it and the location, etc - residents on each Lido are doing the usual NIMBY argument that it should be on one of the other ones]
As well as high docking/disembarkation fees, some other useful tactics:
* Charge an additional fee for disembarking twice the same day (to discourage passengers from re-embarking for food and then disembarking again)
* Lower the docking fees for a longer time docked, to encourage ships to stay longer and therefore the passengers to spend more.
* If there are ticketed attractions, only sell multi-attraction tickets to cruise ships (you can't stop passengers buying their own individual tickets online, but you can stop the ship buying on their behalf). This encourages the ships to stay longer rather than coming in and out, or at least extracts more money from their passengers if they only visit one attraction.
It sounds like you've never been on a cruise. Excursions are a huge part of any port day. Swimming with the sting rays, touring the rum distillery, panning for gold or a helicopter tour of the glacier in Alaska, and on and on.
Yeah, I am - if a cruise passenger isn't crowding out a shore tourist, different logic may apply (and it's certainly possible to imagine different scenarios where that might be the case, including the version where the local government simply won't allow the building of hotels).
I'll repost a section of one of my other responses... 'Similarly, with excursions, if you don't book them through the cruise line there's a risk the ship could leave you behind if you're delayed. Obviously excursions booked through the cruise still take place onshore, but, they're using their size and pricing power to make sure they capture most of the value of that.'
(My in-laws do a fair amount of cruising, so my view is secondhand, but, I think accurate despite that. As a tourist, there are many advantages).
Perhaps they should raise the docking fees. maybe in the form of a per person per day fee as it it were just another luxury hotel. Meals on board woud be taxes like local restaurants.
Cruise ships also bring in a lot of pollution, as they typically idle their engines for all the hours they sit in port for lights/air conditioning/etc. This can be avoided by adding shore power to the cruise ship dock, but doing so costs money, and locals would rather not be burdened with paying for it.
I never realized this, having never been on a cruise. I always dismissed the folks that got up in arms about the cruise ships that come to Seattle as just people who don’t want us to have nice things - there are too many of those here, degrowthers who fundamentally don’t like tourism at all. Personally I don’t think cruise ships really degrade public spaces here, but if the tourists are not actually spending money at Seattle businesses, it’s fair to ask why we’re willing to participate in their business model.
Though at least we now have laws preventing them from discharging their waste in the Sound, and have for years. Gotta save the orcas and salmon.
Seattle is a big enough city that the cruise traffic isn't that noticeable. Very different from a tiny town like Skagway, Alaska, where more people visit the town each day on cruise ships than the town's entire population.
Yeah. Plus, since we’re the origin point for a lot of Alaska cruises, they may be more beneficial for the local economy. Several friends from out of state have met us for lunch while spending a couple of days bumming around the city before or after their Alaska cruises.
Unlike most of Matt's tax takes, I don't absolutely hate this one, even if it's not how I would structure my tax code.
But while I can't speak specifically to Maine, I think this misidentifies the NIMBY source in many other resort towns. The permanent residents more or less knowledge that the old year round industries are gone and not coming back in prominence, and accepting the existence of a seasonal economy. And most tourists, as Matt says, are willing to splurge while on vacation.
I think the main NIMBY source are people who own residences in town, but only use them on a seasonal basis. These people tend to have these seasonal houses not only to take advantage of nicer weather, but also to get away from lots of people. Building more housing runs contrary to that desire. And they're the classic types who think that *their* presence is fine because they've owned property there for th proper amount of time (the time they acquired it), but not for *others* who want to enjoy the same place. And Matt's tax proposal doesn't solve what they want, it instead hits them harder.
The bottom line is that people just need to grow up and tolerate the presence of other people, and cities need to stop catering to them and build a stronger economy.
It's not hard to understand that vacation areas can be a type of inherently limited resource. Certain valuable things must be rationed to preserve the characteristic that makes them valuable to people in the first place. It's basic tragedy of the commons stuff. Or goose that lays the golden egg stuff.
Whether something like that should be rationed by market prices or some other way is a valid question (the Soviets built public resorts rationed presumably on something like ideological loyalty), but separate from whether overuse/overcrowding will destroy the thing.
To an extent, yes. But there's a lot of land out there in the country. The people that really want to be around fewer people need to understand a tradeoff in that if that's one's top priority, then one has to target areas that aren't desirable except for just a few people. Arguing for having few people in a highly desirable area you're in is just unworkable, and frankly selfish.
Arguing that the thing isn't worth preserving is a straight-up argument that doesn't skirt the issue. But if there's lots of unoccupied land elsewhere, why isn't the presumption that people who want to move in go there, instead of piling onto land that's already occupied (and thereby reducing it's value those already there), instead of that those who already have their little spot should move? I'm not sure there's any right or wrong way to resolve this other than just letting democracy do its work.
I just take a standard YIMBY view that if people are able to buy land, they should be able to build the type of housing they want, and nearby landowners can decide whether or not they want to keep their land.
Democracy can’t do its work if you ration democracy only to the people who already have what they want and deny the vote to the people who don’t have it. If we’re talking about something like cars or high salaries, democracy is fine. But if we’re talking about residence in an in-demand place, well, we’ve decided that only people who already have residences get to vote, and people who want residences don’t get to vote. I think this is a deep flaw in our democracy, but if we like it, then we need to settle rights of residence outside of the electoral system in order to be democratic about it.
I think this sells short the problem. We're not denying people the right to vote, states can change these rules (and some are!) so if people outside some city want the rules to change they vote for that at the state level.
The issue is that even most of the people who aren't there but want to be there, want to be there the way it is and not the way it might be with a lot of changes.
that’s exactly it. turning Mt. Desert into singapore means more people can buy property there, but the very reason for the high demand in the first place is gone.
>But if there's lots of unoccupied land elsewhere, why isn't the presumption that people who want to move in go there, instead of piling onto land that's already occupied
With respect to primary residences for working-age people: all of the economic opportunity in the post-industrial age is on land that's already occupied. Condemning e.g. young college graduates and new families to sparsely populated and/or structurally declining regions where their skills and talents are unemployable is both profoundly unjust to them and a kind of economic suicide for the nation.
With respect to nature and vacation areas: the national parks are our collective inheritance, that's why they are national parks. You shouldn't get to monopolize one just because you're a voter in the town where the hotels would otherwise be.
"why isn't the presumption that people who want to move in go there, instead of piling onto land that's already occupied"
Well, not all land is equivalent, right? Much more land satisfies the "far from other people" criterion than satisfies (say) the "next to a ski resort" criterion. If land satisfying the latter has been developed and the current residents really only want to live in isolation, then it's better for society if they move out and a bunch of skiers move in, than if the skiers have to live in rural land with no ski resorts.
When it comes to, say, Seattle, I agree with you. Maine, too, I suppose, if the waiting lists are 75 min long for restaurants people will build more restaurants. YIMBY YIMBY YIMBY
When it comes to Cinque Terre, not so much. Some places are more fragile than others
Quite a few states, including for example Minnesota, build very nice state park systems with cabins and other amenities that could be reserved a nominal fee, usually first-come-first-served. The appetite for funding those and keeping the lodgings up to the standards of the private sector seems to have waned though.
The summer people (context: I'm a summer person in the same town as Matt, having married the girl who taught him to sail) aren't known for voting, though.
Since most of them aren't residents of the state, they shouldn't be able to vote. I'd expect the permanent residents to have all of the voting power. Or is it possible to live and work in, say, VA 9 months of the year and still be a legal resident of ME? I would think both states would have a problem with that.
I'd call Matt a seasonal resident, he owns a house there now but does not live there year round. I'm also a seasonal resident in a different resort town. But both of us are definitely not going to be NIMBYs, so obviously the brush I used is necessarily broad.
Massholes at an even higher base rate, just for being from Massachusetts
Anyone from New York or New Jersey an even even higher rate, on the odds that they could be Yankees, Giants, or Jets fans. Even the mere possibility warrants fines, vehicle seizures, possible imprisonment, etc. Actual wearing of a Yankees cap is punishable by colonial-style tarring and feathering. Thank you for your attention to this matter
I am normally an ardent foe of Pigouvian taxes, but even I can make an exception for any transactions that create revenue for the Yankees. Even more so for the Raiders. I'd include the Chargers in this, but so much of their revenue that they singularly get comes from attendance by fans of the visiting team, so that would be too punitive.
As I read it, Dendropolis does mean "for the Yankees". Unraveling the clauses a bit, I think the original text is equivalent to:
"On the one hand, I hate taxes that try to price some negative externality. On the other hand, some transactions create revenue for the Yankees. Revenue for the Yankees is a negative externality. Hence, I am willing to accept taxation in that specific case: to eliminate transactions that create revenue for the Yankees."
You have hereby made the case for time of day street parking rates, marginal cost pricing of Western surface water, a Pigou tax on groundwater extraction and a tax on net CO2 emissions. Trying to make marginal costs equal Marginal revenue leads to better outcomes.
I know they don't actually cover this explicitly in Econ 101, but they should.
>> I’m always annoyed by leftists who only acknowledge that supply and demand matters for housing in the context of banning Airbnb and other short-term rentals.
This isn’t just the left. Right NIMBYs think in terms of demand too!
I think the baseline human psychological bias is towards demand side thinking and very little towards supply.
I don’t understand how STR bans are anything but supply-side controls to maintain margins for hotels and grandfathered STRs. I feel like people were/are sold on STR bans because they want housing prices to fall (which would actually be bad but they don’t know that)
Importantly, I don’t think voters have a good handle on the problem (workforce housing prices) for their solutions (STR bans). But I’m pretty sure to the extent they do they don’t want to incrementally slow the price appreciation of housing and instead want it to actually go down (while simultaneously increase in quality). Just a guess on my part though.
I wasn’t really thinking about STR specifically. But I think the confusion you describe is directly related to the fundamentally misdirected nature of the normies’ complaints.
They blame demand and anyone trying to satisfy it, and thus don’t care whatever direction they lash out in to “fix” the problem.
This “people instinctively don’t understand Econ 101” is behind a lot of the early fuckups that led to the French Revolution.
I think in resort towns there is a lived experience, at least anecdotally, of a particular apartment previously being long-term rented to a worker and is now a STR. And that makes people big mad.
However, that doesn’t meaning banning STRs will mean that overall rental prices.
Indeed. I think this is the first article where I’ve explicitly read about supply in terms of its elasticity, though we discuss this without using that word all the time on SB. Maybe that was a part of Econ 101 that I just don’t remember having been covered, but I remember making charts and graphs about elasticity of demand, but not of supply.
I think it also leads to the sorts of protestations I get from my local NIMBYs: “Why can’t they build in the next town over?” “Who asked for these ‘transients’ to come live here?”
Demand is easier to wish away because the relevant housing market new demand faces (IE people looking at moving to a region) is a much larger area than any one neighborhood.
Isn’t that what “supply side” economics is supposed to be, increasing the price elasticity of supply? Though in practice it’s mostly about cutting taxes on the uber rich because Republicans hate America
I always thought supply-side economics, at least at best, was to try to increase growth and reduce prices by increasing supply (or at least increasing the responsiveness of supply to prices, which reaches a lower equilibrium price), which you do with lower corporate taxes and lower regulations which stimulate investment, but in my mind not lowering income taxes on the rich, which will just absorb all the money that the lower taxes provide. Of course in our deindustrialized America that doesn’t really work either because companies don’t want to invest…
I’m pretty sure the vast majority of citizens were never exposed to econ 101 (I don’t think most high schools teach it, and most people don’t go to college, and of those who go to college an awful lot manage to graduate still blissfully innocent of economics).
Just a note that there is a non-zero burden to small businesses in all this fancy sales tax adjusting. Tracking, collecting, remitting sales tax is a pain in the ass in the best of circumstances (I know from first-hand experience) and dealing with seasonal adjustments like this would just add to it. I cringe at the underpayment or late filing penalties this would result in. In fact, having had to manage sales tax across many states, truly an insanely complicated task for a concept so seemingly simple, my thinking is that things like sales tax collection is a burden that is downstream of an overall regime of balkanized regulation that genuinely gets in the way of "abundance" and is not actually the best way of doing the job (raising revenue for the state). Bandaids and Frankenstein rules make this stuff worse and worse.
Yeah, I do think Matt underrates the extent to which many businesses themselves don't like dealing with "seasonality" in various aspects of their activities.
Maybe... if you are single state and selling one category (restaurant meals), maybe this is plug and play, but in practice it is more complicated. As far as I know, Toast is just calculating it for you at POS but is it handling weekly/monthly shifts in rates without manual intervention? I know I wouldn't trust it. Many POS systems don’t ship those item‑level holiday rules turnkey; someone has to configure and verify them.
Anything more than one state and one category and you are immediately at a whole other level of complexity (imagine a regional restaurant start up expanding to a new state). Matt is just talking about one state but nearly all states do stuff like this and these idiosyncrasies compound the complexity. Again, maybe not much of a burden on one person running one restaurant that doesn't also sell t-shirts or whatever and doesn't do DoorDash but anything more than that and the complexity starts to build.
Also Toast et al as far as I know are not generally preparing and filing the sales taxes returns and remitting the payment (these are monthly returns/payments in most cases). You are often connecting to third party software to manage the actual filing of the sales taxes. Getting this all integrated into your bookkeeping software is non-trivial as well. As a business owner you are using janky state filing systems for manual processes, month after month, state by state.
And don't get me started on town-specific restaurant taxes when you're selling at farmer's markets, or running a food truck. When I did that, I spent so much time figuring out how much I owed each town and filing the tax forms.
I know you're being intentionally a bit glib, but that link is not what you think it is. The blog post is an ad for a third party software company called Avalera (see the bio of the writer at the bottom of the blog post, click on any of the links which go to the third party provider site). I'm telling you - this stuff is not seamlessly integrated into a POS like toast and compliance in any but the simplest set ups is a burden at best and a huge timesuck/minefield at worst.
You can believe the software company that is trying to make it seem super easy and painless so that you will buy their software. Or you can believe the business owner (me) who has tried those software solutions and found them so bad and expensive that for now he is handling monthly sales tax returns in half a dozen states manually.
Anyone who thinks sales tax compliance is no big deal has never done sales tax compliance. My Avalara Tax Research license is, I think $18K per year, and my workplace also has a Avalara plug-in for our invoicing system that’s a lot more expensive.
Tax compliance is without.a doubt a deadweight loss, and one made larger by any sort of complexity like seasonal variation would cause.
I have zero specific knowledge of this topic, but I am primed to believe claims of the form “this seemingly simple administrative step is actually incredibly complicated and time-consuming”
Yes it woud be an additional cost to each local business but a benefit to them collectively, especially when combined with taxation of cruise ship services on the same basis as the ones they supply.
Acadia is beautiful but shockingly inconvenient to get to and around for a park that’s objectively not that remote…
I don’t get why people hate tourists so much though. It seems like a tourism-based economy has a number of large advantages: (1) your government basically has to be non-oppressive and keep your local area nice, (2) it creates a lot of low-skill jobs that are well-paid and pleasant relative to most low-skill jobs, (3) it ensures a fairly cosmopolitan environment that will have lots of good restaurants and fun things to do—that’s why so many people like moving to Florida despite the awful politics and non-winter weather the density of fun things to do there probably exceeds any other state, (4) it increases the prestige of your local area which is something to take pride in. Is it mostly just overcrowding or not liking the feeling of working for people richer than you?
Aside from noise/crowding/traffic, tourists often behave in selfish, oblivious, and entitled ways which gets tiresome to be around all the time if you live there. Social media has made this one a lot worse over the past 10-15 years, too.
Also, (3) is hardly a given. Just as often tourist areas end up being a mix of lowest-common-denominator chains and businesses focused on fleecing tourists, which crowd out anything that would be more appealing to locals, e.g. Times Square, Hollywood, Fisherman’s Wharf in SF, etc.
The proper YIMBY attitude is that if you own the property, you have every right to stand on your property and shake your fist at the clouds. Or the tourists, depending on your preferences as a landowner. What, you want to put a restrictive covenant on the land, saying "no anger at tourists"?
I knew someone that moved to a tourism-dependent town because he enjoyed his time as a tourist there so much, then immediately became anti tourist. Mind boggling lack of self awareness.
>I don’t get why people hate tourists so much though.<
I think it's easy to see why tourists are hated by people who live in or summer in touristy areas but don't depend on tourism for income: namely, crowds, noise and traffic. Hell, even folks who do depend on tourism for income might hate tourists: It's not at all uncommon for humans to put up with something they hate because they need the dough.
1) lol no the local government prioritizes tourist areas and amenities that locals won't use, and limits useable development for reasons that are essentially NIMBY "to preserve the character that draws visitors" etc etc. Also local economies have to operate on sporadic cash flows and who knows what's going to keep visitors away this year? Is it really rainy? Is it a dry winter? Is foliage not as spectacular? Shark attack at the beach? All these things can drastically affect revenue and taxes obtained.
2) Restaurant and hotel work is mostly awful but the pay is maybe competitive. Retail is slightly better but the pay is bad and you get abused by tourists all day. Seasonal resorts import college kids and foreigners because locals don't want to only work 3 months a year unless they're already degenerate ski bums working for the pass. Then you have the shoulder seasons where there's no work and everything closes, which reduces access to many restaurants and recreation areas because the only time they can afford to operate is in the peak months, and lots of places sit basically dark for months at a time.
3) wat. People move to Florida exactly for the non winter weather, and for the low taxes. Tourism has not been a cosmopolitan influence in any part of tourist country that I've ever been to. Portland has been gentrified and has nice restaurants but that's because of overflow of people moving here from MA, not tourists, because your nice cosmopolitan restaurant needs a local base to operate, not seasonal. Videlicet the restaurant closure rate here.
4) Tourists behave like idiots at best, and entitled assholes at worst, because they don't know where they're going, how to get there, how to behave, and by the way they spent good money to get here so you better not ruin their vacation by being in the way or insisting that they can't have everything they want. Most tourists are not, in fact, richer than us. The people with second homes are richer than us, but they actually put money into the local economy and are somewhat better behaved Most tourists are jumped up Disney Cruise families.
Nobody sees being a tourist area as prestige, because we know it's fake as shit and exploitative, and tourists will rarely actually see the places and people that make our locale a good place to live. Those places are guarded and protected and often secret and we won't tell you. We will send you to the crowded dirty areas that you don't have the taste and discrimination to know are third rate.
Agree with all of this but will temper your last point a bit and say that local hidden gems are getting harder and harder to keep secret with social media and google maps. I live in Vermont and have picked up anecdotally that even smaller swimming holes along the river are pretty well documented across the internet at this point.
I don't know why they hate them elsewhere, but in the SF area we tend to hate them for the racist things they say to Asian-Americans. A truly astonishing number of tourists come to SF not knowing that Asians are the biggest ethnic group and treat people whose ancestors got here in the 19th century as if they're FOBs just because they have obviously Asian features.
In my experience living near (but not in) Stowe, Vermont I see the ripple effects of tourist boom towns fading out real fast outside the actual town borders. About the only benefit I see for middle and upper middle class families that live in adjacent communities that don't benefit directly from the school district advantage the rich tourist town offers is better infrastructure (sweet bike path) and niche rich kid camps in the arts that are still expensive but wouldn't exist otherwise without the affluence. And that's not nothing. I certainly appreciate it. But when I see Stowe has one of the best school districts in the State of Vermont and some of its neighboring communities (in the same county) have the worst schools in the State - I am hard pressed to call that a win-win ESPECIALLY when you factor in that most families can't really enjoy the reason why it all exists in the first place: THE SKIING.
Shoutout to Illinois, in 50th place for "in which state do you want a vacation home?"
(On reflection, I see that I am mischaracterizing the map. The proportion of US vacation homes that are in Illinois ≠ the proportion of Illinois homes that are vacation homes. There are probably more vacation homes in Illinois than in, I don't know, Delaware, but also many more non-vacation homes, so that the internal ratio of vac/non-vac is lower in Illinois.)
“So what you’re really saying is that Illinois has the greatest percentage, out of all fifty states, of homeowners who want to make this state their year round residence. It’s a great state to be in, for every season! That’s why we call it the Land of Lingerin’!”
And meanwhile, Wisconsin, Michigan, and Minnesota all punch above their weight, and if one looks at the map by census tract, it's all in the northern regions of those states. Amazing what a few degrees in latitude away from the equator will do. All the high level takesters making "best places to be" lists really underrate how much normal people value weather.
I dunno about Minnesota, but in MI and WI the draw is forest+lake. Downstate MI and WI are farmland—Western Michigan has some nice wineries but you need to go north of Muskegon to find the trees. And Chicago (the big source for this tourism) isn’t that hot in the summer thanks to Lake Michigan; neither is Detroit (which accounts for a lot of the inland Northern Michigan vacation homes). The somewhat cooler temperatures in northern Michigan and Wisconsin are a plus, but you’re there because you can swim and fish and hike and hunt. Also a large proportion of the Michigan tourism is in the cold season—deer season is practically a state holiday. Probably true in WI but I have no personal knowledge. (I grew up in Metro Detroit, we had a cottage on an inland lake in the woods "Up North" and knew several other families that did also, and my uncle and several of his friends went up every November to hunt deer—futilely for the most part).
Ice fishing is also a thing up north during the cold season (or at least it was back in the day). And at least when I was growing up, having a cottage on a lake was very attainable for middle-class families. Not sure that’s the case on the Maine coast!
Minnesota is awesome at the forest + lake combo! We (husband, son, in-laws and I) spent a couple of weeks in a lakeside cabin in the Minnesota Boundary Waters area, it was wonderful. We got to see loons and deer and bald eagles, we rented kayaks, Son loved it!
I, too, grew up in metro Detroit, and while I agree with everything else, I dispute summers being not that hot. It’s not Georgia in August, but it’s hot and muggy and buggy.
I guess it's hotter now than it used to be! My memory of suburban summers was it was sometimes muggy and buggy in August but for the most part it was like 80s. Though I have to say I usually compare notes on weather with my family when I call them and it's almost always like 4-5 degrees warmer and a bit muggier here in Philly than it is in Oakland County. Similar with my in-laws in Chicago, though usually it's a bit muggier and a bit cooler.
I haven’t looked at data but it definitely seems hotter than it used to be. It’s hit the 90s this week and generally been very sticky and buggy. Doesn’t cool off much at night. I’ve never liked hot weather (still hate it) but I grew up in a house without AC and managed ok. I don’t think I could do that now.
I suspect Wisconsin and Michigan are similar, because ice age glaciers tended to carve out what would become bodies of water and then dumped all that top soil further south - which is why southern Minnesota is 'the valley of the Jolly Green Giant" rather than a hotbed of lake activity.
Yeah, Southwest Michigan is a good choice if you want to combine your swim 'n' fish 'n' hike with agritourism and winery tours. Only other place I know of you can do that in the Midwest is Grand Traverse area.
Well except for Madison, which has been seeing sunbelt levels of growth over the past 20 years (approx 1.7% CAGR). Madison's assessed property value now exceeds Milwaukee county's. Its clearly a regional outlier, though.
The tri-state effect is funny. Growing up we'd drive 10 minutes into Wisconsin to go skiing at Wilmot and 30 minutes into Indiana to go camping at the dunes. But never Illinois itself.
There's a deep tradition in the upper Midwest of having a weekend lake house. Some people never spend a weekend in their primary residence. Wisconsinites and Michiganders generally have their lake home in the state where they live. But there aren't as many lakes in Illinois and many have more of a suburban feel than those in Wisconsin and Michigan.
People in the north Chicago suburbs tend to have a lake house in Wisconsin, those in the West suburbs to have one in Michigan, and Chicagoans are mixed.
Visit any one of New Hampshire's seventeen feet of coastline. Enjoy cities like Worse Portland. New Hampshire is the moat we dug to keep out the rest of the US.
Portsmouth; tourist heavy, bougie coastal town but without the art school flare, smaller, and no decent performance venues I'm aware of. There's some pretty good restaurants but nothing at the same highs and without the same volume. I used to complain about the amount of new, faux-old construction but I think Portland has really surpassed that and it was always mostly a Mainer finding things in NH to complain about.
Mostly fair. I think Portsmouth's history stuff is better (Strawberry Bank, Discover Portsmouth, etc). For arts, Portsmouth has much smaller venues, but I think similar to restaurants, they punch above their weight in variety and quality, especially with more eclectic and non-pop artsy stuff. I'm thinking of stuff like Telluride by the Sea at the Music Hall, West End Studio, and Player's Ring. There's also Seacoast Rep and Prescott Park (in summer), but those are more mass market stuff in much smaller venues than Portland.
Overall, I'd say Portsmouth does have a more bougie and less industrial vibe than Portland, which could count as a plus or a minus. That said, they do have one of the biggest waterfront salt piles anywhere and three working tugs that dock right in the city center.
It hasn't changed all that much really. Same overall vibe imo. A few new buildings in the downtown area plus a zillion new buildings replacing all the empty lots and commercial warehouse type buildings in the north end of town that were cleared during urban renewal in the 70s and mostly sat idle for 40-50 years (Parade Mall area and points north).
For some reason we Americans have to consume horse choking quantities of sugar to make our medicine go down. This discussion highlights how difficult it is to get people to balance long-term gains with short term inconveniences.
Complicated sales tax rates are very difficult for small businesses to manage. Anyone making sales tax recommendations should be forced to fill out a monthly tax report and then get back to us.
How pronounced are the seasonal effects in other parts of the state during "leaf peeping" season in the fall? I hear "peepers" (fall tourists) also bring a lot of economic activity when the leaves change that time of year.
Fall tourism mostly happens in the form of day/weekend trippers up here. Turns out leaves are, on the whole, quite boring. You come up, you see the leaves, you realize that Colby is so far away and your child has picked this school specifically to make visiting impossible, you eat an off-season lobster roll, you go home. Summer tourists linger for weeks or months. There are entire neighborhoods in coastal Maine where none of the buildings are constructed to be occupied during the winter. There's also - to put it politely - some SEL differences between the fall crowd and the summer crowd.
"Turns out leaves are, on the whole, quite boring."
Blasphemy! Fall leaves are gorgeous! I used to live in New England, then we moved to SoCal for work. I miss having actual seasons! I miss seeing forests with fall leaves. Prickly pear and sage brush are beautiful in their own way, but it's just not the same.
I routed in my New England fall trip to see leaves, see friends and family, and see a concert. And I got even luckier that this all happened while the Red Sox were having a successful postseason that was en route to a World Series title.
"I have to admit that when people buy vacation houses or start renting out structures as short-term rentals, this does push up the price of housing."
No you don't. Would it be better if people left the houses unoccupied? Air B&B increases the effective housing supply.
The anti Air B&B folks seem just as irrational as the Anti-Uber crowd. Almost as if there is some visceral distaste for Capitalism among consenting adults.
A house being used for air b&b (or a vacation home) can’t be used for someone to live in year round.
A house not being used for year round housing, a vacation home, or air b&b, is presumably for sale. The more houses for sale the lower the cost of housing. Also people do buy houses with the intent of renting them through air b&b which increases competition.
High house prices encourages more building, which can lower house prices, but that takes time and may be limited by other factors. Therefore it seems logical that air b&bs increase house prices in tourist areas?
I like air b&b—it’s very convenient for my friend groups and my mother has so many food sensitivities that she needs a kitchen when traveling. But how does it not have an impact on housing prices?
(The previous style of renting out a spare room likely wouldn’t have a significant impact on pricing, but Matt did specifically mention “the structure”)
We have to get our ceteris paribus. What is the alternative to the newly minted Air B&B? Any other way of renting the same space presumably has lower occupancy , less effective supply.
Every STR is a home that isn't being lived in. It's a hotel, not a residence. We don't have a hotel shortage, we have a housing shortage. The other way of renting a STR is simply providing housing.
If we are maximizing the supply of “housing for locals,” then I agree that converting a residence of the kind used by locals to the kind used by tourists goes against that objective. But if providing housing for tourists has value, there ought to be a way to transfer some of that value to locals who would like lower cos housing among other things.
We are maximizing housing for residents. I think what tourists use is not well categorized as 'housing'. Hotels are clearly not housing qua housing, for instance.
At least here, you’d have more people willing to buy rental properties and be landlords if you got rid of some of the onerous eviction protections. The only way to manage the risk of being a landlord in Seattle is to convert it to Airbnb due to fewer tenant rights, unless you’re a huge corporate landlord that can spread the risk over hundreds of units.
I like using it! All I’m responding to is the person who said Matt was incorrect about it raising housing costs. I don’t see how it (and vacation homes) wouldn’t raise housing costs for residents.
Some families can afford to have a house or condo they use for a month or three and leave empty the rest of the year. Banning new STRs doesn’t change that.
The large majority of Airbnbs are bought & run by investors, who are new to the area. I think you're imagining that the owners are all longterm residents, but this is not true. An Airbnb is much, much more profitable than a longterm rental, so it drives a large number of investors buy up the homes and convert them. I have a friend who does it professionally
We’re all local somewhere and outsiders elsewhere.
I strongly believe everyone would do well to spend some time as an outsider at some point in their life to see how it’s like being treated as one.
STRs are bought and run by all kinds of people. People like my mom’s friend Nancy or my friend Mark. Both use their vacation homes for a few weeks every year and rent their vacation homes out on VRBO the rest of the year.
This was a way to make owning a vacation home realistic for their family’s income level.
Airbnb only increases effective housing supply if construction is legal. If new construction is illegal, then Airbnb just allows the hotel and residence supplies to be fungible with each other, so that whichever one is more undersupplied steals some of the supply from the other.
>No you don't. Would it be better if people left the houses unoccupied?<
Yes, it would be better for renters (and people trying to buy homes) if people didn't "occupy" Airbnbs (or other kinds of vacation properties).
I'm a radical, Yglesias-style YIMBY ("If it's safe, let them build it") but even I don't deny Airbnb diverts homes for residents to accommodation for tourists. In some cases, (say, NYC) the effect is probably tiny given the overall population numbers. But in other states (like, Maine) it's likely bigger. Thought experiment: If Maine passes a law tomorrow morning banning non-residents from occupying houses (sorry, Matt, you gotta move!) it's pretty likely rents would fall, right?
It diverts housing from less valuable to more valuable use, benefitting city residents in general (through tax collections). It is exactly the same issue as converting lower value land use into higher value land use by a developer.
People hate AirBNB, but anti-AirBNB takes really do remind me of bog-standard "new people should not be allowed to live here" NIMBYism.
The people staying in the AirBNB are certainly made better off by the AirBNB, it's why they can visit the place. The people who operate the AirBNB are certainly made better off, they would do something else with the property if not. The town is getting tax revenue, and local businesses are getting customers.
Yeah, the rabid anti-Airbnb people do tend to be the anti-growth nimbies. Thing is, most jurisdictions simply need a wide variety of accommodations, and Airbnbs are one component of a healthy mix. But there are a lot of unhealthy mixes.
It’s much easier and more practical to ban the AirBnB than to bank on the local authorities abating the nuisance every time a perpetually rotating cast of characters parks in your driveway or plays loud music into the night.
I'd be open to revoking individual short term rentals that have a repeated history of tolerating nuisance. As always, focus on the specific people/things causing societal problems, instead of imposing restrictions on everyone.
Towns are getting better and better about this. For example, a very common practice is for tourist towns to license AirBNBs and require that the owner have someone on-call in the town who can be at the property in a short period of time (usually <=60 minutes) if the city calls them to address a problem.
I really think the best solution to the AirBNB issue is to just make it easier to build hotels. Hotels seem to inherently solve a lot of AirBNB problems by concentrating short-term visitors away from long-term residents.
Sure, but the owner/manager of the Airbnb can't control what their tenants are doing. If people show up and want to party, drink heavily, and be loud, the owner can't screen for or control that behavior. It's endemic to the idea of being on vacation itself
This seems to really depend on what type of housing we’re talking about. Some people have an ADU or rent their primary residence for certain periods, and otherwise wouldn’t dream of renting it full time to someone else—those cases increase supply.
But as others have mainly pointed out, buying a vacation home that you don’t put on Airbnb only reduces housing stock, right?
I mean, that’s the deal. Even in a city that’s thriving, tourism tends to build resentment, because a lot of people can’t afford vacations - especially those who are struggling to find affordable housing. It takes a certain minimum of privilege - the privilege of being able to travel for leisure - to appreciate tourism for what it is. I hate the anti-tourism takes because I love to travel, but I get why they exist.
Yeah, I like that better than distortionary homestead exemptions, and it makes sense to not count on hotel taxes and car rental taxes if a significant proportion of the seasonal population owns second homes rather than comes for a week.
I suspect permanent residents who participate in the tourist economy (restaurant owners, shop owners, probably their employees) would resist this strongly. Many of them already feel that they’re barely getting by. What about a statewide property tax on homes that aren’t primary residences?
Do they not already do a homestead exemption like Florida does? If your home in FL is your primary residence, your property taxes can only rise so much a year, while the assessment is marked to market on secondary residences. That makes a fair amount of people changing residency registration to what is in effect their vacation home, though.
Yes, there’s an existing homestead exemption in Maine, but it’s a state statutory exemption from local property taxes. The OP is talking about statewide measures to raise revenue from seasonal residents, so that would mean a new tax. I was suggesting it be targeted at secondary residences, but you could certainly do the same thing by targeting all residences and expanding the exemption.
I think it’s a partial exemption, not a complete exemption. So localities still get revenue from real property taxes, they just have to reduce the amount they assess for primary residences that qualify for the exemption. In fact, looking at the sources, it appears the exemption isn’t that much even for primary residences (property value is reduced by $25K, which may have been meaningful when the exemption was enacted but is less so now).
Slightly random but this piece made me wonder about the impact of housing costs on people seeking seasonal employment. That is, since housing is relatively expensive in Maine, and short-term rentals are most expensive in the summer, this must make it harder/more expensive to find seasonal employees. I wonder if Maine has rules against types of housing that would appeal to seasonal workers—some ski resort towns have this issue, and I believe there are cases where residents have objected to resorts trying to build employee housing.
This does exist, and most of it is just bog standard NIMBYism of not wanting a lot of new things near them. And as Matt says, this causes the long term housing to get flung out to further away towns that are less desirable...until they become the new destinations for people trying to get away from other people, and a chain reaction continues.
This is super common in touristy areas. Every year Nantucket and Martha's Vineyard see fights between (1) NIMBYs and (2) businesses that would like to build worker housing.
Is it true, could it be made true, that would-be NIMBYs benefit from the additional economic activity permitted by the worker housing? Nimby-ism is a problem of political economy, not morality. [Ditto immigration, CO2 accumulation, import restrictions, etc.]
I doubt there are many construction workers living as permanent residents in Martha’s Vineyard (well, at least before Abbott sent them all the Mexicans)
Perhaps — I have no problem with buses, quite the opposite — but some of these high-profile resort areas are virtual or even literal islands. You can't bus someone to Martha's Vineyard quickly when the boat ride from the mainland is 45 minutes (with additional transit time on either side). I don't know Colorado but someone observed elsewhere in the comments that Telluride, unlike other ski areas, is pretty isolated.
To be more positive: Yes, fast and frequent buses are part of the solution, but there are a few edge cases where it's genuinely not practical.
I was specifically thinking of Telluride — we go there every Film Festival — that has build lower cost housing 10-15 bus ride away from the town center.
I have yet to visit Maine, but the problems describe apply to a lot of place ms around the country that rely on seasonal tourism. I see it, for example, in Colorado mountain towns. There’s the same strong NIMBY instinct from full time, usually wealthy, local, and a lack of affordable local housing, etc. I hope Maine experiments with your ideas and provides an example for others if it works out.
Live in Colorado and recently went to Acadia NP twice for weddings. Bar Harbor is very, very similar to Estes Park in what I might call "tourism vibe." Lots of people aimlessly walking around eating ice cream cones. Lots of boomers driving RVs in hazardous and frustrating fashions. The town has to basically have people out directing traffic at a lot of intersections.
My take is that the problem in a lot of tourist towns and parks isn't so much people, it's cars. I think that in the case of both Acadia and Rocky Mountain NP more frequent and longer-running bus service through the park could reduce a lot or pressure, especially if combined with steep fees to take a personal automobile into the park. The pricing at RMNP right now is dumb: it's $30 to buy a one-day pass to bring a car in (and that covers everyone in the car) but people walking in or bicycling in have to pay $15 per head.
I visit a lot less than I used to. I haven't been this year. My trick was to leave my house insanely early to get to the trailhead at ~5am.
RMNP needs to just bite the bullet and go to some kind of park-and-ride system with shuttle buses circulating everyone in the park. Maybe allow ebikes too.
I've written about my ebike experiences a few times here, but I really do think they're currently underutilized in a lot of tourist destinations. Ebikes make bicycling so much physically easier and faster. Not having to worry about parking is huge. They're also just so much more pleasant than cars for other people in the area.
My partner has been at two conferences in Telluride this month and says that prices have escalated in a way he has never seen anywhere else. It sounds like they really need to do something if they want to keep these conferences (but maybe not if they really want to lean in on the multimillionaires thing, as long as their shops pay high enough wages for mere near-millionaires to wait tables).
Your partner speaks truth. Lady friend and I were in Telluride over the 4th of July, we paid $32 per person for takeout pad thai. This was nothing special, it would have been maybe $15 per person in Denver. Everything seemed slightly more than twice as expensive as in Denver.
Telluride is uniquely bad even by CO mountain town standards because it's very physically small. It's in a box canyon hemmed in by land protected by law or by slope from construction. Beautiful though, if you have a chance to visit you should. Great hiking.
Yeah, I visited once when he was there for some of these conferences several years ago. It was amazing. We did the Via Ferrata, as well as some more ordinary hikes.
It's been a couple of years since I've been to Telluride, but it is among the worst in Colorado. With places like Aspen, for example, there are some cheaper communities nearby for workers, but Telluride is kind of isolated.
In general Cruise Ships bring in relatively little income to the local economy of the ports. This can be characterised in various ways, but one way of putting it is just to say that it's part of the business of a Cruise Line to capture as much of the spending of their customers as possible, and they're pretty good at it.
What you do get is a kind of crowding out of notionally free public spaces, e.g. crowds walk around a quaint village in Maine, pushing out other more economically valuable tourists at the margin.
The solution here is high docking fees or high passenger disembarkation fees, both to pay for additional public facilities, and at the margin to reduce the tax burden on other tourists (or long-term residents).
Yeah, I'm thinking about City of Trees question for what I disagree with Matt about the most – maybe I'll say that all cruise ships should be sunk.
"...all cruise ships should be...."
Okay, just watch out for the Sunk Costa Fallacy:
https://en.wikipedia.org/wiki/Costa_Concordia_disaster
Can someone sell us on what's nice about going on a cruise? Being stuck on a giant floating hotel sounds deeply unappealing and I always think about that Curb episode where the dinner party couple tells Larry about their trip. Being on a long ferry or fishing trip sounds cool just in terms of the nature aspect of it (unless there's a storm).
It's kind of like being at an ocean resort where there's no beach, but in exchange the resort delivers you to some interesting destinations. Instead of having to navigate your own travel between these destinations, you can swim the resort pool, watch the ocean from the resort deck, eat at decent resort restaurants, etc. It's kind of fun, though I think the quality of the cruise depends a lot more on if you enjoy your excursions at the destinations than cruise companies would like to admit. (You'll notice cruise advertisements spend a lot of time talking about their ships and less time selling you on the places where the cruise will visit.)
"...what's nice about going on a cruise?...."
Dr. Johnson once said, “No man will be a sailor who has contrivance enough to get himself into a jail; for being in a ship is being in a jail, with the chance of being drowned.” At another time he claimed, “A man in a jail has more room, better food, and commonly better company.”
In Europe I think the appeal is to visit several places without having to deal with navigation or language barriers. My mom used to be more adventurous, but now that she’s a senior she usually does a cruise when she’s gone to Europe (instead she should pay for me to accompany her and be her guide, of course)
I’ve never been on a cruise but clearly it’s a popular way to travel and I don’t have a problem with others being able to do what they enjoy doing.
"...have a problem with others being able to do what they enjoy doing...."
Really? Nothing fills me with greater fury than the idea that other people are doing what they enjoy doing. How can you sleep at night, when you think about those other people taking pleasure in their own experiences? And sometimes it is innocent pleasure, that hurts no one else -- god, it's maddening even to contemplate.
I’ve been on many (I’m 47 - all but one were before I was out of college) and here’s the allure:
- Your itinerary is defined up front
- Your port plans CAN be pre-planned by the cruise line (for a price)
- The food is predictable when on the ship, and some lines have really good options
- Where you sleep every night is predictable
- There’s onboard entertainment
- The drinks are nearly always good
- If you’re low-mobility, the ship has all the accommodations you need
- For the less adventurous, the ship has a lot of people that look and sound like you…and you can experience the places you port visually. No, this isn’t my recommendation but there’s a market for this.
When you travel to a bunch of port cities, there’s a lot of mental energy that goes into the planning. We just spent 2 days before a cruise near Athens, 11 days ON the cruise, and 4 days afterward. The days in Greece were a lot more difficult to navigate mentally. They were fine…but I get why people cruise.
They greatly reduce the hassle of traveling with kids: You get to see many places but don’t need to constantly pack and unpack all the kids’ stuff. You know there will be child-friendly food and snacks are plentiful. There are a range of activities and entertainment that appeals to everyone. And there is “camp at sea” where staff watch your kids while you do other stuff. It’s honestly pretty great.
In 2017, I rode a cruise ship to visit St. Petersburg. At the time, it was the only way for an American to visit Russia at all without dealing with the expense and bureaucracy of getting a formal visa. (Today, I would assume that cruises between Europe and Russia do not exist anymore, due to sanctions, but such sanctions did not exist at the time, as Russia had not invaded Ukraine yet).
Oh boy, if this is your answer, then I'll have to press Matt on what his take is in a future mailbag!
(I too am a Cruise Curmudgeon.)
Do we let people disembark first or ...
Careful, you'll bring back the jet ski discourse from last week...
“… capture as much of the spending of their customers as possible, and they're pretty good….”
Nicely put, and ammunition for places like Venice that want to drastically reduce the number of cruise ships coming in. They are forgoing less revenue than it might seem.
Based on how often I see some variant of this in articles on cruise ship/city conflicts, this seems to be fairly well-known, at least among anyone who would be making decisions on it. I wonder how the cruise lines keep the cities from closing ports, imposing taxes, etc., to reduce load and get more of the revenue? Is it like American spot s franchises who convince cities to “keep” them by building new stadiums that never provide enough jobs and tourism to offset the costs?
There may be an element that port fees/disembarkation fees can often be a fairly direct revenue stream for the local government(?)
That feels like a blah answer. They get fees, but not jobs and supported businesses. The tourists who stay in hotels drive a lot of revenue streams and are more likely to spread the impacts (positive and negative) out across the area.
I’m probably missing a lot of relevant information, but my intuition is phasing out cruise ship contracts would be a win for places with problems from over tourism
Maybe, but if so phase them out (or down to whatever level seems optimal) by taxing the services they are providing the guests.
I always find it funny when the residence of Venice and the greater province complain about Cruise Ship. They make most of them in that bay! They could just stop building them.
?? Am I missing something? All cruise ships disembark in massive numbers, and then the tourists spend money at local businesses. Their customers want to get *off* the ship for a bit, that's part of the appeal. This was just as true when I lived in Alaska as in Maine. Small towns in Alaska like Ketchikan are even more dependent on cruise ship tourists than Maine is. Almost their entire economy is based on them. Not sure about this take
The problem is they don’t actually spend that much. That’s especially true of the larger ships. As Jonathan Hallam pointed out, the cruise lines are very good at sucking up most of the money from tourists.
As example, a friend of mine did a cruise in Greece. They got off to see the big tourist things but ate on the ship, bought their trinkets on the ship and otherwise spent almost no money locally. Why would they? So much was bundled with their ticket
This source claims that Alaskan cruise visitors spend $914 million annually, or around $1300 per visitor https://www.alaskaact.com/economic-benefits While that's an industry source, a consulting company working for the city of Juneau said that cruise ship tourists (and crew) spend $375 million just in Juneau every (!) So a more objective source. https://juneau.org/wp-content/uploads/2024/01/CBJ-Cruise-Impacts-2023-Report-1.22.24.pdf
Also part of the Alaskan allure is that passengers disembark for much longer times, and do glacier viewing, wildlife tours, and flightseeing, which is obviously more expensive and cannot be substituted by the cruise vessel
May depend heavily on the location. I can go see the Parthenon fairly cheaply while I'm in Greece, but in Alaska I much more want to pay for excursions than to just see Juneau itself.
$1300 per visitor just doesn't sound believable.
I guess it depends on how many days the average Alaska cruise tourist is in state. Spending $100 a day doesn’t seem unreasonable for one meal a day and a couple bigger souvenirs total. And it would be less than people who are eating three meals a day on shore, even ignoring lodging spending.
In Alaska there are frequently day cruises that one can do from various places. I’ve never done a big Alaska cruise, but I’ve been to Seward and done a day cruise on a locally owned boat to Kenai Fjords National Park, which isn’t on the road system - highly recommended! It was the highlight of my trip to Alaska, well worth the $150 or so. If folks are doing excursions like that on local providers, it could be worth it for the communities.
I was thinking just at one stop, but maybe the cruise makes a dozen stops on a dozen days....
They spend enough for it to make a difference as compared to locals, who are often less affluent.
For heavily touristed places, it's not locals vs cruise shippers. It's cruise shippers vs. people who stay in hotels or come in by train, car, foot, bike, etc. Those tourists are a better class for overcrowded tourist destinations. Probably every destination.
Eh, maybe, but that’s what Chamber of Commerce studies are for.
But on-ship meals should be taxed like restaurants.
A cruse ship is just a temporary increase in the supply of and demand for tourism services. That should be part of the tax base like any other supply and demand
How would you do that as a visited port? They’re not registered there. I don’t think cities have authority that would allow them to tax services provided on the ship
You could certainly just charge a docking fee that estimates the tax for services on board. And if you want to rationalize the incentives, you could charge larger than expected docking fees by default, but allow companies to avoid them if they provide itemized receipts for on-board services and pay taxes proportional to those. (The rationalization is that this gives both the ship and the city incentives to get guests to eat meals in town rather than on the ship.)
I suspect that would still be tricky legally, other than just making the docking fee high. My suspicion is that the best answer for most cities is reducing available docking slots while making cruise companies bid on them every few years
Maybe the State woud have to grant them that power.
I think this is more an international issue. You can’t tax people for things they do in international waters
The meals are free. Whatever we do about cruise ships, trying to tax them for the meals they serve to their passengers while docked sounds insane.
It could be an excise tax then, $/meal rather than $/meal$. Or just a higher $/cabin-night.
Just increase the portage fees without trying to figure out what's specifically happening on the cruise ship.
I think most tourist spend (aside accommodation, but, let's exclude that on the grounds that building more hotels is the whole issue in contention) is on food and drink, but, most cruise ship passengers have food+drink packages on board, so, they're disincentivised to have meals ashore (ice creams and drinks, perhaps less so). Even if they do fancy a meal ashore the ships are so large that the number of people would overwhelm the number of dining-covers in a small destination, and it's not necessarily worth expanding the number of covers unless you're regularly going to have a ship in. Contrast with a hotel, which will try to sell out every room every night bringing in a constant stream of diners.
Similarly, with excursions, if you don't book them through the cruise line there's a risk the ship could leave you behind if you're delayed. Obviously excursions booked through the cruise still take place onshore, but, they're using their size and pricing power to make sure they capture most of the value of that.
Attraction entry-fees they'll of course still pay (although, again, cruise organised tours will use their pricing power to beat down on the amount they pay local providers) - and more to the point, the capacity of must-see local attractions is probably one of the limits for tourism overall, so, in this scenario a low-value cruise passenger is displacing a high-value shore tourist*.
Souvenirs (plus snack foods like ice creams etc) are probably the main thing that cruise passengers actually buy... you can see how this works well if you have high-value-added domestically-manufactured products... local woodcarving etc... but the shop-keepers cut of something manufactured elsewhere may not be great (and, again, the cruise lines can also buy this stuff and sell souvenir packages etc...)
*probably more true in Venice or Maine than it is in Alaska.
One of the big complaints in Venice about the cruise ships is that the passengers all go to Saint Mark's and look around and maybe do the tour of the Doge's Palace or the Cathedral and buy one gelato and that's it, and they would like to make more of them go to Murano and buy a bunch of souvenir glassware.
I think the only way to do this would be to ban anything bigger than a vaporetto (the waterbus) from entering the lagoon and build a floating dock on the outside of one of the Lidi (the barrier islands). Then passengers would disembark, cross the Lido to a big vaporetto (waterbus) dock and then they'd have to spread out across Venice because there would be waterbuses to all different places but not enough seats for everyone to all go to Saint Mark's at once and all come back. If the ship stayed for a while, then there would be time for everyone to get there eventually, but being in Venice for 2-3 days would encourage passengers to go to some of the other sights rather than just holing up on the ship until the time came for their excursion to Saint Mark's.
Given the way Venice sells waterbus tickets, they'd likely require everyone coming by ship to buy a three-day whole-city pass to use the waterbus at all (and they can probably force cruise passengers who want the tour of the cathedral* or to enter the Doge's palace to buy a multi-attraction pass) - again encouraging them to spend more time in the city to get their money's worth (and therefore getting them to spend money in the city).
*As with all cathedrals in Italy and most in Europe, you can enter the cathedral for free to pray or for a religious service, but if you want the tour, or you want access to certain places that are of tourist interest but not of religious relevance, then you have to pay. As with any church, those attending a service will be expected but not required to contribute to the costs of operating the church through a collection.
But the "hotel" rooms on the ship should be taxed just like on-shore hotel rooms.
I’m not so sure about your point on the excursions. Cruise excursions are substantially more expensive than just booking your own tour guide would be. So I’d bet the amount that goes to the tour operators is probably similar whether booked through a cruise or booked directly by a land-based tourist, with the cruise ship capturing its profits on the markup.
Yup, I just went to Bar Harbor, and I usually don't like this kind of ban, but I think they got this one right. The town is so much more pleasant without the crush of people. I hate going for a hike, working up an appetite, and finding out that every restaurant in town has a 75 minute waiting list for dinner. But now you can actually get a table! And the restaurants are still full.
(On the other hand, I'm not sure I needed a 10 minute lecture from my BnB host about why the ban was important and his role in the fight)
More pleasant, yes, but probably poorer. So, pick your poison.
The only cruise destination I know much about is Venice and they have been trying to extract more from cruise ship customers for decades. They have already applied their tourism tax to cruise ships' disembarkees, the next thing they want to do is to ban ships above a certain size from the lagoon, so stopping the cruise ships from coming right up to Saint Mark's and instead forcing them to dock on one of the Lidi (the barrier islands on the outside of the lagoon) and then make all of the cruise tourists buy tickets for the vaporetto (the water bus), giving the city even more revenue. This will also mean that the tourists have to spend more time in Venice (they can't just step off the ship at Saint Mark's spend a couple of hours admiring the area and step back on), which will also mean that they are more likely to buy food and drink in the city rather than returning to the ship.
[The reason they haven't done this yet is that they have to build a deep-water dock for cruise ships on whichever Lido they choose and there is the usual argument over paying for it and the location, etc - residents on each Lido are doing the usual NIMBY argument that it should be on one of the other ones]
As well as high docking/disembarkation fees, some other useful tactics:
* Charge an additional fee for disembarking twice the same day (to discourage passengers from re-embarking for food and then disembarking again)
* Lower the docking fees for a longer time docked, to encourage ships to stay longer and therefore the passengers to spend more.
* If there are ticketed attractions, only sell multi-attraction tickets to cruise ships (you can't stop passengers buying their own individual tickets online, but you can stop the ship buying on their behalf). This encourages the ships to stay longer rather than coming in and out, or at least extracts more money from their passengers if they only visit one attraction.
It sounds like you've never been on a cruise. Excursions are a huge part of any port day. Swimming with the sting rays, touring the rum distillery, panning for gold or a helicopter tour of the glacier in Alaska, and on and on.
I think he is saying that they spend way less per person than regular tourists.
Yeah, I am - if a cruise passenger isn't crowding out a shore tourist, different logic may apply (and it's certainly possible to imagine different scenarios where that might be the case, including the version where the local government simply won't allow the building of hotels).
I'll repost a section of one of my other responses... 'Similarly, with excursions, if you don't book them through the cruise line there's a risk the ship could leave you behind if you're delayed. Obviously excursions booked through the cruise still take place onshore, but, they're using their size and pricing power to make sure they capture most of the value of that.'
(My in-laws do a fair amount of cruising, so my view is secondhand, but, I think accurate despite that. As a tourist, there are many advantages).
Not to mention that lodging, car rentals, and dinner are probably the most expensive items tourists buy; all of which are captured by the ship.
Perhaps they should raise the docking fees. maybe in the form of a per person per day fee as it it were just another luxury hotel. Meals on board woud be taxes like local restaurants.
Cruise ships also bring in a lot of pollution, as they typically idle their engines for all the hours they sit in port for lights/air conditioning/etc. This can be avoided by adding shore power to the cruise ship dock, but doing so costs money, and locals would rather not be burdened with paying for it.
I wonder if there would be a way to regulate the spending capture for portside activities, but that seems challenging to say the least
I never realized this, having never been on a cruise. I always dismissed the folks that got up in arms about the cruise ships that come to Seattle as just people who don’t want us to have nice things - there are too many of those here, degrowthers who fundamentally don’t like tourism at all. Personally I don’t think cruise ships really degrade public spaces here, but if the tourists are not actually spending money at Seattle businesses, it’s fair to ask why we’re willing to participate in their business model.
Though at least we now have laws preventing them from discharging their waste in the Sound, and have for years. Gotta save the orcas and salmon.
Seattle is a big enough city that the cruise traffic isn't that noticeable. Very different from a tiny town like Skagway, Alaska, where more people visit the town each day on cruise ships than the town's entire population.
Yeah. Plus, since we’re the origin point for a lot of Alaska cruises, they may be more beneficial for the local economy. Several friends from out of state have met us for lunch while spending a couple of days bumming around the city before or after their Alaska cruises.
Unlike most of Matt's tax takes, I don't absolutely hate this one, even if it's not how I would structure my tax code.
But while I can't speak specifically to Maine, I think this misidentifies the NIMBY source in many other resort towns. The permanent residents more or less knowledge that the old year round industries are gone and not coming back in prominence, and accepting the existence of a seasonal economy. And most tourists, as Matt says, are willing to splurge while on vacation.
I think the main NIMBY source are people who own residences in town, but only use them on a seasonal basis. These people tend to have these seasonal houses not only to take advantage of nicer weather, but also to get away from lots of people. Building more housing runs contrary to that desire. And they're the classic types who think that *their* presence is fine because they've owned property there for th proper amount of time (the time they acquired it), but not for *others* who want to enjoy the same place. And Matt's tax proposal doesn't solve what they want, it instead hits them harder.
The bottom line is that people just need to grow up and tolerate the presence of other people, and cities need to stop catering to them and build a stronger economy.
"also to get away from lots of people"
It's not hard to understand that vacation areas can be a type of inherently limited resource. Certain valuable things must be rationed to preserve the characteristic that makes them valuable to people in the first place. It's basic tragedy of the commons stuff. Or goose that lays the golden egg stuff.
Whether something like that should be rationed by market prices or some other way is a valid question (the Soviets built public resorts rationed presumably on something like ideological loyalty), but separate from whether overuse/overcrowding will destroy the thing.
To an extent, yes. But there's a lot of land out there in the country. The people that really want to be around fewer people need to understand a tradeoff in that if that's one's top priority, then one has to target areas that aren't desirable except for just a few people. Arguing for having few people in a highly desirable area you're in is just unworkable, and frankly selfish.
Arguing that the thing isn't worth preserving is a straight-up argument that doesn't skirt the issue. But if there's lots of unoccupied land elsewhere, why isn't the presumption that people who want to move in go there, instead of piling onto land that's already occupied (and thereby reducing it's value those already there), instead of that those who already have their little spot should move? I'm not sure there's any right or wrong way to resolve this other than just letting democracy do its work.
I just take a standard YIMBY view that if people are able to buy land, they should be able to build the type of housing they want, and nearby landowners can decide whether or not they want to keep their land.
Democracy can’t do its work if you ration democracy only to the people who already have what they want and deny the vote to the people who don’t have it. If we’re talking about something like cars or high salaries, democracy is fine. But if we’re talking about residence in an in-demand place, well, we’ve decided that only people who already have residences get to vote, and people who want residences don’t get to vote. I think this is a deep flaw in our democracy, but if we like it, then we need to settle rights of residence outside of the electoral system in order to be democratic about it.
I think this sells short the problem. We're not denying people the right to vote, states can change these rules (and some are!) so if people outside some city want the rules to change they vote for that at the state level.
The issue is that even most of the people who aren't there but want to be there, want to be there the way it is and not the way it might be with a lot of changes.
that’s exactly it. turning Mt. Desert into singapore means more people can buy property there, but the very reason for the high demand in the first place is gone.
>But if there's lots of unoccupied land elsewhere, why isn't the presumption that people who want to move in go there, instead of piling onto land that's already occupied
With respect to primary residences for working-age people: all of the economic opportunity in the post-industrial age is on land that's already occupied. Condemning e.g. young college graduates and new families to sparsely populated and/or structurally declining regions where their skills and talents are unemployable is both profoundly unjust to them and a kind of economic suicide for the nation.
With respect to nature and vacation areas: the national parks are our collective inheritance, that's why they are national parks. You shouldn't get to monopolize one just because you're a voter in the town where the hotels would otherwise be.
"why isn't the presumption that people who want to move in go there, instead of piling onto land that's already occupied"
Well, not all land is equivalent, right? Much more land satisfies the "far from other people" criterion than satisfies (say) the "next to a ski resort" criterion. If land satisfying the latter has been developed and the current residents really only want to live in isolation, then it's better for society if they move out and a bunch of skiers move in, than if the skiers have to live in rural land with no ski resorts.
When it comes to, say, Seattle, I agree with you. Maine, too, I suppose, if the waiting lists are 75 min long for restaurants people will build more restaurants. YIMBY YIMBY YIMBY
When it comes to Cinque Terre, not so much. Some places are more fragile than others
Idaho-pilled answer lol!
Robert Moses built public resorts but only for people rich enough to afford a car. It kinda backfired once everyone could afford a car though.
Quite a few states, including for example Minnesota, build very nice state park systems with cabins and other amenities that could be reserved a nominal fee, usually first-come-first-served. The appetite for funding those and keeping the lodgings up to the standards of the private sector seems to have waned though.
The summer people (context: I'm a summer person in the same town as Matt, having married the girl who taught him to sail) aren't known for voting, though.
Since most of them aren't residents of the state, they shouldn't be able to vote. I'd expect the permanent residents to have all of the voting power. Or is it possible to live and work in, say, VA 9 months of the year and still be a legal resident of ME? I would think both states would have a problem with that.
If it discourages peaking, how does it hit permanent residents harder?
Yes, it would be better if voters rewarded politicians for "getting prices right."
Hitting *seasonal* residents harder, not permanent residents.
Oops! Sorry.
Matt is one of those people though? And he clearly doesn't identify as a local resident, more a sort of regular tourist.
I'd call Matt a seasonal resident, he owns a house there now but does not live there year round. I'm also a seasonal resident in a different resort town. But both of us are definitely not going to be NIMBYs, so obviously the brush I used is necessarily broad.
Native Mainer here. I propose that we tax:
Massholes at an even higher base rate, just for being from Massachusetts
Anyone from New York or New Jersey an even even higher rate, on the odds that they could be Yankees, Giants, or Jets fans. Even the mere possibility warrants fines, vehicle seizures, possible imprisonment, etc. Actual wearing of a Yankees cap is punishable by colonial-style tarring and feathering. Thank you for your attention to this matter
We should never have let you go in the first place. Maine? You mean Maine County, Massachusetts?
"... let you go in the first place...."
Deep secession!
“We should never have let you go in the first place”
Perhaps if Massachusetts had offered assistance and an appropriate response after the Battle of Machias things would have turned out differently.
I am normally an ardent foe of Pigouvian taxes, but even I can make an exception for any transactions that create revenue for the Yankees. Even more so for the Raiders. I'd include the Chargers in this, but so much of their revenue that they singularly get comes from attendance by fans of the visiting team, so that would be too punitive.
"... create revenue for the Yankees...."
Wait, do you mean "for" or "from"?
You don't want the Yankees to be the recipients of the revenue, surely?
As I read it, Dendropolis does mean "for the Yankees". Unraveling the clauses a bit, I think the original text is equivalent to:
"On the one hand, I hate taxes that try to price some negative externality. On the other hand, some transactions create revenue for the Yankees. Revenue for the Yankees is a negative externality. Hence, I am willing to accept taxation in that specific case: to eliminate transactions that create revenue for the Yankees."
"...Unraveling the clauses...."
Creative! And maybe right. I hope CoT will weigh in.
I'm mostly confused, but I think Jacob has it right. The important point is concurring with LF's Fuck The Yankees sentiment.
"...important point is concurring with...."
That part is beyond reasonable dispute.
Tax away! The Massholes can afford it
As someone from NY that is known for cycling through Knicks and Yankees caps, I approve of this message. Game respects game.
You have hereby made the case for time of day street parking rates, marginal cost pricing of Western surface water, a Pigou tax on groundwater extraction and a tax on net CO2 emissions. Trying to make marginal costs equal Marginal revenue leads to better outcomes.
I know they don't actually cover this explicitly in Econ 101, but they should.
Matt’s proposal really is effectively congestion-pricing for a state, right?
It is, except he wants to impose a tax on everything, instead of just a user fee on government property.
I restacked this quote under a similar thought:
>> I’m always annoyed by leftists who only acknowledge that supply and demand matters for housing in the context of banning Airbnb and other short-term rentals.
This isn’t just the left. Right NIMBYs think in terms of demand too!
I think the baseline human psychological bias is towards demand side thinking and very little towards supply.
I don’t understand how STR bans are anything but supply-side controls to maintain margins for hotels and grandfathered STRs. I feel like people were/are sold on STR bans because they want housing prices to fall (which would actually be bad but they don’t know that)
Importantly, I don’t think voters have a good handle on the problem (workforce housing prices) for their solutions (STR bans). But I’m pretty sure to the extent they do they don’t want to incrementally slow the price appreciation of housing and instead want it to actually go down (while simultaneously increase in quality). Just a guess on my part though.
I wasn’t really thinking about STR specifically. But I think the confusion you describe is directly related to the fundamentally misdirected nature of the normies’ complaints.
They blame demand and anyone trying to satisfy it, and thus don’t care whatever direction they lash out in to “fix” the problem.
This “people instinctively don’t understand Econ 101” is behind a lot of the early fuckups that led to the French Revolution.
I think in resort towns there is a lived experience, at least anecdotally, of a particular apartment previously being long-term rented to a worker and is now a STR. And that makes people big mad.
However, that doesn’t meaning banning STRs will mean that overall rental prices.
Indeed. I think this is the first article where I’ve explicitly read about supply in terms of its elasticity, though we discuss this without using that word all the time on SB. Maybe that was a part of Econ 101 that I just don’t remember having been covered, but I remember making charts and graphs about elasticity of demand, but not of supply.
In *most* situations, demand has more elasticity than supply. There are exceptions, but it leads to most examples of elasticity being about demand.
I think it also leads to the sorts of protestations I get from my local NIMBYs: “Why can’t they build in the next town over?” “Who asked for these ‘transients’ to come live here?”
Demand is easier to wish away because the relevant housing market new demand faces (IE people looking at moving to a region) is a much larger area than any one neighborhood.
Isn’t that what “supply side” economics is supposed to be, increasing the price elasticity of supply? Though in practice it’s mostly about cutting taxes on the uber rich because Republicans hate America
No, “supply side” originally meant the supply side of the Laffer Curve, not the supply side of the macroeconomy.
Ah. Ew, the Laffer curve.
I always thought supply-side economics, at least at best, was to try to increase growth and reduce prices by increasing supply (or at least increasing the responsiveness of supply to prices, which reaches a lower equilibrium price), which you do with lower corporate taxes and lower regulations which stimulate investment, but in my mind not lowering income taxes on the rich, which will just absorb all the money that the lower taxes provide. Of course in our deindustrialized America that doesn’t really work either because companies don’t want to invest…
I'm pretty sure externalities are covered in every Econ 101 course.
I’m pretty sure the vast majority of citizens were never exposed to econ 101 (I don’t think most high schools teach it, and most people don’t go to college, and of those who go to college an awful lot manage to graduate still blissfully innocent of economics).
Just a note that there is a non-zero burden to small businesses in all this fancy sales tax adjusting. Tracking, collecting, remitting sales tax is a pain in the ass in the best of circumstances (I know from first-hand experience) and dealing with seasonal adjustments like this would just add to it. I cringe at the underpayment or late filing penalties this would result in. In fact, having had to manage sales tax across many states, truly an insanely complicated task for a concept so seemingly simple, my thinking is that things like sales tax collection is a burden that is downstream of an overall regime of balkanized regulation that genuinely gets in the way of "abundance" and is not actually the best way of doing the job (raising revenue for the state). Bandaids and Frankenstein rules make this stuff worse and worse.
Yeah, I do think Matt underrates the extent to which many businesses themselves don't like dealing with "seasonality" in various aspects of their activities.
So they should appreciate something that reduces it.
Toast and square of basically any POS would handle it. What are you talking about?
Maybe... if you are single state and selling one category (restaurant meals), maybe this is plug and play, but in practice it is more complicated. As far as I know, Toast is just calculating it for you at POS but is it handling weekly/monthly shifts in rates without manual intervention? I know I wouldn't trust it. Many POS systems don’t ship those item‑level holiday rules turnkey; someone has to configure and verify them.
Anything more than one state and one category and you are immediately at a whole other level of complexity (imagine a regional restaurant start up expanding to a new state). Matt is just talking about one state but nearly all states do stuff like this and these idiosyncrasies compound the complexity. Again, maybe not much of a burden on one person running one restaurant that doesn't also sell t-shirts or whatever and doesn't do DoorDash but anything more than that and the complexity starts to build.
Also Toast et al as far as I know are not generally preparing and filing the sales taxes returns and remitting the payment (these are monthly returns/payments in most cases). You are often connecting to third party software to manage the actual filing of the sales taxes. Getting this all integrated into your bookkeeping software is non-trivial as well. As a business owner you are using janky state filing systems for manual processes, month after month, state by state.
And don't get me started on town-specific restaurant taxes when you're selling at farmer's markets, or running a food truck. When I did that, I spent so much time figuring out how much I owed each town and filing the tax forms.
https://pos.toasttab.com/blog/save-time-with-sales-tax-automation?srsltid=AfmBOoqVrNL-d_PSMDdR4Zga1MT21LWhLlHgybbmEs25pUhYKZHuok4z
I know you're being intentionally a bit glib, but that link is not what you think it is. The blog post is an ad for a third party software company called Avalera (see the bio of the writer at the bottom of the blog post, click on any of the links which go to the third party provider site). I'm telling you - this stuff is not seamlessly integrated into a POS like toast and compliance in any but the simplest set ups is a burden at best and a huge timesuck/minefield at worst.
You can believe the software company that is trying to make it seem super easy and painless so that you will buy their software. Or you can believe the business owner (me) who has tried those software solutions and found them so bad and expensive that for now he is handling monthly sales tax returns in half a dozen states manually.
Anyone who thinks sales tax compliance is no big deal has never done sales tax compliance. My Avalara Tax Research license is, I think $18K per year, and my workplace also has a Avalara plug-in for our invoicing system that’s a lot more expensive.
Tax compliance is without.a doubt a deadweight loss, and one made larger by any sort of complexity like seasonal variation would cause.
I feel like this is something the leftie Abundance people should get behind: government-sponsored tax compliance software.
Been there with sales presentations not fully disclosing all the important details.
I had to custom code something to make it work properly (Docu sign for Salesforce)
I have zero specific knowledge of this topic, but I am primed to believe claims of the form “this seemingly simple administrative step is actually incredibly complicated and time-consuming”
Yes it woud be an additional cost to each local business but a benefit to them collectively, especially when combined with taxation of cruise ship services on the same basis as the ones they supply.
I agree. This plan is much more feasible if it is very simple:
1) Consistent sales tax rate across all categories
2) Higher in the summer
3) Lower the rest of the year
Acadia is beautiful but shockingly inconvenient to get to and around for a park that’s objectively not that remote…
I don’t get why people hate tourists so much though. It seems like a tourism-based economy has a number of large advantages: (1) your government basically has to be non-oppressive and keep your local area nice, (2) it creates a lot of low-skill jobs that are well-paid and pleasant relative to most low-skill jobs, (3) it ensures a fairly cosmopolitan environment that will have lots of good restaurants and fun things to do—that’s why so many people like moving to Florida despite the awful politics and non-winter weather the density of fun things to do there probably exceeds any other state, (4) it increases the prestige of your local area which is something to take pride in. Is it mostly just overcrowding or not liking the feeling of working for people richer than you?
Aside from noise/crowding/traffic, tourists often behave in selfish, oblivious, and entitled ways which gets tiresome to be around all the time if you live there. Social media has made this one a lot worse over the past 10-15 years, too.
Also, (3) is hardly a given. Just as often tourist areas end up being a mix of lowest-common-denominator chains and businesses focused on fleecing tourists, which crowd out anything that would be more appealing to locals, e.g. Times Square, Hollywood, Fisherman’s Wharf in SF, etc.
If you move to a place with an economy dependent on tourism, you can't be angry about tourism. I think that's fair.
I think you can certainly be *annoyed* about tourism. This is certainly a variance we allow in all other industries and workplaces.
"...you can't be angry about tourism...."
The proper YIMBY attitude is that if you own the property, you have every right to stand on your property and shake your fist at the clouds. Or the tourists, depending on your preferences as a landowner. What, you want to put a restrictive covenant on the land, saying "no anger at tourists"?
I knew someone that moved to a tourism-dependent town because he enjoyed his time as a tourist there so much, then immediately became anti tourist. Mind boggling lack of self awareness.
>I don’t get why people hate tourists so much though.<
I think it's easy to see why tourists are hated by people who live in or summer in touristy areas but don't depend on tourism for income: namely, crowds, noise and traffic. Hell, even folks who do depend on tourism for income might hate tourists: It's not at all uncommon for humans to put up with something they hate because they need the dough.
1) lol no the local government prioritizes tourist areas and amenities that locals won't use, and limits useable development for reasons that are essentially NIMBY "to preserve the character that draws visitors" etc etc. Also local economies have to operate on sporadic cash flows and who knows what's going to keep visitors away this year? Is it really rainy? Is it a dry winter? Is foliage not as spectacular? Shark attack at the beach? All these things can drastically affect revenue and taxes obtained.
2) Restaurant and hotel work is mostly awful but the pay is maybe competitive. Retail is slightly better but the pay is bad and you get abused by tourists all day. Seasonal resorts import college kids and foreigners because locals don't want to only work 3 months a year unless they're already degenerate ski bums working for the pass. Then you have the shoulder seasons where there's no work and everything closes, which reduces access to many restaurants and recreation areas because the only time they can afford to operate is in the peak months, and lots of places sit basically dark for months at a time.
3) wat. People move to Florida exactly for the non winter weather, and for the low taxes. Tourism has not been a cosmopolitan influence in any part of tourist country that I've ever been to. Portland has been gentrified and has nice restaurants but that's because of overflow of people moving here from MA, not tourists, because your nice cosmopolitan restaurant needs a local base to operate, not seasonal. Videlicet the restaurant closure rate here.
4) Tourists behave like idiots at best, and entitled assholes at worst, because they don't know where they're going, how to get there, how to behave, and by the way they spent good money to get here so you better not ruin their vacation by being in the way or insisting that they can't have everything they want. Most tourists are not, in fact, richer than us. The people with second homes are richer than us, but they actually put money into the local economy and are somewhat better behaved Most tourists are jumped up Disney Cruise families.
Nobody sees being a tourist area as prestige, because we know it's fake as shit and exploitative, and tourists will rarely actually see the places and people that make our locale a good place to live. Those places are guarded and protected and often secret and we won't tell you. We will send you to the crowded dirty areas that you don't have the taste and discrimination to know are third rate.
Enjoy!
Agree with all of this but will temper your last point a bit and say that local hidden gems are getting harder and harder to keep secret with social media and google maps. I live in Vermont and have picked up anecdotally that even smaller swimming holes along the river are pretty well documented across the internet at this point.
Overcrowding
I agree with most of what Lapsed Pacifist said, but will add that restaurants catering to tourists are almost uniformly bad.
100% agree about Acadia.
I don't know why they hate them elsewhere, but in the SF area we tend to hate them for the racist things they say to Asian-Americans. A truly astonishing number of tourists come to SF not knowing that Asians are the biggest ethnic group and treat people whose ancestors got here in the 19th century as if they're FOBs just because they have obviously Asian features.
I think they are often moving to Florida *for* the non-winter weather?
It’s non-winter right now. The weather is awful.
In my experience living near (but not in) Stowe, Vermont I see the ripple effects of tourist boom towns fading out real fast outside the actual town borders. About the only benefit I see for middle and upper middle class families that live in adjacent communities that don't benefit directly from the school district advantage the rich tourist town offers is better infrastructure (sweet bike path) and niche rich kid camps in the arts that are still expensive but wouldn't exist otherwise without the affluence. And that's not nothing. I certainly appreciate it. But when I see Stowe has one of the best school districts in the State of Vermont and some of its neighboring communities (in the same county) have the worst schools in the State - I am hard pressed to call that a win-win ESPECIALLY when you factor in that most families can't really enjoy the reason why it all exists in the first place: THE SKIING.
Shoutout to Illinois, in 50th place for "in which state do you want a vacation home?"
(On reflection, I see that I am mischaracterizing the map. The proportion of US vacation homes that are in Illinois ≠ the proportion of Illinois homes that are vacation homes. There are probably more vacation homes in Illinois than in, I don't know, Delaware, but also many more non-vacation homes, so that the internal ratio of vac/non-vac is lower in Illinois.)
[Illinois State PR flack;]
“So what you’re really saying is that Illinois has the greatest percentage, out of all fifty states, of homeowners who want to make this state their year round residence. It’s a great state to be in, for every season! That’s why we call it the Land of Lingerin’!”
Illinois: It’s Where You Want to Be
“ It’s Where You Want to Be”
It is certainly where I want *it* to be: in my rear view mirror.
A slightly more dystopian take is: “Illinois: It’s Where You Are.”
"...“Illinois: ...."
"It's where you'll end up if you keep doing that."
I think that’d put you right about Gary, Indiana
“… right about Gary, Indiana….”
There’s nothing right about Gary, Indiana.
It made for a good song in The Music Man.
Careful, you don't want to be mistaken for a FISHTAB
Today I learned:
https://www.urbandictionary.com/define.php?term=fishtab
Man, did FishTab Technologies (https://www.facebook.com/FishTab/) ever make a mistake in choosing what they thought was a unique name!
I need to form some good acronym for the RVs on two lane highways that refuse to pull over when they're slowing down dozens of cars for miles.
And meanwhile, Wisconsin, Michigan, and Minnesota all punch above their weight, and if one looks at the map by census tract, it's all in the northern regions of those states. Amazing what a few degrees in latitude away from the equator will do. All the high level takesters making "best places to be" lists really underrate how much normal people value weather.
There’s a real arbitrage capability for those of us who like snow.
But it has to be snow away from ski resorts!
I broke my arm at Wilmot Mountain, Wisconsin.
"...at Wilmot Mountain,...."
Not the bumper sticker they need.
I dunno about Minnesota, but in MI and WI the draw is forest+lake. Downstate MI and WI are farmland—Western Michigan has some nice wineries but you need to go north of Muskegon to find the trees. And Chicago (the big source for this tourism) isn’t that hot in the summer thanks to Lake Michigan; neither is Detroit (which accounts for a lot of the inland Northern Michigan vacation homes). The somewhat cooler temperatures in northern Michigan and Wisconsin are a plus, but you’re there because you can swim and fish and hike and hunt. Also a large proportion of the Michigan tourism is in the cold season—deer season is practically a state holiday. Probably true in WI but I have no personal knowledge. (I grew up in Metro Detroit, we had a cottage on an inland lake in the woods "Up North" and knew several other families that did also, and my uncle and several of his friends went up every November to hunt deer—futilely for the most part).
Ice fishing is also a thing up north during the cold season (or at least it was back in the day). And at least when I was growing up, having a cottage on a lake was very attainable for middle-class families. Not sure that’s the case on the Maine coast!
Maine has a lot of lakes, too.
Minnesota is awesome at the forest + lake combo! We (husband, son, in-laws and I) spent a couple of weeks in a lakeside cabin in the Minnesota Boundary Waters area, it was wonderful. We got to see loons and deer and bald eagles, we rented kayaks, Son loved it!
I, too, grew up in metro Detroit, and while I agree with everything else, I dispute summers being not that hot. It’s not Georgia in August, but it’s hot and muggy and buggy.
I’m in Michigan now after six weeks in swampy DC, and the weather is disappointingly similar…
I rest my case.
I guess it's hotter now than it used to be! My memory of suburban summers was it was sometimes muggy and buggy in August but for the most part it was like 80s. Though I have to say I usually compare notes on weather with my family when I call them and it's almost always like 4-5 degrees warmer and a bit muggier here in Philly than it is in Oakland County. Similar with my in-laws in Chicago, though usually it's a bit muggier and a bit cooler.
I haven’t looked at data but it definitely seems hotter than it used to be. It’s hit the 90s this week and generally been very sticky and buggy. Doesn’t cool off much at night. I’ve never liked hot weather (still hate it) but I grew up in a house without AC and managed ok. I don’t think I could do that now.
I was just thinking the other day about how often temps went below zero F when I was growing up. I don’t think that happens nearly so often anymore.
100% holds true for Wisconsin and Minnesota as well.
"I'd love Minnesota, but it doesn't have enough lakes," said no one ever.
I think the #1 economic activity in northern WI is being drunk on boats.
In Minnesota, the vacation homes are in the north because that is where the vast majority of the lakes are located.
Indeed, as the article says. Be it lakes, rivers, or oceans, bodies of water are attractive amenities.
I suspect Wisconsin and Michigan are similar, because ice age glaciers tended to carve out what would become bodies of water and then dumped all that top soil further south - which is why southern Minnesota is 'the valley of the Jolly Green Giant" rather than a hotbed of lake activity.
~ western Michigan fruitbelt!
Yeah, Southwest Michigan is a good choice if you want to combine your swim 'n' fish 'n' hike with agritourism and winery tours. Only other place I know of you can do that in the Midwest is Grand Traverse area.
WI and MI are similar, the lakes are concentrated in a few areas, mostly in the north.
Texas has created lots of artificial lakes, partly for water supply but also recreational amenities.
Reservoirs are good.
It’s a nice region to visit, but people don’t want to live there.
Well except for Madison, which has been seeing sunbelt levels of growth over the past 20 years (approx 1.7% CAGR). Madison's assessed property value now exceeds Milwaukee county's. Its clearly a regional outlier, though.
How much of that is hunting?
The tri-state effect is funny. Growing up we'd drive 10 minutes into Wisconsin to go skiing at Wilmot and 30 minutes into Indiana to go camping at the dunes. But never Illinois itself.
Nothing wrong with Rock Cut SP
"... Nothing wrong with ...."
You're putting proximity to Beloit into the positive column?!? Bold move.
Hey, they've still got Fairbanks-Morse!
"...Fairbanks-Morse!"
That's a partial defense.
Your pun is bad, and you should feel bad.
Yeah, there's definitely stuff in IL too - Starved Rock is amazing!
There's a deep tradition in the upper Midwest of having a weekend lake house. Some people never spend a weekend in their primary residence. Wisconsinites and Michiganders generally have their lake home in the state where they live. But there aren't as many lakes in Illinois and many have more of a suburban feel than those in Wisconsin and Michigan.
People in the north Chicago suburbs tend to have a lake house in Wisconsin, those in the West suburbs to have one in Michigan, and Chicagoans are mixed.
It’s probably property taxes, those are super high in Illinois, at least in Chicagoland
As a New Hampshire resident, I fully support Matt's idea for higher taxes on tourists visiting Maine.
BTW, we have awesome attractions here in NH and if you're traveling by car from points south, many of our attractions are an hour or more closer.
https://www.visitnh.gov/
Maine may think it's the way life should be, but you're going to love it here in NH.
From my westerner perspective, you're honestly all just the same to me.
Frozen people
Visit any one of New Hampshire's seventeen feet of coastline. Enjoy cities like Worse Portland. New Hampshire is the moat we dug to keep out the rest of the US.
Love,
Your Neighbor from Upta Camp
“… seventeen feet of coastline…”
Woohoo! New England slap-fight! Down Easters gettin salty!
Wait, what city is Worse Portland?
Portsmouth; tourist heavy, bougie coastal town but without the art school flare, smaller, and no decent performance venues I'm aware of. There's some pretty good restaurants but nothing at the same highs and without the same volume. I used to complain about the amount of new, faux-old construction but I think Portland has really surpassed that and it was always mostly a Mainer finding things in NH to complain about.
Mostly fair. I think Portsmouth's history stuff is better (Strawberry Bank, Discover Portsmouth, etc). For arts, Portsmouth has much smaller venues, but I think similar to restaurants, they punch above their weight in variety and quality, especially with more eclectic and non-pop artsy stuff. I'm thinking of stuff like Telluride by the Sea at the Music Hall, West End Studio, and Player's Ring. There's also Seacoast Rep and Prescott Park (in summer), but those are more mass market stuff in much smaller venues than Portland.
Overall, I'd say Portsmouth does have a more bougie and less industrial vibe than Portland, which could count as a plus or a minus. That said, they do have one of the biggest waterfront salt piles anywhere and three working tugs that dock right in the city center.
Portsmouth: Come for the waterfront salt piles; stay for the three working tugs!
Portsmouth was over when the Stone Church and the Elvis Room closed.
I only ever knew of the Newmarket Stone Church:
https://stonechurchrocks.com/
I loved Portsmouth! Granted it was twenty years ago and I haven't been to Maine, but still.
It hasn't changed all that much really. Same overall vibe imo. A few new buildings in the downtown area plus a zillion new buildings replacing all the empty lots and commercial warehouse type buildings in the north end of town that were cleared during urban renewal in the 70s and mostly sat idle for 40-50 years (Parade Mall area and points north).
And cheap liquor, never forget to plug the cheap liquor.
If you’re referring to the state-run liquor stores on I-95, the prices aren’t cheap.
This whole comment chain is hilarious. Well done everyone!
"While sitting in my vacation home in Maine". Words that I wish to speak one day.
"...vacation home in Maine". Words that I wish...."
I fucked up on the whole "inherited wealth" thing.
Be right back -- gotta go get new parents.
Yeah, my life goal is to be a snowbird too
For some reason we Americans have to consume horse choking quantities of sugar to make our medicine go down. This discussion highlights how difficult it is to get people to balance long-term gains with short term inconveniences.
Complicated sales tax rates are very difficult for small businesses to manage. Anyone making sales tax recommendations should be forced to fill out a monthly tax report and then get back to us.
Doesn't toast and square do that automatically?
Yeah, pretty sure modern software's got them covered.
I think this is a common misconception among people who aren't doing the actual tax collecting.
The software purports to do it automatically, but in reality, it still requires extra work.
Toast and Square are not exactly cheap either, so anyone with lesser POS would likely need to incur additional costs.
How pronounced are the seasonal effects in other parts of the state during "leaf peeping" season in the fall? I hear "peepers" (fall tourists) also bring a lot of economic activity when the leaves change that time of year.
Fall tourism mostly happens in the form of day/weekend trippers up here. Turns out leaves are, on the whole, quite boring. You come up, you see the leaves, you realize that Colby is so far away and your child has picked this school specifically to make visiting impossible, you eat an off-season lobster roll, you go home. Summer tourists linger for weeks or months. There are entire neighborhoods in coastal Maine where none of the buildings are constructed to be occupied during the winter. There's also - to put it politely - some SEL differences between the fall crowd and the summer crowd.
"Turns out leaves are, on the whole, quite boring."
Blasphemy! Fall leaves are gorgeous! I used to live in New England, then we moved to SoCal for work. I miss having actual seasons! I miss seeing forests with fall leaves. Prickly pear and sage brush are beautiful in their own way, but it's just not the same.
I routed in my New England fall trip to see leaves, see friends and family, and see a concert. And I got even luckier that this all happened while the Red Sox were having a successful postseason that was en route to a World Series title.
It's a much shorter season, and pretty much only retirees.
And Asian photography enthusiasts...
Maine is beautiful in all seasons, of course, but my sense is Vermont and New Hampshire draw bigger leaf-peeper crowds.
If you’re coming from Boston or NYC, you have to pass through Vermont and New Hampshire anyway.
Sunday River and Sugarloaf are some of the best ski areas in the East but they see fewer overnight visitors.
"I have to admit that when people buy vacation houses or start renting out structures as short-term rentals, this does push up the price of housing."
No you don't. Would it be better if people left the houses unoccupied? Air B&B increases the effective housing supply.
The anti Air B&B folks seem just as irrational as the Anti-Uber crowd. Almost as if there is some visceral distaste for Capitalism among consenting adults.
A house being used for air b&b (or a vacation home) can’t be used for someone to live in year round.
A house not being used for year round housing, a vacation home, or air b&b, is presumably for sale. The more houses for sale the lower the cost of housing. Also people do buy houses with the intent of renting them through air b&b which increases competition.
High house prices encourages more building, which can lower house prices, but that takes time and may be limited by other factors. Therefore it seems logical that air b&bs increase house prices in tourist areas?
I like air b&b—it’s very convenient for my friend groups and my mother has so many food sensitivities that she needs a kitchen when traveling. But how does it not have an impact on housing prices?
(The previous style of renting out a spare room likely wouldn’t have a significant impact on pricing, but Matt did specifically mention “the structure”)
We have to get our ceteris paribus. What is the alternative to the newly minted Air B&B? Any other way of renting the same space presumably has lower occupancy , less effective supply.
Every STR is a home that isn't being lived in. It's a hotel, not a residence. We don't have a hotel shortage, we have a housing shortage. The other way of renting a STR is simply providing housing.
If we are maximizing the supply of “housing for locals,” then I agree that converting a residence of the kind used by locals to the kind used by tourists goes against that objective. But if providing housing for tourists has value, there ought to be a way to transfer some of that value to locals who would like lower cos housing among other things.
We are maximizing housing for residents. I think what tourists use is not well categorized as 'housing'. Hotels are clearly not housing qua housing, for instance.
I, and presumably Matt, is trying to maximize real incomes of residents.
At least here, you’d have more people willing to buy rental properties and be landlords if you got rid of some of the onerous eviction protections. The only way to manage the risk of being a landlord in Seattle is to convert it to Airbnb due to fewer tenant rights, unless you’re a huge corporate landlord that can spread the risk over hundreds of units.
I think it's good that AirBNB increases the supply of short-term housing for tourists.
I like using it! All I’m responding to is the person who said Matt was incorrect about it raising housing costs. I don’t see how it (and vacation homes) wouldn’t raise housing costs for residents.
They're converting housing stock into hotel stock, decreasing supply of housing, which increases the price.
These are houses in desirable areas, they wouldn't be empty.
Who is "they" who will not be happy? The property owner, Air B&B, the Air B&B renter, and the city government all benefit?
The people who are trying to find housing at an affordable price.
Some families can afford to have a house or condo they use for a month or three and leave empty the rest of the year. Banning new STRs doesn’t change that.
The large majority of Airbnbs are bought & run by investors, who are new to the area. I think you're imagining that the owners are all longterm residents, but this is not true. An Airbnb is much, much more profitable than a longterm rental, so it drives a large number of investors buy up the homes and convert them. I have a friend who does it professionally
We’re all local somewhere and outsiders elsewhere.
I strongly believe everyone would do well to spend some time as an outsider at some point in their life to see how it’s like being treated as one.
STRs are bought and run by all kinds of people. People like my mom’s friend Nancy or my friend Mark. Both use their vacation homes for a few weeks every year and rent their vacation homes out on VRBO the rest of the year.
This was a way to make owning a vacation home realistic for their family’s income level.
Airbnb only increases effective housing supply if construction is legal. If new construction is illegal, then Airbnb just allows the hotel and residence supplies to be fungible with each other, so that whichever one is more undersupplied steals some of the supply from the other.
>No you don't. Would it be better if people left the houses unoccupied?<
Yes, it would be better for renters (and people trying to buy homes) if people didn't "occupy" Airbnbs (or other kinds of vacation properties).
I'm a radical, Yglesias-style YIMBY ("If it's safe, let them build it") but even I don't deny Airbnb diverts homes for residents to accommodation for tourists. In some cases, (say, NYC) the effect is probably tiny given the overall population numbers. But in other states (like, Maine) it's likely bigger. Thought experiment: If Maine passes a law tomorrow morning banning non-residents from occupying houses (sorry, Matt, you gotta move!) it's pretty likely rents would fall, right?
They would fall to near zero, because the non residents are the economy. If you can't rent a place to stay you can't visit.
It diverts housing from less valuable to more valuable use, benefitting city residents in general (through tax collections). It is exactly the same issue as converting lower value land use into higher value land use by a developer.
People hate AirBNB, but anti-AirBNB takes really do remind me of bog-standard "new people should not be allowed to live here" NIMBYism.
The people staying in the AirBNB are certainly made better off by the AirBNB, it's why they can visit the place. The people who operate the AirBNB are certainly made better off, they would do something else with the property if not. The town is getting tax revenue, and local businesses are getting customers.
Yeah, the rabid anti-Airbnb people do tend to be the anti-growth nimbies. Thing is, most jurisdictions simply need a wide variety of accommodations, and Airbnbs are one component of a healthy mix. But there are a lot of unhealthy mixes.
The question is, what are we trying to optimize? bed-nights by long term residents? Or real income of long term residents?
I can understand the people who hate short term rentals on grounds of nuisance. But the answer is to address the nuisance, not the rental itself.
But yes, the people who are stuck in zero sum thought on them don't understand what they're talking about.
It’s much easier and more practical to ban the AirBnB than to bank on the local authorities abating the nuisance every time a perpetually rotating cast of characters parks in your driveway or plays loud music into the night.
I'd be open to revoking individual short term rentals that have a repeated history of tolerating nuisance. As always, focus on the specific people/things causing societal problems, instead of imposing restrictions on everyone.
Towns are getting better and better about this. For example, a very common practice is for tourist towns to license AirBNBs and require that the owner have someone on-call in the town who can be at the property in a short period of time (usually <=60 minutes) if the city calls them to address a problem.
I really think the best solution to the AirBNB issue is to just make it easier to build hotels. Hotels seem to inherently solve a lot of AirBNB problems by concentrating short-term visitors away from long-term residents.
Sure, but the owner/manager of the Airbnb can't control what their tenants are doing. If people show up and want to party, drink heavily, and be loud, the owner can't screen for or control that behavior. It's endemic to the idea of being on vacation itself
But a lot more costly in terms of lost revenue to the city and the owner of the AB&B property.
This seems to really depend on what type of housing we’re talking about. Some people have an ADU or rent their primary residence for certain periods, and otherwise wouldn’t dream of renting it full time to someone else—those cases increase supply.
But as others have mainly pointed out, buying a vacation home that you don’t put on Airbnb only reduces housing stock, right?
It'd reduce it only if there's not sufficient housing allowed to be built for both seasonal residents and short term renters.
Only if your city isn’t supply constrained. I think there’s a place for AirBNB too, but I get why people don’t like it when there’s a housing shortage
Well, if the judgment does not include any of the benefit, only the diversion from “rent to locals” vs “rent to tourists,” yes.
I mean, that’s the deal. Even in a city that’s thriving, tourism tends to build resentment, because a lot of people can’t afford vacations - especially those who are struggling to find affordable housing. It takes a certain minimum of privilege - the privilege of being able to travel for leisure - to appreciate tourism for what it is. I hate the anti-tourism takes because I love to travel, but I get why they exist.
Whatever the reason for wanting fewer tourists the time sensitive tax may be a better way of targeting them better than selective tourist items.
Yeah, I like that better than distortionary homestead exemptions, and it makes sense to not count on hotel taxes and car rental taxes if a significant proportion of the seasonal population owns second homes rather than comes for a week.
I suspect permanent residents who participate in the tourist economy (restaurant owners, shop owners, probably their employees) would resist this strongly. Many of them already feel that they’re barely getting by. What about a statewide property tax on homes that aren’t primary residences?
Hoe do you see tis as reducing total revenue; on the face it does the opposite?
Do they not already do a homestead exemption like Florida does? If your home in FL is your primary residence, your property taxes can only rise so much a year, while the assessment is marked to market on secondary residences. That makes a fair amount of people changing residency registration to what is in effect their vacation home, though.
Yes, there’s an existing homestead exemption in Maine, but it’s a state statutory exemption from local property taxes. The OP is talking about statewide measures to raise revenue from seasonal residents, so that would mean a new tax. I was suggesting it be targeted at secondary residences, but you could certainly do the same thing by targeting all residences and expanding the exemption.
So localities can’t do property taxes in Maine? Nor sales taxes, as per the article? Where do localities get their revenue?
I think it’s a partial exemption, not a complete exemption. So localities still get revenue from real property taxes, they just have to reduce the amount they assess for primary residences that qualify for the exemption. In fact, looking at the sources, it appears the exemption isn’t that much even for primary residences (property value is reduced by $25K, which may have been meaningful when the exemption was enacted but is less so now).
Massachusetts residents can probably find other places to go.
They get a tax cut for 3/4 of the year, and a greater incentive for off season visitors.
Yeah, maybe that would be enough to sell it. I’m a little skeptical. It’s not an objection to the substance of the policy, to be clear.
Slightly random but this piece made me wonder about the impact of housing costs on people seeking seasonal employment. That is, since housing is relatively expensive in Maine, and short-term rentals are most expensive in the summer, this must make it harder/more expensive to find seasonal employees. I wonder if Maine has rules against types of housing that would appeal to seasonal workers—some ski resort towns have this issue, and I believe there are cases where residents have objected to resorts trying to build employee housing.
This does exist, and most of it is just bog standard NIMBYism of not wanting a lot of new things near them. And as Matt says, this causes the long term housing to get flung out to further away towns that are less desirable...until they become the new destinations for people trying to get away from other people, and a chain reaction continues.
This is super common in touristy areas. Every year Nantucket and Martha's Vineyard see fights between (1) NIMBYs and (2) businesses that would like to build worker housing.
Is it true, could it be made true, that would-be NIMBYs benefit from the additional economic activity permitted by the worker housing? Nimby-ism is a problem of political economy, not morality. [Ditto immigration, CO2 accumulation, import restrictions, etc.]
They would benefit from more economic activity. Generally they don't see it that way, they just want the area to be less crowded.
I don’t know that nimby retirees would actually benefit from more economic activity.
Retirees specifically, maybe not on net. They may benefit from lower labor costs in the area.
Then make the seasonal sales tax rate even higher until the you reach the optimal level of convention
I doubt there are many construction workers living as permanent residents in Martha’s Vineyard (well, at least before Abbott sent them all the Mexicans)
Part of the solution is fast frequent bus service to nearby places with lower opportunity cost land.
Perhaps — I have no problem with buses, quite the opposite — but some of these high-profile resort areas are virtual or even literal islands. You can't bus someone to Martha's Vineyard quickly when the boat ride from the mainland is 45 minutes (with additional transit time on either side). I don't know Colorado but someone observed elsewhere in the comments that Telluride, unlike other ski areas, is pretty isolated.
To be more positive: Yes, fast and frequent buses are part of the solution, but there are a few edge cases where it's genuinely not practical.
I was specifically thinking of Telluride — we go there every Film Festival — that has build lower cost housing 10-15 bus ride away from the town center.
I stand corrected (in part)!
Not "corrected" Multiple dimensions of an issue. :)
I have yet to visit Maine, but the problems describe apply to a lot of place ms around the country that rely on seasonal tourism. I see it, for example, in Colorado mountain towns. There’s the same strong NIMBY instinct from full time, usually wealthy, local, and a lack of affordable local housing, etc. I hope Maine experiments with your ideas and provides an example for others if it works out.
Live in Colorado and recently went to Acadia NP twice for weddings. Bar Harbor is very, very similar to Estes Park in what I might call "tourism vibe." Lots of people aimlessly walking around eating ice cream cones. Lots of boomers driving RVs in hazardous and frustrating fashions. The town has to basically have people out directing traffic at a lot of intersections.
My take is that the problem in a lot of tourist towns and parks isn't so much people, it's cars. I think that in the case of both Acadia and Rocky Mountain NP more frequent and longer-running bus service through the park could reduce a lot or pressure, especially if combined with steep fees to take a personal automobile into the park. The pricing at RMNP right now is dumb: it's $30 to buy a one-day pass to bring a car in (and that covers everyone in the car) but people walking in or bicycling in have to pay $15 per head.
Yeah, good example. I don't bother with RMNP anymore because of how much of a PITA it is to even get in the park anymore. And agree on Estes Park.
I visit a lot less than I used to. I haven't been this year. My trick was to leave my house insanely early to get to the trailhead at ~5am.
RMNP needs to just bite the bullet and go to some kind of park-and-ride system with shuttle buses circulating everyone in the park. Maybe allow ebikes too.
Yeah, I think that's the only practical way. I like the eBike option too.
I've written about my ebike experiences a few times here, but I really do think they're currently underutilized in a lot of tourist destinations. Ebikes make bicycling so much physically easier and faster. Not having to worry about parking is huge. They're also just so much more pleasant than cars for other people in the area.
Totally agree. I just got back from Norway and the e-Scooters are well utilized there, although mostly in urban areas.
My partner has been at two conferences in Telluride this month and says that prices have escalated in a way he has never seen anywhere else. It sounds like they really need to do something if they want to keep these conferences (but maybe not if they really want to lean in on the multimillionaires thing, as long as their shops pay high enough wages for mere near-millionaires to wait tables).
Your partner speaks truth. Lady friend and I were in Telluride over the 4th of July, we paid $32 per person for takeout pad thai. This was nothing special, it would have been maybe $15 per person in Denver. Everything seemed slightly more than twice as expensive as in Denver.
Telluride is uniquely bad even by CO mountain town standards because it's very physically small. It's in a box canyon hemmed in by land protected by law or by slope from construction. Beautiful though, if you have a chance to visit you should. Great hiking.
Yeah, I visited once when he was there for some of these conferences several years ago. It was amazing. We did the Via Ferrata, as well as some more ordinary hikes.
It's been a couple of years since I've been to Telluride, but it is among the worst in Colorado. With places like Aspen, for example, there are some cheaper communities nearby for workers, but Telluride is kind of isolated.
I mean, the example for others is just the Jersey Shore, right?
The Jersey Shore is another place I've never been, so I can't say.