New Housing on Resort Islands, Martha’s Vineyard, Nantucket Real Estate
EDGARTOWN, Massachusetts - For decades, hotels seemed as intrinsic to the landscape of the island of Martha’s Vineyard as its wide beaches and finger-shaped lagoons. Ditto for Nantucket, 10 miles farther out to sea to the southeast, where bed-and-breakfast places and stately inns crowded the wide cobblestone streets.
Yet in an increasingly common trend, many of these longtime lodgings are either closing outright or drastically scaling back the number and availability of their rooms.
Rising home values have made it attractive to convert hotels and inns into condominiums and single-family homes, while high hotel-room rates have led many tourists to stay on Cape Cod, from where ferries sail for both islands, and take day trips over instead.
At the same time, island planners say, demand for permanent housing has increased. The year-round population in Martha’s Vineyard has risen nearly 30 percent a decade since 1970, according to census data, and Nantucket’s shot up 58 percent between 1990 and 2000.
From 2002 to 2007, the islands have shed about 200 of 2,500 hotel rooms, based on an analysis of data from business owners. Most of the losses came from bed-and-breakfasts that are converted to single-family homes. But in the next two years, those losses could rise sharply, with hundreds of other rooms coming off the market, as developers transform properties into condos.
The decline in hotel beds is a consequence of a sizzling real estate market, where home prices are up 80 to 90 percent in five years, according to the islands’ multiple listings services, with an average home price of $775,000 on Martha’s Vineyard and $1.19 million on Nantucket.
For many hotel and bed-and-breakfast owners, it makes sense financially to convert their properties to single-family homes or condos, and not maintain their current business model of short-term lodging.
Escalating hotel rates — a consequence of the higher cost of living on the islands — have also put accommodations beyond the reach of many tourists. “For certain people, the Vineyard is pricing itself out” of the seasonal hotel market, said Mark London, the executive director of the Martha’s Vineyard Commission, a regulatory agency that approves large-scale conversions.
Peter Martell, the owner of the 95-room Wesley Hotel in Oak Bluffs on Martha’s Vineyard, put his property on the market in September 2006 for $6.5 million, but it has not sold yet. The gray-shingled hotel, where rates average $205 a night, was just 55 percent full during the Fourth of July holiday week. In the late 1990s, when rates averaged $130 a night, the hotel was around 90 percent full that time of year.
“Occupancy rates are too low,” Mr. Martell said. “The common man just can’t afford to come here anymore.”
Those tourists who still choose the islands are increasingly opting to stay in rented homes, where they can save money by cooking their own meals.
Hotel rooms typically start at $200 a night, so staying a week can cost $1,400, said Alan Schweikert, the owner of Ocean Park Realty in Oak Bluffs on Martha’s Vineyard. “But for $1,200,” he said, “you can rent your own house for a week with a lot more privacy,” though it might be an older property far from the ocean.
This summer, Martha’s Vineyard had 500 houses for rent, scattered from Vineyard Haven to Aquinnah, which doubled the offerings in 2000, according to Mr. Schweikert and Abby Rabinovitz, a principal of Tea Lane Associates, a brokerage in the town of Chilmark on the western side of Martha’s Vineyard.
And on Nantucket, 1,000 homes were listed as rentals this year, versus about 650 seven years ago. As the supply has swelled, and competition has grown, the rental rates have held relatively steady, increasing by just 5 percent since 2000, according to Linda Bellevue, a broker with Congdon & Coleman Real Estate on Nantucket.
Though rentals may guarantee more creature comforts, like kitchens and outdoor showers, the island’s creakier hotels could be retooled to offer similar amenities, said Alan Worden, the chief executive of Scout Real Estate Capital.