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Report: COVID crashed North Carolina’s tourism sector, but vacation rentals are up

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While most people might still want to get away this summer, the COVID-19 pandemic and associated restrictions — not to mention health and safety concerns — have stymied many travel plans.

But there's one sector of North Carolina's battered tourism industry that is racing back — vacation rentals.

Still, the state's tourism sector has severely declined since the COVID-19 pandemic sent the national and state economies reeling, according to a recent presentation to the N.C. Travel & Tourism Board.

Surveys have been conducted to measure consumer sentiment and other efforts are underway to try to bring back the customers, presenters told the board.

"It is estimated that North Carolina has suffered a loss of about $6.8 billion in travel spending from the beginning of the pandemic," said Marlise Taylor, the director of tourism research for Visit North Carolina.

Visit NC is part of a the public-private Economic Development Partnership of North Carolina, an economic development organization. The Travel & Tourism Board advises state policy makers on the industry's matters.

The $6.8 billion loss is a 57.9% decline in travel spending between March 1 and Aug. 1 compared to the same period last year, according to Taylor's report. The math works out to $11.74 billion in 2019 and $4.94 billion in sales this year.

Local, state and federal tax collections from travel spending are down $871 million, Taylor said. Weekly travel spending has rebounded some during the summer, but as of Aug. 1 was still 42% below last year's numbers.

The loss of local revenue prompted one North Carolina beach town to increase its parking rates mid-pandemic by up to 66% — raising the ire of many visitors.

With rentals and hotel room stays all but suspended for several weeks at the start of the pandemic and many businesses forced to close or scale back their operations, Wrightsville Beach officials said they had little choice but to look to boost parking revenue to make up for the estimated 17% downturn in room-occupancy and sales tax proceeds.

But there is a bright spot, Taylor said: vacation rentals are running ahead of last year's sales.

Vacation rentals are short-term rentals of places like homes or cabins, and by far summer is their peak season from the mountains to the sea.

Sales, measured as "guest nights," dropped sharply March to April, but then spiked steeply, the data shows. They peaked in July at nearly 307,000 guest nights. This compares to the annual peak in July 2019 of almost 279,000, and of almost 281,000 in July 2018.

Vacation rental bookings going forward remain strong into the fall, Taylor's statistics show, and are running higher for August and September than they did in 2019 and 2018.

Caleb Hofheins, marketing operations director for Greybeard Realty and Rentals in Asheville, said Taylor's data matches the strong demand he has seen for the 220 vacation properties his company manages.

"I think just the appeal of private accommodations has kind of spiked due to the pandemic and everything going on," he said.

A home or cabin provides a place with amenities (like a hot tub, kitchen and pleasant outdoor views and outdoor space) and isolation from other people, Hofheins said. At the same time, his guests who want to get out are close to the attractions in the Asheville area.

Some of Hofheins' guests this year originally planned to take other vacations, such as trips overseas, he said, or they are taking trips that were postponed from the spring when the shutdown started.

"It is obvious that some of the people that are booking with us aren't used to vacation rentals, because they'll, they'll just mention like — have questions about — hotel type amenities that are different with vacation rentals, and stuff," Hofheins said.

Some people are taking the chance to escape a step further, especially with interest rates still hovering near historic lows.

Vacasa, the country's largest full-service vacation rental management company, said sales of vacation properties are booming.

"We've seen a surge in demand for vacation homes across our portfolio, and real estate transactions are up as much as 35% in some of our vacation rental markets across the country when compared to July 2019," said Shaun Greer, Vacasa's vice president of sales and marketing, in a release accompanying the latest version of the company's report noting the best places to buy a vacation home.

"Many buyers believe we will be impacted by COVID-19 for the next 12 to 18 months, and are seeking a place close to home where they can get away with their families, work remotely if needed, and generate income when the home is not in use."

That trend can be seen in Southeastern North Carolina, which includes major second-home markets in the beach towns of New Hanover, Brunswick and Pender counties. Home sales in July were up 34% over July 2019's number, according to the Cape Fear Realtors, with pending sales last month up an eye-watering 54%.

Vacation rentals make up only about 3.5% of all commercial lodging room nights, Taylor said. She and others in the meeting outlined programs and research findings for the rest of the industry as it tries to find ways to boost sales under pandemic conditions:

  • A survey of 1,201 people conducted Aug. 7-9 found 46.5% have no plans for leisure travel the rest of the year. This was down from more than 50% saying that the prior week.
  • Among people who have decided not to travel because of the coronavirus, 70.5% said discounts and price cuts won't change their minds.
  • A program called "Count On Me NC" provides training and certification that businesses have trained their employees how to conduct operations with the coronavirus threat. Customers can look up these businesses at CountOnMeNC.org, and the program is being promoted in advertisements.
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