Clark Twiddy is the President of Twiddy & Company, a hospitality and asset management firm along North Carolina's Outer Banks.
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North Carolina's Outer Banks have long been a favorite vacation destination for those looking to relax and enjoy the natural beauty the area has to offer. During the summer months, a year-long population of around 30,000 residents increases tenfold. Our local economy relies almost entirely on tourism.
So you can imagine the concern local business owners had, especially those in the vacation rental management sector like myself, when county officials suddenly closed our bridges to outside visitors this past March, which is when our tourist season starts to pick up. As was widely reported, the Outer Banks was among many "tourist towns" — especially along our coastline — prohibiting not just vacationers, but non-resident homeowners from accessing their homes. The shutdown lasted for nearly two months.
None of us could have predicted what would happen next. Immediately, upon our bridges reopening, North Carolina's Outer Banks became one of the country's top vacation destinations. This unprecedented demand does not appear to be easing up. I see it in my own firm's fall bookings, which are up 53% compared to last year.
But we're not alone.
In fact, rural vacation rentals in general have seen a surge across virtually every continental market this summer season. If it's a short drive from an urban population center and relatively self-contained, chances are it's a great place to be this summer if you're either a visitor or a vacation homeowner. As the real estate community digests this new demand both in terms of annual rental income this season and relative asset appreciation as a function of increasing sales demand, we approach the second half of the summer and begin to think about the financial horizon for next year. In other words, how confident are we that this new demand will become a reliable revenue stream?
We know that the Covid-19 shadow continues to lengthen for us all — where at one time we may have hoped for a relatively rapid wave of the virus to come and go, we are now seeing an enduring behavior change on the part of many consumers. We also know that many vacationers this summer see a vacation rental as their second choice. Air travel, cruises, and theme parks — what are usually first choices — remained locked up when vacation plans were made this year. In essence, we're wondering if the industry can convert the "second choicers" into the "first choicers" who represent a reliable revenue stream for local vacation destinations across America. Will the demand continue to exceed supply in the short term?
The best early barometer of this confidence will be the tell-tale measurement of advanced reservations for the same time next year. The holy grail of bookings, these far-out reservations represent both a relatively strong consumer commitment and a positive financial testament to a reaffirming experience in the mind. As Covid-19 becomes a longer-term challenge and the traditional school-related travel limitation begins to change fundamentally, doors for extended travel planning begin to be unlocked in ways hard to imagine just a few months ago. That new reality is driving positive early returns on demand for next year — long-term reservations at my own firm on the Outer Banks are up by more than 40% year-on-year.
All of that is to say that optimism in the rural vacation rental industry remains encouraging both this year and now, with initial data becoming available regarding future stays for next year as well. Broadly, over the next three years, we may see a relative golden age of the industry — that height of influence and brand projection in the minds of the traveling public with pent-up demand, limited options and new flexibility to travel with family.
That's excellent news for both travelers and vacation homeowners alike — to be nervous about our new shared future is to be human, and yet, to be excited about both supply and demand is to be confident about availability and risk. All hail the golden age of the American family vacation.
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