Pullback Vacation Rental bookings if we enter recession?

[Ross Gallo]

Hey BP community!

I’m about to start building a vacation rental in the dessert near Joshua Tree. I’m starting to feel that by the time it’s built we could be in a rescission (if we’re not already). What will this look like in terms of people spending on weekend get-aways? Do you think it will be similar to the height of the pandemic when people traveled to drive-to destinations over any international travel? The concern is if people need to save, will vacation travel take a back seat?

Does anyone with long term experience in vacation rentals have some insight to offer?

Thank you in advance for your help!!

Best,

Ross

[Collin Hays]

There are a number of STR markets that do very well in recessions. I manage vacation rentals in the Gatlinburg, TN area. Our occupancies do not vary much, regardless of the national economic environment.

What we DO see is a shift in where our guests are traveling from:  In an economic expansion, travelers are visiting the Smoky Mountains from up to several thousand miles away.  Folks will often fly in for their vacations.  In economic recessions, travelers are, more often, driving to the Smokies, from places like Nashville, Atlanta, and Charlotte.  

If you are operating a STR in what is primarily a "fly-to" destination, your downside in a recession is much greater, simply because airfare can dominate a travel budget. If families can jump in the car instead of head to the airport, they've probably saved several $ thousand on their vacation.