Short Term in a downturn

[Brian Langstrom]

With the stock market at record lows, crypto crashing lower every day, interest rates jumping 3/4 a point in a day. This market is going to change. I am curious how AirBNB owners see this working in the long term. Wouldn't a yearly or seasonal and summer lease for 3-6 months give stability to income? I have a couple of friends who jumped into the nightly and weekly markets this past winter season. They did well for a lot of work and damages. So now as they look to the Summer and next season in Naples, they are thinking longterm rentals might be smarter. Plus if this economy busts, they have a better chance of getting some income as opposed to none.  Thoughts?

[Jared Higginbotham]

The last two years have been banner years for STR's in Florida. We're seeing consumers running out of cash. They are stretched to thin with rising costs of living. We're not in a downturn. We're seeing STR operators refusing to lower their prices which is resulting in lower occupancy.

The issue I'm seeing is investors have purchased homes at insane prices and they HAVE to keep those rates high in order to pay their overhead. Now we're going back to 2019 prices and these new STR owners are going to be very sad because their malinvestments aren't paying for themselves. Over 1,000 STR's were added to the Tampa in the last 60 days. When the market gets flooded like this, ADR's fall as supply/demand equalizes. It's a race to the bottom for pricing when both supply increases and demand decreases. First ones to decrease prices will capture all the bookings while the rest of the market crosses their fingers during their holdout. This is exactly why the pros stay in business and the DIY'rs lose their hats. The extra 1,000 rentals we just added will either be converted to LTR's or sold at a loss because 2019 RevPAR numbers will not even cover their overheads.