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Investing in STRs with a recession coming
How are you Super and Angel Hosts thinking about the next 3-5 years? I follow many well-respected economists and am convinced a recession is coming (or is here) and the questions are how long and how bad. I know the smokies weathered the 2009 crisis quite well based on park visits and other data. But how do you think a recession and potential job losses, etc. will affect STRs? I have one and am planning on getting 2 more in the next year, but don't want to buy into a 30-40% occupancy market. Thanks for your advice!
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Quote from @Ken Boone:
On the other hand, differing from what @Robin Simon said, invest in the luxury instead of the average value range. I could be dead wrong, but my theory is that the average value range is going to be what is hit the most and that is where the largest ADR drop will occur because that is where the most competition is going to be. Whereas, the folks that rent the luxury type places, are not hurt near as much in a recession, and still take their ($500+ per night) vacations. Don't know if I am right or not, that's just my theory ;)
I think the opposite. When the market gets tight, people reduce frivolous spending. People that would normally splurge on a luxury rental may decide to downgrade to something cheaper. People that normally rent middle-of-the-road may downgrade to something cheap, stick to a hotel, or skip the vacation completely. I think the B-class properties are the ones most likely to thrive in a downturn. Luxury rentals will struggle to find renters.
- Nathan Gesner
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