Vacation Rentals in a Recession -What size property to target?

[Josh C.]

Hello BP - my wife and I have a few vacation rentals in San Diego (3 bedroom homes and granny flats). I've been researching what happens to the vacation rental industry in a recession, and so far what I've seen is that if your property is in an accessible area, there will still be demand, though the luxury properties may lose demand. My question is this, for our next properties, should we be looking at smaller (1-2 bedroom) properties, assuming that if the economy is in recession, the smaller more affordable vacation homes will be fine? Or, would additional bigger properties be the better strategy because people will want to take group trips and lower the cost per traveler? It's been our experience that the 3 bedroom properties in San Diego have a higher revenue per room than the 1 & 2 bedroom properties, but the concern is that if a recession comes along, the bigger properties would lose demand. Thanks!

[John Underwood]

I think there will still be plenty of demand. You may have more local vacationers than people who have to travel a longer distance.