As we all know, the impact the pandemic has had in the travel and tourism industry has been one of the greatest. According to the U.S. Travel Association, as of April 30, 2020, the national weekly travel spending went down from $19.8 billion on 3/7/20 to $2.3 billion on 4/25/20. That is a difference of $17.5 billion! The states hit the hardest were the ones with higher tourism and international travel. For instance, their Total Weekly Travel Spending table reported that for this same time period, states like:
California went from $2,488 million to $298 million
Florida went from $1,883 million to $152 million
Hawaii went from $481 million to $18 million
Nevada went from $712 million to $97 million
New York went from $1,461 million to $170 million
Texas went from $1,423 million to $218 million
Consequently, vacation rentals have been impacted. Travelers cancelled plans and although not all vacation rental owners have been flexible, most have worked with the consumer in providing refunds. This means vacation rental owners have been severely affected. On May 5, 2020, the CEO of Airbnb announced they would be letting go of nearly 1,900 employees, about 25% of their workforce. The two reasons he stated for determining this were they do not know when travel will return and when it does return, it will look different; so they need to start taking action now. For instance, as of April 29, 2020, Florida’s governor, issued an executive order extending the prohibition on vacation rentals due to concerns that infected people were going to the state.
This pandemic also affected major theme parks such as Disney. The parks had to close and they are a major tourist attraction in 50% of the six states mentioned above. According to The OCR, Disney theme parks face a $21 billion loss through 2022. According to ClickOrlando.com, as of May 5, 2020, Walt Disney Co. had not revealed when its U.S. theme parks will reopen. However, they are working on safety guidelines so they can gradually reopen the parks. This is probably why on May 11, 2020, they announced they were taking reservations for their Florida attractions in July.
So, in summary, the COVID-19 pandemic has drastically affected the travel and tourism industry, which consequently, has affected the short-term vacation rentals. In my opinion, it will depend on how soon people start feeling safe to travel and the safety guidelines implemented in the major tourist attractions before we can see the vacation rentals coming back as closely as possible to normal pre-COVID-19. And, when it does, it will be very different from what we’ve known. Operators/Owners will need to be up-to-date with local health and safety guidelines and make appropriate modifications in the operations, cleaning and maintenance of the rental.
It is possible that owners who have experienced a major loss and who are not able to maintain the property while the occupancy is low, might need to sell or pivot to a different type of rental (i.e. home insurance, coronavirus quarantine, corporate leases, etc.).
As always, reach out to me for your local real estate needs. You can schedule you 15-minute online session with questions on selling your investment property.