Vacation-rental business still brisk
The slowing economy hasn't deterred millions of U.S. families from a summer ritual renting a vacation getaway in the mountains, on a lake or at the shore.
Though some families have balked at the escalating prices of vacation rentals in beach towns in New Jersey and the affluent east end of Long Island, N.Y., it's business as usual this summer, say rental-property managers across the United States.
People don't change their vacation plans very quickly, says David Wyss, chief economist at Standard & Poor's.
"Most of this money is budgeted, and it will get spent," Wyss says. "There is a lag of about a year before the economy affects vacation plans."
Americans may not be willing to sacrifice their vacation when times get tough, but many are becoming more discriminating about how they spend their money. They often find that a vacation rental can be more affordable than paying for a rental car, airline tickets and hotel rooms for the whole family.
"And with a rental, they'll have a kitchen and can cook instead of eating in restaurants," says David Levine, chairman of ResortQuest International, which has 20,000 rental properties in 50 resort locations. Bookings are up 5 percent to 7 percent over last year at ResortQuest properties, he says.
Some areas where rents have risen steeply have been hurt. And with the Internet, it's easier for people to compare prices for vacation rentals, says Michael Powers, a broker at Power Play Realty in Avalon, N.J.
In Avalon, for example, the prices of beach rentals have jumped 30 percent to 40 percent in recent years, and people are starting to go elsewhere. "Summer rentals are about 30 percent behind where they were a year ago," Powers says.
In the Hamptons, the exclusive area of Long Island, high prices finally caused a backlash.
"Landlords who beefed up prices 20 percent were left vacant," says Judi Desiderio, vice president of Cook Pony Farm Real Estate in Bridgehampton.
But there's no clear pattern. In Hilton Head, S.C., Oceanfront Rentals has cut prices 10 percent to 15 percent on midpriced homes and condos, which rent for $1,000 to $2,000 a week. But high-end rentals, which go for $9,000 to $10,000 a week, were booked a year ahead, says Bill Haley, general manager of Oceanfront Rentals.
At most resorts, rentals are booming. Some examples:
Western Seasons, a resort in Beaver Creek, Colo., near Vail, says summer rentals are up 15 percent over last year. "We've had record business the last three years, and it looks like we're on our fourth record year," says Ben Irvin, president of Western Seasons.
High gas prices haven't hurt business at Northern Lakes Property Management in Cheboygan, Mich., where the average vacation home rents for about $1,200 a week. Many families are willing to make the 3 1/2-hour drive from the Detroit area, though they are making more last-minute reservations, says Stacey Glazier, sales manager.
Vacation rentals in Bethany Beach and Rehoboth Beach in Delaware are ahead of last year, says Sue Cooper, rental manager at Crowley Associates, which manages 375 rental properties. "We've never been affected by the economy," she says.
In May, reservations were double the same month last year at VacationCapeCod Kinlin Grover GMAC Real Estate. The firm has eight offices across Cape Cod, with properties that range from $800 a week for a cottage to $35,000 a month for an estate.
Some families are cutting back on the amount of time they spend at the Cape, but that's not necessarily a cost-cutting effort.
"With all the kids' activities, it can be hard for families to find a week when everyone is free," says Jack Cotton, owner of Cotton Real Estate in Osterville, Mass., who says that rentals are about on par with last year.
The bottom line: "People still have jobs, and they will still take a vacation," Wyss says. "Even people who've been laid off are saying, 'This is the first chance I've had to take a vacation. Let's do it.'"