What it's like as a vacation rental owner during COVID-19
As we pass more than 435,000 cases of the Coronavirus (COVID-19) in the US, these are clearly difficult times for our country and the world. Several recent articles have said that the travel industry has been the hardest hit of any sector in the US economy. Cruise lines have completely shut down and air traffic is likely down more than 75%. Coronavirus is hitting St. George Island especially hard. Vacation rental taxes are $1.4 million of our small county’s budget and is a vital source of revenue for our county. In addition, we estimate for property taxes on St. George Island comprise 60%-70% of the county’s property tax revenues. Vacation rental taxes plus property taxes account for nearly 80% of county revenues. As vacation rental owners, our days are filled with stress, a lot of unknowns and a complete lack of control of our future.
According to recent data for neighboring vacation destinations like Destin, Panama City and 30A, occupancy rates of vacation rentals are basically 0%. Not only is no one staying in a vacation rental home, no one is booking a home. Bookings of vacation rentals have fallen ~95% over the last couple of weeks across the country.
At St. George Island Beach Vacations we are being hit hard. Over the last 17 days, we have provided full refunds for 25 guests staying at Sea Dunes, Sand Dollar and Serene Dream equating to more than $85,000 in lost income. Of those 17 days, there have been only two days where we have not had at least one cancellation (today was actually one of those days). For obvious reasons, this has hit us hard, but we entered this pandemic from a position of strength, and we continue to do everything we can to help our guests during this difficult time.
(Side note: Now more than ever though, this is a good reason why everyone should purchase travel insurance. One of our recent guests (her name is Sharyn, and guys, she is an awesome lady!) purchased travel insurance for her stay at Sea Dunes, and we expect that she will get a full refund from Travel Guard because St. George Island was shut down as part of the Florida governor’s order to close all vacation rentals. If you’d like more information about travel insurance, click here.)
Many, if not most vacation rental owners, are undergoing significant hardship right now. We, along with many other owners have applied for the Economic Injury Disaster Loan program that was part of the CARES Act (stimulus package). We’ve also asked for forbearance on all of our mortgages (including our primary home) due to COVID-19. While we are thankful that we came through this from a position of strength (now more than ever we can’t encourage our friends and family to make sure they have an emergency fund!), but we are also thankful that I have a “day job” too (at least for now, anyways).
We are also thankful for our awesome guests! Even though so many have been forced to cancel so many reservations, our guests have been awesome to us. A few have rescheduled, many have written encouraging notes (one email even made Krista cry), and all have promised to return to St. George Island soon.
However, not all owners are in the same position as we are. Many vacation rental owners on the island use their vacation rentals as their sole source of income. For those owners (several of which we know), we are concerned.
We are concerned because we don’t know when this will end, and if it doesn’t end soon, homeowners will see nearly all of their expected rental income for the year disappear.
We are concerned because while property taxes have increased significantly over the last two years, property values are likely to decline.
We are concerned that declining property values and a significant decline in rental income could drive foreclosures in our area.
However, St. George Island is not the only place being hit hard by Coronavirus. Anyone that knows me well, knows that I’m a big numbers guy. Nothing gets me more excited than an excel chart! Unfortunately, the following charts don’t get me very excited.
As you can see in the chart below, the only bookings happening right now are for those that are trying to take advantage of steep discounts (and likely flexible cancellation terms) to find a crazy deal on a vacation rental home.
Typical cancellation rates for vacation rental homes in “normal times” are ~20% (our cancellation rates at St. George Island Beach Vacations are only 1%-2%), but cancellation rates have sky-rocketed to nearly 80% in recent weeks.
According to data from VRMIntel, more than 80% of vacation rentals in North Florida happen between March and August. As I mentioned before, if this pandemic lasts through the summer, it will devastate not only homeowners, but the entire economy of our area.
As mentioned before, bookings for vacation rental homes have fallen off a cliff in the last month. Florida vacation rental bookings have fallen ~90%.
This blog is not about complaining about where we are, and this is not a political blog. We expect things to get worse before they get better. As I mentioned earlier, as vacation rental owners, our days are filled with stress, a lot of unknowns and a complete lack of control of our future, but we continue to press on! However, we did want to let our readers know that there are a lot of people hurting out there (not just homeowners…we’re talking about restaurant owners, retail stores, and even charter captains), and when things return to “normal” we hope that everyone can support our economy and our homeowners on St. George Island and help it return to the vacation destination that we know and love.