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ScribeBy: John P. McDermott of The Post and
Courier Staff
Originally Published on: 4/27/03
Sunny summer forecast seen for beach rentals
A month ago, Jeff Akers was thinking about summer -- and dreading it. "We went into April looking as if we were going to be a little bit behind pace compared to last year and the prior year," said Akers, who oversees 600 rental units at Kiawah Island Golf Resort.
Since then, the upscale seaside getaway has been teeming with vacationers, he said. Over Easter weekend, he said, the 540 villas and 60 private houses that the resort manages for their owners were fully booked, as was the 150-room inn.
"We probably turned away 50 people who were looking for rooms," Akers said.
"I've been on the coast for 13 years and I've never seen anything like it," he added.
With the high-dollar season just a month away, rental agents in Charleston's sun-baked beach communities are predicting a modestly bright forecast for the crucial June-August period. Inquiries are steady, rates are mostly flat but holding firm, and owners are not resorting to discounts and other incentives to fill their properties.
"Now that gas prices are going down, that's a big help," said Mark Steedley, owner of The Atwood Agency on Edisto Island.
Beach vacations have become big business, drawing tens of thousands of free-spending tourists each summer.
Veteran agents can recall that a $1,000-a-week rental raised eyebrows 15 or 20 years ago. The market began to take off in the early 1990s, when the insurance bonanza that followed Hurricane Hugo fueled a renovation and rebuilding boom, particularly near the East Cooper beaches.
The choicest rental properties now fall in the $5,000- to $9,000-a-week range during the peak season, and one -- an 11-bedroom beachfront home at 622 Ocean Blvd. on the Isle of Palms -- commands $14,500 for a seven-night stay.
The Charleston Metro Chamber of Commerce's Center for Business Research began tracking vacation rental figures in 1995. Since then, the number of available units in Charleston County has soared by 75 percent, to 2,816, the center said. In fact, that estimate is low because the precise number of properties is unknown. Not every rental agency participates in the inventory survey, and homeowners who manage their rental units themselves are not counted.
Even so, the center said summertime occupancy rates have remained fairly constant -- hovering between 60 percent and 70 per cent -- indicating that the sun-and-sand set is soaking up the extra capacity.
Like the rest of the tourism industry, the vacation rental segment was squeezed during past two summers by the slowing national economy and the lingering aftermath of the Sept. 11 terrorist attacks, said Randy Walker, president of Dunes Properties.
"We noticed a drop-off in vacation inquiries and vacation reservations," said Walker, whose company manages 300 houses and villas on the Isle of Palms, Sullivan's Island, Folly Beach and Kiawah Island.
The industry's response was to cut rates.
"The discounts started flying," Walker said. "People were getting 15 percent or 20 percent off of what were steady rates."
Bargain-hunters will be hard-pressed to find as many discounts this year.
"I don't see us doing that," said Amanda Johnson, vice president of property management for Dune Properties.
At the same time, booking habits are changing, Johnson said. An increasing number of time-pressed families are paying for the week but staying only a few days, she said.
"They're doing shorter vacations," Johnson said.
In addition, more beach renters are making reservations just a few weeks before their trips. "We're seeing that trend," Johnson said.
So are the agents at Great Beach Vacations, which oversees 800 properties in most of the major rental markets, from Seabrook Island to Wild Dunes Resort.
Much of the hesitation stems from uncertainties related to the job market and the war in Iraq.
"People are booking closer in, no question," said Bill Daniel, partner and general manager of Great Beach Vacations, the largest rental agency in the Charleston area. "But as they do that, the downside is that they run the risk that the unit they want may not be available."
Meanwhile, competitive pressures are building, Daniel said.
"The hotel industry is really discounting, and that does affect us somewhat," he said. "We also compete with cruise lines because a cruise is a vacation choice. Right now, the cruise lines are really hurting, and it's very inexpensive to go on a cruise."
For the most part, though, rental rates have remained firm, if flat.
"We've not had to discount at all ... and we weren't overly aggressive with any increases," said Sandy Stone, owner of Island Realty, which manages 400 homes and villas at the East Cooper beaches. "We pretty much held to last year's prices except on those properties that were sold out 52 of 52 weeks."
The pricey oceanfront homes are the first to go, typically to repeat renters, Stone and other agents agreed.
"Everyone wants to get those," he said. "People usually make their reservations for next year as they leave."
The cheaper units also are filling up quickly.
"But the stuff in between is suffering," Stone said. "I have some inventory holes that I can only attribute to pricing and location."
He suspects that some wary, cost-conscious vacationers are trading down this year.
"I envision families of six or seven are now renting two-bedrooms where they used to rent a three-bedroom unit that cost them $200 to $300 a month more," Stone said.
Still, he expects his business to be up this summer. Stone added more properties to his firm's rental stock this season, including the vacation units on remote Dewees Island.
"That has allowed more diverse choices for the consumer," he said. "Some customers come in and stay at a high-end property and come back for another stay in one of our less expensive properties."
Also, Stone didn't cut his advertising budget last year.
"I'm having to spend more to realize more," he said.
Internet bookings also are picking up. Island Realty, for instance, began accepting online reservations last August and is now closing 100 deals a month through its Web operation.
"That's real exciting, even though in the big picture it's not a lot of bookings overall," Stone said.
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