Will the supply for short term rentals eventually slow?

Jan. 8—Whether it's a place that can store mountain bikes for a weekend's stay or a house that can accommodate extended family for a mountain reunion, the exponential growth of short-term rentals has changed the tourism landscape in Haywood County.

In the span of five years, from 2019-2023, the inventory of short-term rentals has increased by 130%.

Corrina Ruffieux, executive director of the Tourism Development Authority, notes the significant increase in these short-term rentals, especially since the pandemic.

"In our type of destination, when COVID hit, it completely changed the landscape literally across the world. Not unique to Haywood County, it's not even unique to the United States," Ruffieux said. "And that trend seems to have continued since 2020."

The rise of tourism and vacation rentals

And the inventory of short-term rentals isn't the only thing increasing. The number of booked listings has grown, as well.

The number of booked vacation rentals during October, often viewed as a peak tourism season in Western North Carolina, where leaf-lookers flock to the mountains to view the fall colors, has steadily grown in the past decade.

In October 2014, there were a mere 21 booked listings compared to 1,767 in October 2023. This, in turn, has increased the amount of occupancy tax revenue.

Room tax collected by overnight lodging just in October has increased from $142,151 in the 2013-14 fiscal year to $379,422 in 2022-23, a growth of $237,231.

Is it merely a coincidence that room tax has increased alongside vacation rentals?

"Our total occupancy tax collections in 2018 were one and a half million, but in 2022, they were 3 million. So we doubled in five years," Ruffieux said.

Rufieux explained that the shared economy was what really started the trend in the early 2000s but was adopted in more urban environments as opposed to rural environments and was a much slower adoption.

"They just made it completely accessible for anybody to find the product that they want and need without having to make phone calls," Ruffieux said.

The shared economy began to increase as people discovered new ways of "sharing" each other's stuff and making money doing so. And businesses like Uber, or Vrbo gained more popularity.

However, tourism began to really mirror the growth of this shared economy after the pandemic, when more people realized they could get a piece of the pie.

Growing together

When COVID hit, the demand for these homes began to increase, and subsequently, the supply of short-term rentals followed.

"Looking at our specific data, it was a pretty steady trend line growth from January 2019 through January 22. It wasn't an exponential curve, it's a pretty linear growth over that five-year period, but it's 130% growth in inventory, which is a very significant increase," Ruffieux said.

Jeff Hillis, who has owned Buffalo Creek Vacation Rentals for 15 years, has seen the short-term rental growth firsthand.

"We have a lot more short-term rentals now than we did 10 years ago. And that's really playing into smaller businesses like ourselves that rely on those rentals coming in to stay full," Hillis said.

Fellow TDA board member Natalie Hawkins, locations manager for Vacasa at Lake Junaluska, saw the demand for the lake's short-term rentals hit a larger growth spurt compared to the number of folks who stayed in hotels.

"It all kind of basically started really blossoming when COVID hit in 2020, you had more people because they couldn't stay in hotels. They wanted to have the security of staying away from other people," Hawkins said. "It started blossoming all over the United States during that period of time and just went crazy."

Hawkins' job changed as a direct result of this growth. She began working with Vacasa in January 2022 after working for Lake Junaluska vacation rentals. Hawkins had been doing everything by herself before Vacasa came in: reservations, home inspections, owner support. Working with Vacasa meant better management and fewer tasks for Hawkins alone.

Hawkins said that a lot of the retired Methodist ministers who had previously owned homes at Lake Junaluska, what once was an all-Methodist community, began to sell their homes, and people saw an opportunity to make their own money by renting properties out.

"Now, we're finding that a lot of those retired ministers, we still have some but not like they used to be, now have sold and decided to either move closer to family members or they have passed on, and their families really didn't want the homes," Hawkins said. "We're seeing a whole new group of people renting the homes, and some of the people had never been to Lake Junaluska until now."

Hawkins added that Haywood County is a great central hub for other travel destinations. Asheville, the Smoky Mountain Parks and Cataloochee Ski Resort are all great attractions within close proximity.

"A lot of investors have jumped on the bandwagon of investing in vacation home rental, and it's just all over the country. It's not just here in Haywood County," Hawkins said.

Changes in the tourism scape

Although short-term rentals have grown, hotels and motels have experienced a slight decline, Ruffieux said.

Hawkins spoke to the type of guests Lake Junaluska serves in their hotels versus their short-term rentals.

"A lot of people are doing vacation rentals because they can have a larger family group," Hawkins said. "More family members can come and stay in a home rather than a hotel room where you're only getting a maximum of two to four people in a room."

Hillis said that the rise in short-term rentals versus traditional motels means more people are just seeing an opportunity to make some money.

"If you take all that into account, nobody's hurting, we're seeing some declines, but overall, I think it's people are saying, 'Okay, there's a piece of this tourism pie to get a piece of if I have some free time with my house or a camper or whatever, then let's throw it up there,'" Hillis said.

He added that it's also not a simple feat to put the house on the short-term rental market.

"There's a lot that goes into managing that said, establishment and dealing with guests and taking the calls in working with them on pricing and arrival times and, you know, things like that," Hillis said.

"From the county's perspective, everything is still on the rise; revenues are on the rise, and so are abilities. But at some point, it's gonna have to plateau, there's gonna have to be a true saturation where there's gonna be a slowing of that increase in availability," Hillis said.

Hawkins notes a saturation point has already begun to sprout.

"This year, we're a little lower than the last two years in occupancy and revenues for the owners," Hawkins said. "And that's just basically because the market is so saturated."

In other words, the AirBNBs have become so diffused within the market that the supply is leveling off to be more than the demand.

"It seems to be across the board, not only just in Western North Carolina but also in general, the short-term rental market does seem to be waning a little bit. There's a lot more travel going abroad," Hillis added.

He said there's been a boost in U.S. tourism in Europe right now and people going back on cruises after being hesitant post-Covid.

"People are kind of getting that stuff out of their system again, where they couldn't do that recently," Hillis said. He predicts that the supply for short term rentals will begin to slow and plateau eventually.

"The investors that are coming in and buying properties and putting them on the market for those other agencies like Vacasa and whatnot, it'll be interesting to see how long those last," Hillis said. "Because for investors, it's all about making the money, and if we do get to a saturation point and they can't fill those spaces, numbers evolve like those, then, of course, our inventory will start decreasing. But I can't say that I've seen that or project it'll occur like that anytime soon."