Inlfation, Gas Prices, & Increased Travel Expenses

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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
4y

Inflation affects disposable income, which is what people use to take a vacation. If you have a choice between paying your housing bills, putting food on the table or going on vacation, you will prioritize the first two. 

Also keep in mind that COVID caused hotels to fall out of favor, because people didn't want to packed in with other people. That is starting to get back to normal. Hotels offer breakfast, convenient locations, house keeping, gym, pool and loyalty rewards. I like hotels because of flexible cancellation. Some STR offer this but some are very strict, even having me sign a contract. It can be pretty intense, especially if you think plans may change.

That all being said, inflation and gas has had minimal effect to date. Yes there are lots of people complaining about it, but it is only starting to have a real effect. Economy is strong and people are working, so people are getting by. If that changes, then you will see a real hit to the vacation market. 

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  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y

    In the Smokies, it certainly has.  Bookings have not decreased, but we are seeing guests coming from nearer cities.  Lots of bookings from folks living in Atlanta, Nashville, Charlotte, Louisville.  

    With the increasing airfares and costs to fill up, guests are naturally going to look for more economical ways to take a vacation.

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  • Dustin SandersBusiness Member
    OP
    Realtor · Pensacola, FL · Member since 2019 · 89 posts · 30 votes
    4y

    Hey Collin,

    Thanks for your reply. I've heard similar feedback from other STR hosts.

    I also read the article (link below) which gave me a better perspective on the topic. It sounds as though Skift's research found that roughly 60% of the people surveyed said that gas prices are going to impact their vacation plans & of that 60% there is roughly 1/3 also said that it will greatly impact their decision on vacation plans.

    It goes into saying that rural areas & small "quaint" type towns will be the biggest benefactor as vacationers are looking for closer, drivable vacation spots. It also mentions that vacationers are more likely to carpool to split the travel cost vs. driving separately.

    https://skift.com/2022/03/08/u...


    Dustin

    [email protected]850-529-3683
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  • Matthew R.
    Member since 2020 · 8 posts · 4 votes
    4y

    @Collin Hays, what about the length of the bookings? I would be curious if vacationers opt to book shorter stays to make up for the increased cost of gas or if on the other hand, they book longer stays because they can mentally spread that increased cost of gas over more nights.

    I imagine a lot of it just has to do with who your average customer is. Gas going from $3.5 to $5 in California is a deal-breaker for working families or those with several kids, but for those with a lot of discretionary income, it's just another cost of doing business, so to speak.

    2Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Matthew R.:

    @Collin Hays, what about the length of the bookings? I would be curious if vacationers opt to book shorter stays to make up for the increased cost of gas or if on the other hand, they book longer stays because they can mentally spread that increased cost of gas over more nights.

    No statistical variation yet. I do anticipate large, multi-family cabins to be the first ones impacted by any slowdown:  These properties are very expensive to rent, and require that multiple families have the means (and will) to make the vacation happen.  Thus, it is a considerably smaller slice of pie of potential guests.


    In 2008-10, I recall large cabins with indoor pools renting for well under $200 a night just to keep cash coming in.   

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    4y

    Inflation affects disposable income, which is what people use to take a vacation. If you have a choice between paying your housing bills, putting food on the table or going on vacation, you will prioritize the first two. 

    Also keep in mind that COVID caused hotels to fall out of favor, because people didn't want to packed in with other people. That is starting to get back to normal. Hotels offer breakfast, convenient locations, house keeping, gym, pool and loyalty rewards. I like hotels because of flexible cancellation. Some STR offer this but some are very strict, even having me sign a contract. It can be pretty intense, especially if you think plans may change.

    That all being said, inflation and gas has had minimal effect to date. Yes there are lots of people complaining about it, but it is only starting to have a real effect. Economy is strong and people are working, so people are getting by. If that changes, then you will see a real hit to the vacation market. 

    3Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    I haven't noticed any difference.

    I am between Atlanta, Columbia and Charlotte so I have a very drivable location.

    3Reply
  • Dustin SandersBusiness Member
    OP
    Realtor · Pensacola, FL · Member since 2019 · 89 posts · 30 votes
    4y

    @Joe Splitrock

    You bring up a lot of valid points that are troublesome for STRs. I like that you did because I have a few STRs and these are the topics that concern me moving forward.

    What are you strategically doing (or planning to do) with your future real estate portfolio?

    [email protected]850-529-3683
    1Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    4y

    You can add fertilizer prices along with the gas price you mentioned. All of my STR tenants are doing short term jobs at a fertilizer plant or a diesel fuel refinery. There is a lot of future work in the pipeline. The more money the refinery makes, the more they spend on maintenance and expansion.

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    No changes so far or into the future.....gas prices will settle down, and people always want to get away. A few more $$ is not gonna change that, and that's really all we're talking about.

    2Reply
  • Stacy Edwards
    Virtual Assistant · Langley, WA · Member since 2022 · 43 posts · 23 votes
    4y

    Hasn't seemed to affect the properties I work with, however, I feel like the majority of our guests are from the nearby big city or other bigger cities within the state.

    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    4y

    Nothing so far. We are still getting bookings. Just took 2 bookings yesterday for June and Sept. The peak time is already booked and has been since around Christmas. No cancellations. 

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  • Jaryn PiersonPro Member
    Investor · Pittsfield, MA · Member since 2019 · 88 posts · 49 votes
    4y

    No changes in The Berkshires on my end.  Still seeing consistent bookings as the calendars open up into the summer months.  As of right now about 90% of my bookings are coming from NYC / Boston metro areas, so all those guests are driving.  March is generally the slowest month for this area, shut down both properties and did some renovations.  Bookings for April and May are already looking strong and ramping up.

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  • Eric Bilderback
    Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
    4y

    I don’t think gas prices are harming me any.  I do fear there could be a recession the economy feels very shaky to me.

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