Smoky Mountain Slow Down?

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Smoky Mountain Slow Down?

Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes

The last 3 weekends the traffic on the parkway from Sevierville through gatlinburg has been pretty much a ghost town on weekend evenings which ordinarily are jammed traffic. The last few years it was wall to wall this time of year. Went to the Alamo steakhouse last night and walked right in. It’s starting to look and feel ominous, I know summer will pick back up around here but this is starting to seem like it might be a 7 month season here now.

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Nathan W.

Austin, TX · Member since 2013 · 153 posts · 104 votes

Quote from @John Carbone:

My general rule of thumb is if you have any vested interest in telling me to do something I generally filter your advice out. When you filter out all the Realtors / Property Managers / Lenders the picture starts to look a little clearer.

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Ken Boone
Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
3y
Quote from @Collin Hays:

One of the biggest traps we see in a down cycle is this:  The investor bought the home thinking "well, even if demand drops 10 percent, I'm still in good shape."

In actuality, a 10 percent drop in demand can translate into a 30 to 40 percent decline in rents.

A percentage drop in rent is not linear with a percent drop in demand. Two very diffferent things.

Seems like we have to re-learn this economics lesson every decade or so. It's painful to watch. I have homeowner clients right now that are asking "why are we not making money?" I have to be honest and tell them "you aren't going to make money for a long time - you paid far above fair market value for your property."

100% Most people that bought in the last 18 months with 10% down loads out of FOMO are freaking out about now seeing that the market seems to be returning to pre covid levels.
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John Carbone
OP
Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
3y
Quote from @Ken Boone:

Quote from @Collin Hays:

One of the biggest traps we see in a down cycle is this:  The investor bought the home thinking "well, even if demand drops 10 percent, I'm still in good shape."

In actuality, a 10 percent drop in demand can translate into a 30 to 40 percent decline in rents.

A percentage drop in rent is not linear with a percent drop in demand. Two very diffferent things.

Seems like we have to re-learn this economics lesson every decade or so. It's painful to watch. I have homeowner clients right now that are asking "why are we not making money?" I have to be honest and tell them "you aren't going to make money for a long time - you paid far above fair market value for your property."

100% Most people that bought in the last 18 months with 10% down loads out of FOMO are freaking out about now seeing that the market seems to be returning to pre covid levels.

This forum was full of people constantly pumping STR as a 10 month season in the smokies. 4 bedroom locks for 100k+

I also use the Sevierville outlets as a good indicator, it’s also been ghost town. Asked some cashiers how this compares and ones who have been here a while are saying “never seen it like this”
if you shift from a 10 month market to a 7-8 month market prices need to drop 25 percent just on that shift in demand not even accounting for additional supply and Competition or a slow down in the economy. If you get the tri fecta it could look ugly.
5 Reply
Nathan W.
Austin, TX · Member since 2013 · 153 posts · 104 votes
3y
Quote from @John Carbone:

My general rule of thumb is if you have any vested interest in telling me to do something I generally filter your advice out. When you filter out all the Realtors / Property Managers / Lenders the picture starts to look a little clearer.
9 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
Hey @Nathan W., that kinda doesn't make sense. I hear you when you say that people with vested interests in your business, but they are also often the experts in specific areas so filtering them out means you lose that perspective.
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John Carbone
OP
Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
3y
Quote from @Michael Baum:

Hey @Nathan W., that kinda doesn't make sense. I hear you when you say that people with vested interests in your business, but they are also often the experts in specific areas so filtering them out means you lose that perspective.

I think there are also a lot of people here who don’t have a vested interest in selling stuff that are also experts in the area that should be listened to. I’d much rather have insight from an investor with a few million in real estate in a market instead of someone who just sells real estate. I will make an exception for the smokies @Collin Hays is a PM but he tells it like it is and doesn’t try to spin anything for business, very rare.

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Nathan W.
Austin, TX · Member since 2013 · 153 posts · 104 votes
3y
@Michael Baum You're right, my statement was probably too broad. There are some great people on here that have some good insights. Collin H and Luke Carl are great examples of people I listen to.
An example of what I filter out is when someone says "Is Myrtle Beach a good market to invest in" and a realtor answers, "Yes, and I can help you buy there."
1 Reply
Mark S.
Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 474 votes
3y
@Nathan W. Yep, an awful lot of those type of posts. Makes it seem like there isn’t a bad place to invest anywhere!
0 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
May is usually a busy month for real estate, so don't be tempted to drop your - accept them! With more in the market than any other month, now is the time to get the best deal.
[email protected]832-889-5607
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Wilson Hunter
Investor · Greenville, SC · Member since 2020 · 210 posts · 302 votes
3y
Quote from @Nathan W.:

@John Carbone I was there a couple of weeks ago and I thought it felt pretty dead too. It will be interesting to see April and May's numbers. I expect to see a decline.
I keep hearing about more and more layoffs. I think we are likely to hit a recession which is why it's so important to stress test your numbers when you make an investment. Unfortunately most people don't. I'm a long term buy and hold investor though and I think even if we do have a slow year or two it will bounce back.
I also think inflation is real and just getting started. I keep seeing stories like Raising Cane's raises average wages to $19.50 an hour. People got used to those government checks during the pandemic and they aren't willing to live with less. That's going to force companies to pay more and keep inflation going for a while.

As far as the slow season, I always heard that January, February, May and September are the slow months.

Raising Canes was my first job 14 years ago at $7.25 per hour
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Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
I hear you @Nathan W. and @Mark S.. I don't mind anyone on here offering up their services to people looking to buy. I do appreciate having massive resources here to tap into as needed.
You know, you can make money just about anywhere investing in real estate. Whether it be STRs, LTRs, wholesaling etc etc. There are opportunities everywhere in the real estate zone.
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John Carbone
OP
Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
3y
Did the gatlinburg trail this evening (friday memorial day weekend) didn’t see one person on the trail (2 miles out and back to the visitor center) and the weather perfect. Made it from downtown pigeon forge to the park entrance at 6pm and didn’t stop once. Demand seems to have fallen off a cliff here.
2 Reply
Cheng Chu
Member since 2021 · 24 posts · 6 votes
3y
@John Carbone
Hard to imagine smokys not getting enough visitors. Maybe impending recession has something to do with it
0 Reply
Luke CarlPro Member
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
3y
Remember when posts on this forum used to get one or two replies and everyone thought we were out of our minds to do vacation homes? lol
All of my smokys properties are slammed as usual.

Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
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John Carbone
OP
Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
3y
Quote from @Luke Carl:

Remember when posts on this forum used to get one or two replies and everyone thought we were out of our minds to do vacation homes? lol
All of my smokys properties are slammed as usual.

What does this show? Not questioning that summer is going to have visitors…but you are saying you are meeting 2021/2022 numbers? Everyone I talk to here is saying rentals are down 20 percent overall for 2023. It’s a fairly large sample size as well. May was a disaster for many. New construction is being halted on many projects (this is a good thing), realtors are quitting in the area due to slow sales. a friend of mine is a realtor and also works with PM companies (I know saying PM on here is blasphemy) but all the insiders are unloading their properties right now before the fall hits.
I’m not saying the smokies is a bad investment, but supply is definitely greater than demand right now. I’m going to hold through this downturn here, but I’m not going to be oblivious to the reality on the ground here.

Also showing a snapshot of your summer bookings that were most likely booked out several months ago is not indicative of the current situation. Something changed abruptly between April and May.

3 Reply
Matt Mertz
Leander TX · Member since 2020 · 179 posts · 150 votes
3y
That's the pricelabs dashboard showing your occupancy rate at 7/30/60 days. Luke is doing way better than our cabin. We're 43%/60%/55%.
We've noticed a couple of things this year.
1. We're doing far better than last year. Revenue first half of this year is +57% above last year.
2. We've noticed time between booking and stay has shortened.
Our listing started in Dec 2021 so I think the better performance this year has to do with getting more reviews and superhost. We're super happy but the tighter booking times worry us because we have a big cabin that typically requires more coordination to book. We're hoping that the rest of this year will continue to be as great as the first.
The other thing I wanted to note is that we didn't get the better numbers by cutting our rates. We have a new construction with fantastic views so we've held firm on that.
1 Reply
John Carbone
OP
Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
3y
Quote from @Matt Mertz:

That's the pricelabs dashboard showing your occupancy rate at 7/30/60 days. Luke is doing way better than our cabin. We're 43%/60%/55%.
We've noticed a couple of things this year.
1. We're doing far better than last year. Revenue first half of this year is +57% above last year.
2. We've noticed time between booking and stay has shortened.
Our listing started in Dec 2021 so I think the better performance this year has to do with getting more reviews and superhost. We're super happy but the tighter booking times worry us because we have a big cabin that typically requires more coordination to book. We're hoping that the rest of this year will continue to be as great as the first.
The other thing I wanted to note is that we didn't get the better numbers by cutting our rates. We have a new construction with fantastic views so we've held firm on that.
I’m seeing those occupancies you mention at many many many properties. How are you making 57 percent more this year with occupancy rates you mention? Is it possible you just underpriced it last year to get bookings and reviews? This is the general strategy and it makes sense to do when starting a property out.
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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Everyone, and I mean EVERYONE, is off at least 20 percent for June in rates and/or occupancy.

EVERYONE.

Go to Airbnb or VRBO and check calendars. This isn't even a discussion.
[email protected]806-672-7102
SMOKY MOUNTAIN FALLS INC.51 Review
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Ken Boone
Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
3y
Quote from @John Carbone:

Quote from @Luke Carl:

Also showing a snapshot of your summer bookings that were most likely booked out several months ago is not indicative of the current situation. Something changed abruptly between April and May.

This is how May was before covid. May has always been a drop off month. Spring break is over and kids are not quite out of school yet. Expect the same come end of august into September. Yes I do agree we are seeing less demand but everybody and their brother visited the smokies in the last 2 years and I think some of them want to go somewhere else this year. To me it just feels like we are back to pre-covid times. And then we are also competing with a number of folks that bought in last year at super high prices and not making bank like they expected and are slashing their prices like crazy. Many visitors are going to change bookings for price alone. Unfortunately those that doing that are going to find out that strategy is still not gonna work in the long run.
0 Reply
John Carbone
OP
Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
3y
Quote from @Luke Carl:

Remember when posts on this forum used to get one or two replies and everyone thought we were out of our minds to do vacation homes? lol
All of my smokys properties are slammed as usual.

the data seemed too unbelievable based on dozens of people I talk to here and what I see so I had a look myself to do some “enemy method” analysis on. You should contact your virtual assistants and make sure they are synching your calendars correctly from price labs to Airbnb. Seems like a lot more is open on Airbnb than your labs shows. The 30a properties look strong.

as Colin said, we don’t know anybody who isn’t seeing 20 percent declines apart from a few one offs.

1 Reply
Jim MuellerPro Member
Rental Property Investor · Central NY · Member since 2019 · 31 posts · 21 votes
3y
We are no experts for sure. We purchased a 2/2 cabin, no great view, 915 SF in PF just off the Parkway and went live Oct 1, 2021. Our Jan 1 - June 30, 2023 is up approximately 5% compared to the same time in 2022. I'm not sure why other than I constantly try to tweak our listing to get bookings daily. This is the only STR we have.
0 Reply
Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Quote from @Jim Mueller:

We are no experts for sure. We purchased a 2/2 cabin, no great view, 915 SF in PF just off the Parkway and went live Oct 1, 2021. Our Jan 1 - June 30, 2023 is up approximately 5% compared to the same time in 2022. I'm not sure why other than I constantly try to tweak our listing to get bookings daily. This is the only STR we have.

What does your June look like?
[email protected]806-672-7102
SMOKY MOUNTAIN FALLS INC.51 Review
Website View Page
0 Reply
Jim MuellerPro Member
Rental Property Investor · Central NY · Member since 2019 · 31 posts · 21 votes
3y
0 Reply
John Carbone
OP
Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
3y
Quote from @Collin Hays:

Quote from @Jim Mueller:

We are no experts for sure. We purchased a 2/2 cabin, no great view, 915 SF in PF just off the Parkway and went live Oct 1, 2021. Our Jan 1 - June 30, 2023 is up approximately 5% compared to the same time in 2022. I'm not sure why other than I constantly try to tweak our listing to get bookings daily. This is the only STR we have.

What does your June look like?
Also, when did you get your June bookings is a big question. My 4 bed has been booked up at high prices for June and July back in February. My prices were “low” at the time. I had a cancellation for first week of June beginning of may. I halved my asking price of what I originally got and it’s still unbooked.
0 Reply
Matt Mertz
Leander TX · Member since 2020 · 179 posts · 150 votes
3y
Quote from @John Carbone:

Quote from @Matt Mertz:

That's the pricelabs dashboard showing your occupancy rate at 7/30/60 days. Luke is doing way better than our cabin. We're 43%/60%/55%.

We've noticed a couple of things this year.

1. We're doing far better than last year. Revenue first half of this year is +57% above last year.

2. We've noticed time between booking and stay has shortened.

Our listing started in Dec 2021 so I think the better performance this year has to do with getting more reviews and superhost. We're super happy but the tighter booking times worry us because we have a big cabin that typically requires more coordination to book. We're hoping that the rest of this year will continue to be as great as the first.

The other thing I wanted to note is that we didn't get the better numbers by cutting our rates. We have a new construction with fantastic views so we've held firm on that.

I’m seeing those occupancies you mention at many many many properties. How are you making 57 percent more this year with occupancy rates you mention? Is it possible you just underpriced it last year to get bookings and reviews? This is the general strategy and it makes sense to do when starting a property out.

Pretty simple explanation.  We started off pretty slow. I guess it was the new listing and lacking reviews.
For comparison, we had 66 nights booked 1st half of 2022. This year we have 101 nights and there's still some days in June left.
I look back at those numbers in 2022 and wonder why we weren't so scared. But 2022 was a good year despite the slow start.
0 Reply
Matt Mertz
Leander TX · Member since 2020 · 179 posts · 150 votes
3y
We have 21 nights / 6 different groups booked for this June. But we didn't cut prices. Two of those booked in May.
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