Mid-year state of the union for my homeowner clients

[Collin Hays]

I sent this out today. Thought it might be helpful to you, whatever corner of the country you are invested in.

Greetings Smoky Mountain Falls homeowners! I hope that this email finds you well, and you are enjoying these long days of warm weather that summer brings.

I wanted to give you all a quick “state of the union” on where we are in terms of our vacation rentals this summer in the Smokies. No doubt, you have heard that travel to the Smokies is down quite a bit from 2024, which was also down some from 2023. The travel industry across the country is down this summer. I am getting inundated with social media blasts and postcards from the airlines, cruise ships, and Disney offering substantially discounted trips. That tells me things are down in the industry.

Specific to the Smokies, it is far too early to give actual data on visitor counts to Sevier and Cocke County – we won’t see those until September and October – but our own business shows that we are off 13.7% for June over last year, and indicators for July are similar. It is too early to tell much about August and September. Lodging sales in the Smokies declined in Quarter 1, year over year, ranging from -6.5% to -12.5%, depending on whether it is Gatlinburg, Pigeon Forge, Sevierville, Sevier County, or Cocke County, although Cocke County is down measurably more than the others. I expect tax receipts for Q2 to be down an even greater percentage than these figures.

Why are we down? Two reasons: Macroeconomic factors – concerns about a potential recession, federal government policies, uncertainty about the federal budget and tax code, tariff concerns, and so on. Regardless of your and my political bent, our government can make people feel nervous, and when people are nervous, they don’t spend as much on “want to” things such as a family vacation. Right now, people are a bit nervous. I talk to other businesses and merchants all the time – daily – and the pulling back by consumers is near universal currently. Restaurants, retailers, home building, and lodging.

The second reason we are down is there is currently an oversupply of cabins in the TN Smokies. This is very similar to the 2008-2011 cycle. I purchased my first cabin in the Smokies in 2005, at a price that I thought was reasonable. But three years later, it lost almost half of its value on paper, because the Smokies became overbuilt, traffic was down, and everyone was selling. I was in it for the long game though, and after twenty years, it is one of the best investments I have ever made.

Meanwhile back at the ranch, this morning I looked at the number of available properties this weekend for guests of 2 or more. Here is what I found:

Gatlinburg, 707 homes available

Pigeon Forge, 986 homes available

Wears Valley, 223 homes available

Cobbly Nob, 68 homes available

Cosby, 86 homes

In summary, currently in the market we have more rentals than guests, and that is driving down occupancy and rates. I have a very nice two-bedroom cabin in Gatlinburg, but it is difficult to fetch the typical $300 a night for it, when huge McMansions down the road are asking less than that and still sitting empty. This phenomenon is part of the market cycle in the Smokies, so it too shall pass. Right now, our challenge is to keep occupancy as high as possible while keeping rates as high as possible. We want to avoid cutting rates too soon or too late. We also want to be very quick to respond to inquiries – generally under an hour – to maximize our capture rate.

Another initiative we have begun is a MUCH more thorough inspection of our cabins by Angel and David. I was at one of my own cabins three weeks ago, and just felt like some things were getting passed over that needed attention. So, I implemented a more rigorous inspection plan. Angel and David have a schedule for inspecting all properties. When there are items that need attention at your cabin due to this tighter process, we will notify you what those items are, give you our recommendations, and give you an estimated cost to bring everything up to snuff.

I know that no one is particularly in the mood to spend money on their cabin right now, but it will be very important that things are kept tip-top to keep positive reviews coming in, which then impact your future rental revenues.

As always, if you have any questions or concerns, you can contact me directly at (806) XXX-XXXX. There is no such thing as a dumb question. Angel, David, and Cammie are also happy to help you. I am most thankful for all three of them. Each is very conscientious, and we collectively want to do a good job for you.

Until next time, grace and peace to you.

Collin Hays

[Collin Hays]

Quote from @John Underwood:

Colin, what are the numbers for booked cabins so we can see booked vs unbooked.

Are there really more empty cabins than booked ones?

Is there a big difference for booked vs unbooked for a 6 bedroom cabin vs a 2BR?

I don’t have time right now to give you a full answer, but there are still far more cabins booked than not booked. I don’t know that I have ever witnessed a time in the Smokies where unbooked outnumbered booked, in the summer months at least.

We won’t see that unless there is a major black swan event.