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Monday, May 17, 2021

Beach property owners, hotels and real estate agents scramble to salvage the summer

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Christopher Kersey
Christopher Kersey
Christopher Kersey is an award winning reporter with 13 years of experience in journalism who has written for five different newspapers, including two in Delaware.

The Boardwalk Plaza Hotel in Rehoboth Beach

The state’s ban on short-term rentals ended Monday, providing some hope to hotels, rental owners and real estate agents that the summer season could be salvaged.

While the industry hasn’t quantified exact losses, one realtor said the short-term rental ban had cost their clients hundreds of thousands of dollars in canceled bookings.

Governor John Carney instituted the ban on April 7 as part of his State of Emergency orders to stop the spread of COVID-19. He lifted the ban effective June 1.

 

2020 was on track to be the best spring ever for beach rental properties

Sharon Palmer with RE/MAX Realty Group in Rehoboth

Sharon Palmer, a realtor with RE/MAX Realty Group in Rehoboth Beach, said the firm was on its way to a record spring when the ban went into effect.

“We had heavy bookings. It looked like it was going to be a fantastic year. We had the best March, the best April and the best May we’ve ever had.

“And then, you know, here comes the coronavirus and puts a halt to everything. So, all of that money had to be refunded [to the renter]. And not only did the homeowners have to refund it, we had to refund it, too,” Palmer said.

RE/MAX has salaried real estate agents, but the company is paid commissions and “has to give thousands of dollars back in commissions,” when the renter cancels,  she said.

 

Despite the financial hardship, Palmer has optimism about renting vacation homes this summer.

“There have been a ton of cancellations [of rentals] going into June because people are still scared,” but just as many have been calling to rent the properties since the ban was lifted.

Visitors to the beach now looking to rent for a month

Palmer says the lifting of the short-term rental ban had an immediate effect. “The phone has been ringing off the hook…I think it will be an okay June. But it won’t be a gangbuster. By the time we get to July and August, I think we’ll be okay,” Palmer said.

 

Instead of weekly rentals, people have been renting for multiple weeks such as “a month at a North Shores house,  a month at a house right in town Rehoboth. So, I mean, we don’t normally see that,” said Palmer.

People are renting homes at the beach so they can stay there and work from home. “Or they’ve been just cooped up so long [at their own home], they are saying, ‘Let’s get the heck out of Dodge.”

Hotel business at Delaware’s beaches hit bard

In addition to impacting vacation home rentals, the hotel business at the beach was also hard hit during the pandemic lock-down, suffering particularly from restrictions for out-of-state visitors.

In the Rehoboth area, there were zero occupancies at the hotels on April 8 and April 15 (both Wednesdays) compared to more than a thousand rented rooms on Wednesdays last year in the same time frame. 

The weekend numbers also were dramatic. The rented room numbers went down by more than half for one night during the March 14 weekend this year—from 1,112 occupied rooms that night compared to 2,404 rooms last year on a similar weekend night.

 

Occupancy numbers continued dropping rapidly in April and May. The most recent statistic shows that for one night during the May 15 weekend,  there were only 274 rooms rented compared to 3,041 rooms for one night during the May 17 weekend last year.

Beau Zebley, president of the Delaware Association of Realtors, said the June 1 removal of the short-term rental ban combined with allowing non-residents to rent may have come just in time to salvage the summer. “Anything after mid-June would be a disaster for us. That’s when they start to pick up.”

“So certainly, there is an economic impact [during the ban]. But we’re looking forward to welcoming people to the beach and to helping them be safe while they’re here,” said Sandi Bisgood, president of the Sussex County Association of Realtors.

 

A collection of the business groups is trying to estimate a dollar figure for the overall losses sustained, but coming up with an agreed number is difficult because people disagree on when the beach home rental season starts,  Zebley said. Also, not all property owners rent their homes through a realtor.

According to the Delaware Tourism Office, tourism’s contribution to the state’s GDP was $3.5 billion in 2018. Other statistics for that year:

• There were 9.2 million visitors to Delaware.

• The Delaware tourism industry is the fourth-largest private employer in the state, accounting for 44,030 jobs (full-time equivalents).

• Tourism in Delaware generated $545.1 million in tax revenue. Without tourism, each Delaware household would pay an additional $1,562 in taxes a year.

 

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