Three Reasons Vacation-Rental Owners Need To Factor Wellness Into Their Investment Decisions

Clark Twiddy is the President of Twiddy & Company, a hospitality and asset management firm along North Carolina’s Outer Banks.

There is a popular adage that reminds us, “If you don’t make time for wellness, you’ll be forced to make time for illness.” Even in this new age of seemingly limitless uncertainty, one Covid-19 lesson we can virtually all agree on is the importance of making time in our lives for both mental and physical wellness. Our own personal journeys have shown us the challenges stemming from the mental and physical strain of enduring a lengthening pandemic. Among many things influenced by our recent experiences, how we choose to vacation and what we value in our time away from home stands out. This year has also made clear new reasons for those providing vacation settings — owners and investors — to include wellness in the many factors influencing the decision to invest in a property through purchasing or upgrading it.

1. Rentals Are Sticking Less To Distinct Seasons

Look no further than the boom in family vacations. Across America, we’re traveling short distances as a family like never before. Along North Carolina’s Outer Banks, for example, the traditional summer season has been eclipsed by much more sustained demand for homes and experiences that support our own sense of happiness and well-being. For many coastal destinations close to urban centers, property managers are reporting record revenues outside of summer seasons. In a write-up on an industry conference, analyst Amy Hinote briefly details this trend and shares the analysis from one rental manager who predicted rentals could close for the rest of the year — and properties would still come out on top. This is welcome news to investors — and a trend that’s changing the business model of vacation rentals. Operating revenues are reflecting this change in business model giving owners the chance to make investment and maintenance decisions that reflect more demand, more usage from guests and more value in exit strategies.

2. Families Are Investing In Wellness

Wellness should be considered a factor in investing because it’s an increasing factor in budgeting disposable family income. Smart professionals and family planners right now are setting aside budgets for rest, recuperation and wellness benefits that come with vacations. In my work at a hospitality and asset management firm, I recently spoke with one family that allocates 10% of their shared annual take-home income to a two-week vacation. Family budgets may have already included line items for vacations, but Covid-19 has reminded us all the importance of unplugging. Just as we develop investment strategies around health care, retirement accounts, college savings plans and so on, new investments in wellness are competing head-to-head with more with other items in the family budget. 

As the impacts of extended stress and isolation become more evident in mental and physical health reporting, wellness investments in the form of experiences can become more important. The CDC reports that more than 40% of Americans are experiencing elevated levels of emotional distress. Aside from everyday activities like walks outside and adequate rest, quiet vacations where the demands of school and work are less or even nonexistent can act as an antidote to stress.

3. Covid-19 Doesn’t Have An End Date — Yet

As awareness of needing time for both mental and physical wellness continues, we are rapidly developing capabilities to confront the many side effects of Covid-19. If on behalf of ourselves and others we choose to prioritize wellness, then like with any other priority it will have to be resource-supported, time-based and designed with clear relationships around decisions. 

While this is an important perspective personally, it’s also helpful to investors seeking to weigh the reliability of annually recurring revenue streams around vacation-oriented investments. The longer Covid-19 uncertainty remains, the longer this market change – and corresponding revenue stream – will last. As vacationers continue to endure the pandemic and its potential emotional scarring, their newfound or renewed appreciation for vacations may impact demand for short-stay rentals years after an effective vaccine becomes widely available.

As we reflect on our experiences so far during Covid-19, there’s a subtle new priority emerging or reemerging in many of our lives. It’s the unapologetic and actually quite healthy investment in our own wellness in the form of a great vacation. Owners and investors should pay attention to the renewed embrace of wellness and the many ways to find it — including vacations. Imagine, for a moment, if you only dealt with people who were just back from a truly refreshing reprieve from the chaos. That’s a better kind of pandemic to be sure.

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