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It’s A Last-Minute World
What’s In Store For The 2009 Summer Rental Market
By Selena Chavis
Every peak season along the Alabama and Northwest Florida gulf coast comes with its own share of challenges. Whether it’s a market rebuilding from the devastation of a major hurricane, high gas prices or a teetering economy, there always seem to be factors at play that could have major impact on the rental pace of the condominium market.

Hindsight is always 20/20, as the saying goes, and as condominium owners and management companies prepare for the 2009 peak tourist season, they are all hoping to make decisions that won’t leave them looking back with regret. In a tough economy, here’s what professionals across the gulf coast are seeing as some emerging trends.

“Last year, we were affected by the higher gas prices,” said Annie Holcombe, vice president of business development with Oaseas Resorts, a rental management company in Panama City Beach. “This year, people are waiting a lot longer to make a decision about their vacation.”

“Hesitant” is how many are describing the average tourist looking to make vacation plans for the spring and summer months. “There’s a very apprehensive feeling in the industry,” said Mike Foster, vice president of marketing with the Alabama Gulf Coast Convention and Visitors Bureau (CVB). “The reservations are slower at this point than they were last year.”

Destination growth indicator statistics tracked by the Alabama Gulf Coast CVB revealed that condominium occupancy rates were down more than 10 percent in January as compared to January 2008, but Foster said he expects the summer to be brighter. A recent poll of 1,000 gulf coast visitors and potential visitors revealed that 85 percent were planning to take a family vacation this summer.

Gambling For Good Deals
Sarah Kuzma, corporate relations director for Meyer Real Estate, said she also believes people are planning to take vacations this summer but are waiting until the last minute to book trips. The company just ran a promotion to encourage earlier bookings and garnered a solid response, giving her reason to believe there is hope. “We believe the response indicated that vacationers are planning to spend money. They are just waiting until the last minute or until they see that extraordinary deal,” she said. “We are seeing that families and couples are finding a way to finance a vacation. That’s comforting.”

The trend of last-minute bookings has been coming for a while, according to Dan Rowe, president of the Panama City Beach CVB—and it’s not just a symptom of today’s economy, he said. “The booking window has gotten very short. People are shopping for the deals,” he said, pointing to the fact that the travel industry has taught consumers that waiting can pay off in lower prices.

Holcombe agreed, adding that she believes “potential visitors are going to wait and hope we drop our rates or loosen our policies.” The “policies” Holcome mentioned refer to the long-held strategy by many rental management agencies to require guests to stay a full week during the peak tourist season.

Last year, Holcome said she noticed a 30-day booking trend, but that timeframe has tightened to a week or even three days prior to arrival. And for some rental management firms, the number of walk-ins is growing. This is the case for Sterling Resorts, said Tracy Kundey, president of Pineapple Management Services Inc. and Sterling Resorts. “It surprises me that we are seeing walk-ins,” she said. “Tourists are really gambling now for deals. It tests your nerves, that’s for sure.”

Marketing, Creativity Make A Difference
Recently acquired by Texas-based Encore Enterprises, Sterling Resorts is an anomaly of sorts in that bookings as of March were actually higher when compared to the same time period in 2008. Kundey explained that the organization had found its success by reorganizing to focus more resources into sales and marketing efforts, a strategy that is often difficult to reconcile when budgets are tight.

“When you look at trends, April 2008 was sort of the bottom for Sterling,” he said, pointing to a more than 40 percent drop in revenue over April 2007. “Encore bought the company in September, and by December, we really reversed that trend.”

The company chose to cut resources in operations and hired dedicated sales representatives in November. Spending was also “beefed up” for marketing, promotions and advertising, including doubling the monetary resources allocated to Web optimization. “We’re maintaining a pace ahead of the prior year across the board,” he said.

Panama City Beach is taking a similar approach toward marketing at a time when many organizations feel a natural pull in the opposite direction, Rowe said. Pointing to the need for the destination to be very proactive in attracting new visitors to fill a substantial increase in inventory, Rowe said the CVB is enhancing its marketing plan this summer. “We are weeks away from launching that program aggressively,” he said. “Even though people are waiting to book, we still need to be out there when people are thinking about their travel plans. We need a sustained presence.”

While the hesitance of many travelers to book their vacations early is causing some angst in the industry, Rowe said, “we don’t anticipate a decrease in visitation.”

Instead of hitting the panic button and lowering rates, Oaseas is trying some promotions to encourage vacationers to book. One promotion, named “Sunshine Insurance” is geared at differentiating the organization’s rentals from the rest of the pack. “If it rains, we will give them spending money to go and do other things,” she said. “It keeps them from canceling or leaving early once they are here.”

The company is also providing a layaway program of sorts to encourage early bookings. Clients are invoiced at regular intervals for their stay. “It’s something we borrowed from the cruise industry,” she noted.

Exploring New Markets
Sterling Resorts and Oaseas are also both going after the sports events and SMERF (social, military, educational, religious, fraternal) markets to beef up bookings. “If the economy is bad, people either play or pray,” Holcombe laughed. “If you work the religious and sports markets, they are still going to come to you.”

Foster also noted that the fact that the gulf coast region is a drive-to market should also work in everyone’s favor. “The drive market last year favored us when gas prices spiked, and I think it will favor us again,” he said. “Family vacations are not something people give up easily.”