Villa Rental Business Starting To See Glimmer of Summer Sunshine

Villa Coco de Mer Photo Courtesy of Suite St. John

Like most in the hotel industry, St. John villa businesses have seen better years. But it seems a little summer sunshine is beginning to break through the dark clouds brought on by the recession.

“It looks to me like we are going to be up 8 to 10 percent for all three summer months compared to last year,” said Richard Matheny, owner of Suite St. John Villas and Condos. “I think it will continue to get a little better, but I still think we are two or three years away from doing as well as we did in 2008, which was the best year we have ever had.”

Suite St. John increased their advertising budget  by 50 percent over last year, honing in on online ads, revamping its website by adding Google maps to its properties and marketing individual properties on vacation rental websites — efforts Matheny believes kept his occupancy rates from dropping.

“We’ve had to discount properties more last year than previous years and we have kept the same low prices for this year, but what I am seeing is that I am getting advanced bookings for next winter and people are not asking for the discounts,” he said. “So that is encouraging.”

The villa rental business could be better, but it also could be a lot worse, said Kathy McLaughlin, owner/president of Island Getaways.

She said May 2009 was better than May 2010, and June, July and August look like they will be down in occupancy by about 20 percent from last year.

“I think we did better last year because a lot of people had booked in advance before the bottom fell off and many of them didn’t cancel because they wouldn’t get their money back,” McLaughlin said. “What I am seeing now is that people are booking more last minute than they have in the past.”

McLaughlin said a new trend occurring is that people are starting to book cheap airfare first and securing villas later, rather than the other way around.

“And everybody is asking for a discount even though most of my owners had already lowered their rates,” she said. “St. John has never been a discount destination, so we are ready for that to be over. But the good news is that people are still coming here and we are a U.S. destination so people don’t have to get a passport which helps us.”

Dick Clark of Caribbean Villas and Resorts is also noticing the lack of visibility in the resort industry brought on by the recession.

“Rather than booking many months in advance like years past, any projection that involves more than two or three months out has limited visibility,” he said.

Last year business was “pretty good” considering it was a very tough year for the hotel industry, according to Clark, who said Caribbean Villas and Resorts kept occupancy up by dropping room rates.

“By putting great villas and condos on sale, you keep your occupancy rates up, but you aren’t as profitable,” he said. “We dropped them last year and we haven’t been able to raise them yet.”

Although the American economy has stabilized and improved, Clark said the big factor preventing the resort industry from doing better is unemployment.

“People who are unemployed or think they might be without a job do not usually take vacations on St. John,” he said. “But overall, the summer occupancy rates are looking better than last year which you would expect in an improving economy.”

Clark said St. John will always fare a little better than most other resort areas during a recession and when things come back, it will be a little stronger than the rest.

“Because St. John is a real special place with a unique appeal, we are slightly less affected than the rest of the country because we have such a loyal base that comes back year after year,” Clark said.