Sound Strategy

Evolving Landscapes: The Future of North Carolina's Vacation Rental Industry

By Clark Twiddy

The vacation rental landscape continues to be a dominant economic driver regionally–and perhaps even across North Carolina–in terms of lodging.? Within our visitor economy, few sectors have the overall economic impact of lodging whether measured in visitor spending or employment numbers.? With that impact, though, comes a corresponding challenge to evolve and grow as the needs and desires of the traveling public evolve as well.? Few things, as experience always teaches, stay the same.??

With the incredible tourism boom years of 2021 and 2022 in the rear view mirror, a reversion to a more normal visitor economy is underway.? The supply of lodging options, on one hand, has grown tremendously across the State while North Carolina remains a top five state to visit overall across America in terms of demand.? The coming years will answer a wide range of questions across the industry in terms of how these supply and demand interactions will play out in terms of market strength and future visitation trends.? Regardless, there remains a lot to be optimistic about within North Carolina’s robust visitor economy.

One area where it makes sense to see some future evolution will be in watching the kind of hospitality companies that grow in the visitor economy as lodging supply continues to become more competitive; both at the national and state level, the vacation rental industry remains remarkably fragmented and it’s worth pausing for a moment to consider why that is as a guide to might be what is to come.??

Many of our hospitality companies at the state level are small businesses grown by front line entrepreneurs; these business risk takers have great ideas and go about tackling them in a unique way.? A corresponding opportunity emerges, in light of this, at the intersection of growth and complexity; great local hospitality is a complex thing that involves a wide range of markets, regulations, staff planning, and business risk that translate into an evolving opportunity for integrative, as opposed to fragmented, service delivery.? Take AirBnb, for example–essentially a marketing platform, AirBnb solves a marketing and market access problem for business operators leaving other areas of an investment to the homeowner as the operator.? In short, it’s a fragmented approach to an overall visitor experience.??

Consider for a moment the vacation rental homeowner; combining marketing, service delivery, financial reporting, risk management, long-term thinking, and tax thinking can be highly fragmented and as a result daunting (few, in fact, do all these things well or even at once).? It makes a lot of sense that as vacation rental supply grows and becomes more competitive, business operators in the space will begin to offer more integrative service options to save time, money, and complexity for vacation rental homeowners.??

In short, great hospitality companies in this new market will shift growth strategies toward integrative solutions that solve complex problems on behalf of time-starved vacation rental homeowners.? In doing so, these great companies will avoid a commodity approach to pricing that compresses their ability to hire talented people, serve homeowners looking for more simple and consolidated approaches to asset management, and in the end deliver better products to more discerning customers.? That’s a great thing in many ways, as the industry will continue to attract growing numbers of multidisciplinary thinkers and integrative financial minds not normally associated with vacation rental management.??

Lastly, North Carolina may yet lead the way in this evolution; with one of the most advanced vacation rental landscapes on the planet, we’re well positioned to grow more great businesses by understanding customers, building great staff teams, and placing competitive bets on the future.? Questions about market trends may wrestle with supply and demand in years to come, but smart business operators will continue to seek the frontier of the industry and by doing so elude the commodity pressure of doing the same thing the same ways; in summary, look for the North Carolina visitor economy to maintain it’s ever-evolving focus on doing different things in different ways to attract and sustain our State’s wonderful visitors.

Clark Twiddy is the president of Twiddy & Company, a vacation rental asset management and hospitality firm founded in 1978 along the North Carolina Outer Banks. He was raised in Duck, North Carolina, and is a combat veteran of the U.S. Navy and an alumni of several universities. Clark has served in numerous public, private, government and nonprofit capacities at various levels from volunteer to chair.