(Aug. 23, 2013) Despite all of the conflicting evidence and political antagonism over the resort’s tourism performance this summer, the simplest explanation may be the one offered by the Democratic political strategist James Carville during President Bill Clinton’s first run: “The economy, stupid.”
Regardless of any problems specific to Ocean City, East Coast resorts are reportedly having universal difficulty this year. The latest edition of the Smith Travel Report, which aggregates booking data from a network of franchise hotels, shows the Jersey Shore’s occupancy rate down 10.2 percent and Atlantic City down a whopping 20.4 percent.
Ocean City has seen a comparatively minor drop of three percent for June, as have the Delaware resorts and Virginia Beach.
“It’s not just Maryland, we’ve got the same thing in Delaware,” said Long & Foster Vice President Jim Waggoner, who manages one of the coastal region’s larger condominium rental operations.
Waggoner recently reported a five percent drop in his company’s sales for Ocean City, the first decline since 2006. Rehoboth Beach sales were down 13 percent, he said.
“Each month, beginning in January this year, our gains got smaller and smaller to the point where I said, ‘We’re going to have a problem,’” Waggoner said.
Recent news reports out of New Jersey indicate that the 10-20 percent decline in visitation isn’t entirely due to lingering damage from Sandy. Even with any loss of housing stock factored in, Smith Travel data shows that average revenue per available room has dropped by up to 26.5 percent for Atlantic City.
The after-effects of Sandy, it was hoped, would drive New Jersey and New York visitors south. But it appears they simply aren’t coming at all.
“That whole thing didn’t happen,” Waggoner said. “I’m not saying we didn’t have a small influx of people from Jersey or New York – we get a few more every year – but it wasn’t the mass numbers that were predicted.”
Many in Jersey are saying that the economy – and particularly federal healthcare regulations – have had a greater impact than the storm. Under the impending Affordable Care Act, often termed “Obamacare,” employees who average 30 hours or more per week in a given year must be provided health care by their employer or the employer has to pay penalties.
In order to get around this, many businesses are cutting hours and hiring more part-time workers. This has strained the schedules of many Americans, who now work multiple, inconsistent jobs and are unable to take large chunks of time off for extended summer vacations.
“Obamacare has really created a huge hardship in the fact that employers are downsizing their workforce and cutting their people down to part-time,” said Ocean City Hotel-Motel-Restaurant Association Executive Director Susan Jones. “They don’t have the vacation time anymore.”
As such, Ocean City’s hotel occupancy has been lopsided towards weekends, with fewer vacationers able to take stretches of time off work during the week. Weekend occupancy for 2013, year-to-date, is down 3.3 percent versus a 5.6 percent drop in weekdays.
However, the average length of a hotel stay has remained relatively static, with the average number of nights booked actually increasing by .18 over the past six weeks versus the same time last year, according to data provided by Ann Hillyer of oceancity.com, one of the area’s largest online hotel booking agencies.
But hotel stays have always been shorter than condominium rentals, for obvious reasons of economy of scale. Roughly one-third of hotel stays are two nights, and another third are three-night. Only about 16 percent are four nights or more.
In the condominium rental business, four nights is typical of a “mini-week” rental, something that has been becoming increasingly popular since the economic downturn, according to Waggoner.
“We started noticing that about three years ago, people wanted mini vacations during prime-time, whereas we usually just offered them in the shoulder season,” Waggoner said. “That’s not something we wanted, but we had to change our model to fit demand.”
Mini-weeks so far this year have been up around 20 percent, Waggoner said, while full week rentals are down around 20 percent.
“People aren’t coming for a week anymore,” he said. “What do you do when you have your income cut, and you’re a government employee that never thought you would slide backwards?”