Small: How can tourism impact resort real estate values? | Business
Resort markets like Aspen-Snowmass across the country saw explosive growth over the past year as people sought open space. We saw record migration in resort communities that drove house prices higher as an influx of new buyers bought resort properties. We also saw an unprecedented rush of tourists. This has resulted in almost daily articles on everything from the scarcity of affordable housing and labor shortages for businesses supporting resort communities to complaints about tourists clogging the streets with e-bikes and otherwise local customs to ignore.
It has gone so far that resorts like Crested Butte and other major events have canceled and stopped traditional tourist advertising. Some people wonder: Could the recent boom in popularity for ski resorts like Aspen-Snowmass, Vail, Steamboat Springs, Telluride, and Crested Butte affect the quality of life in these resort communities and ultimately affect property value?
Along with the rush from bigger cities to places like Aspen and Snowmass Village, travel and tourism have rebounded sharply in the US – and local resort markets are struggling to keep up. While tourism has generally had a positive impact on resort communities and their property markets, this sudden flood has contributed to the current inability of the market to host affordable housing for the service industry as visitors take on the available rents and the cost of housing in soar. The result is less labor available, which has an impact on the level of service that restaurants and hospitality establishments can provide to arriving tourists and residents alike.
The health of any real estate market depends on a balance between supply and demand. The desirability of living in certain areas drives the demand side of the equation. The attractiveness depends on the quality of life, which is often measured in terms of access to recreation, culture, entertainment, good schools, affordable housing and economic opportunities. It’s about keeping a healthy balance. When overcrowding, traffic jams and the high cost of living become the norm, people start rethinking where to live and where to spend their time.
This begs the question of whether the undiminished efforts to bring more tourists to resorts like Aspen and Snowmass are having a positive or perhaps negative impact on the long-term health of the property market. In order to maintain the quality of life that residents and homeowners expect, ski areas, especially Crested Butte, are reducing or even doing without advertising for tourism. Promoting tourism to ski resorts has always been seen as a good idea to boost the local economy and create demand for residential and commercial properties. But as the local economy and real estate market evolve into an economy supported by a full-time population, it may be time to reconsider the idea that promoting tourism at all costs is still a good idea.
An example of an area that could have boosted tourism to the limit is Miami’s South Beach. Once it was considered an “in” destination with rising property values and an up-and-coming economy supported by a lively art and cultural community, it has now developed into something completely different. Since the mid-1990s, the South Beach business community began promoting the area as a top tourist destination. They even changed the name of the famous Ocean Drive neighborhood from “Art Deco District” to “Entertainment Zone”. With a huge influx of tourists over the past decade, the art and cultural vibe has faded and the area is now very different from what made it a desirable place to live and buy property a decade or two ago. As the saying goes: “If everyone goes there, at some point nobody wants to go again.”
It’s too early to say whether the current popularity of mountain skiing areas like Aspen-Snowmass will wear off somewhat due to the pandemic once big cities and international travel are fully reopened. The crisis that emerged in Aspen and Snowmass last year could be unique given the unprecedented economic impact of the pandemic. Some analysts also predict that not all but some of those who have left cities to continue their work remotely in suburbs and resorts are showing signs of returning to the larger metropolitan areas.
The Great Recession wasn’t long ago – after a rapid and hot real estate boom, many remember how a deflated market struggled for years to recover. The market is hot right now but it’s important to watch the signs. The real estate market is not aware of the long-term effects of the flood of tourism last year. Perhaps it is time to reconsider whether an uncompromising approach to promoting tourism is really in the best long-term interests of feeding the goose that lays the golden eggs for the local economy and real estate market.
Lori and William Small, CCIM, are recognized luxury and commercial real estate experts at Coldwell Banker Mason Morse in Aspen. They can be found through their website theSmallsaspen.com or by emailing them at [email protected].