Short-term lodging owners struggle to stay afloat under public health order
Editor’s note: This story has been updated to more accurately reflect the rental properties owned by Wes English.
When Colorado Gov. Jared Polis ordered ski areas to close March 14, Summit County’s resort-based economy ground to a halt. At the mercy of state and local public health orders are owners, managers and employees of short-term lodging facilities.
More than two months later, people in the short-term rental business are still looking toward the future with anxiety and trepidation as the county’s ban on short-term lodging looms over their financial stability.
Patty Whetham owns Breckenridge Rental, a short-term rental hosting company. She said all of her income comes from her business and that she’s anticipating a 50% decrease in revenue for the year.
“That’s my business,” she said. “One hundred percent of my Breckenridge Rental income is based on short-term rentals.”
While the county has allowed retail businesses and restaurants to open with limitations, the short-term lodging industry is in a holding pattern. In the safer-at-home public health order, county officials prohibited short-term lodging — which includes any lodging that can be rented for 30 or fewer days — from operating until June 1. That date is not set in stone, however. The county will make its official decision Wednesday, May 20.
Mervyn Davies, who owns two properties in Keystone and one in Frisco, said a little more than one-third of his retirement income relies on those properties.
“For the first time ever, we’re having negative earnings,” he said.
Davies, who also worked as a part-time ski instructor at Arapahoe Basin Ski Area, said he initially thought the shutdown was the right thing to do to save lives. Now he’s worried the date will be extended into July, which would be detrimental to his finances.
“The ski resorts closed, and I thought, ‘Well, this is probably a good thing,'” he said. “Safety of lives is by far more important than anything else. But I think we have come to realize that we have to learn to live with this virus. We can’t close up forever. People have to live.”
Wes English, who owns Breck Creekside condos and rents his condo in Wildwood Suites in addition to a single-family home in Breckenridge, said he initially thought the shutdown was a good idea, but he worries the county will push the lodging ban further.
His company has had about $20,000 worth of bookings in the past week and a half for June and July, which would be lost if the county continues to prohibit short-term lodging.
“It will be really, really financially burdensome if Summit County or the town of Breck decide they want to extend that past June 1,” he said.
Whetham said her business has been shut down for at least 10 weeks, and she’s seen most of the bookings for the summer cancel. Interest for after the prohibition is lifted is “literally zero,” she said.
“March 14 through the end of June, I didn’t have a single reservation that stayed on the books,” she said. “They all cancelled.”
Breckenridge Resort Managers President Toby Babich said his company, which operates 60 individually owned properties across the country, saw a 20% decrease in revenue in March. He expects that will go up to 25% in April. As for summer, he said property owners and managers are preparing for a 50% decline in revenue.
Babich is also a part of the Summit County COVID recovery team. He said that county officials are doing a “fantastic job” trying to balance the needs of the economy and the need to prevent the spread of the virus.
“We all understand what the rational and the reasoning is behind it, and we’re supportive of helping the county figure out a way to open our economy safely so we can start recapturing a positive and fruitful way of life,” he said.
Breckenridge Resort Managers surveyed 36 of the town’s lodging businesses and found that 52% of businesses lost more than 20% of their winter revenue. Twenty-one, or about 58%, of the businesses did not receive loans from the federal government’s Paycheck Protection Program, according to results from the survey.
One-third of the people who responded to the survey said they would not be able to stay in business for the remainder of 2020 if they did not have sufficient business over the summer.
Summit County short-term rental tax revenue
- January: $403,000
- February: $416,000
- March: $561,000
- Annual total: $2.9 million
- January: $493,000
- February: $449,000
- March: $219,000
Source: Marty Ferris, Summit County finance director
The decline in bookings affects everyone. The Colorado Department of Revenue has a sales tax on short-term lodging, 2% of which goes back to the county, according to the county website. Through February, the county saw a 15% increase in revenue from the tax compared with last year. By the end of March, the year-to-date total was down 16%. Overall, the tax brings in millions for the county — $2.9 million in 2019.
All of the homeowners said they were lucky to have savings to rely on, but as the shutdown continues, the numbers are going to look more grim.
“Our rental incomes are always up and down,” Whetham said. “I have to say I’m pretty concerned about how much longer this can last. I’m even having people cancel for July and August.”
Most of the summer cancellations Whetham has experienced revolve around canceled events and changed plans.
“A big part of it, quite frankly, is people don’t feel like Summit County is open. It’s not open,” she said. “Even after May 31, the majority of events that I’ve seen have been canceled. What’s attracting people to come up is no longer occurring.”
In the meantime, many short-term rental owners are preparing for what the business might look like after the shutdown is over. Babich is also the president of the Vacation Rental Management Association, a national organization that supports companies in the vacation rental industry. Within that role and in his role on the county recovery team, he has been looking at new guidelines for short-term rentals.
“Rather than just standing around complaining, we’re taking action,” he said. “(We’re) developing cleaning processes, recommending products, recommending changes and modifications to operations to encourage safe travels and safe stays when people get here.”
Babich said he’s looking at different types of disinfectants, educating staff on safe protocols and looking at ways to educate guests on safe distancing.
“It also goes up a little bit further than that just in terms of how we all work together to ensure we can still travel and we can still experience our wonderful town of Breckenridge and have guests come here without dramatically increasing the risk of having a flare-up,” he said. “It’s really going to take everybody’s participation.”
English said the efforts made by the management association, Airbnb, VRBO and other short-term rental companies to put in strict cleaning protocols are all the more reason why the county should open rentals June 1.
“The short-term rental industry is doing the things that we should do, just like retailers are doing in town, where they’re limiting the number of people that can come in,” he said. “You have to be able to balance that because the impact that short-term rentals have, arguably, is just as much or more than a Main Street retailer … who now has the ability to open with certain protocols.”
While offering their homes for long-term or month-to-month leases is an option, both Whetham and Davies said they haven’t considered it. Long-term rentals bring in less revenue and cause more expenses, Davies said.
“When you do a monthly rental, you’re probably getting about a third as opposed to a short-term rental,” he said. “You get a lot more wear and tear. So, your expenses and maintenance are going to increase.”
Davies said the wear and tear on short-term rentals is minimal because people usually only use the properties to sleep.
Whetham has been in the business for 20 years and said she’s never seen anything like this.
“2008 was interesting because we definitely saw a downturn, but you never shut your doors,” she said. “You didn’t completely close down.”
The housekeepers and cleaners that Whetham uses in Breckenridge Rental’s properties have gone to find other jobs. So she’s left having to “rebuild from scratch,” she said.
English said watching other areas like Eagle County begin to open up is frustrating.
“If Summit County doesn’t have some forward thinking through this and actually weigh the economic piece along with the health piece, then Vail and Eagle and some of those places are going to capitalize and take advantage of us,” he said. “That will forever hurt businesses in Summit County.”
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