The Disadvantages of Being a Resort Owner
Many people dream of owning a home or villa in a resort community where sand, sun and water are the main attractions. Weighing the pros and cons of owning this type of real estate takes more than simply knowing the direction of the trade winds and how to mix the latest rum cocktails. Owning a resort property, and offering it as a vacation rental when you're not using it, presents some challenges and disadvantages of which you might not be aware.
During times of economic uncertainty, one of the first luxuries people give up is travel. This means resort property owners are among the first to weather sharp declines due to more people choosing stay-at-home-vacations over traveling to exotic locales for a week-long stay at a beautiful resort. Even those for whom the economy only mildly affects their discretionary spending may choose a vacation resort based on the best value. Economic conditions can influence your financial decisions and the viability of owning property far from home, especially when you don't use it or can't rent it.
Regardless of whether your resort property is on a sun-drenched Caribbean island overlooking powdery sand beaches or in Australia near one of the Great Barrier Reef's bio regions, visiting and tourism is a seasonal business. If your resort home offers a source of income when you're not using it, the ebbs and flow of business can result in financial hardship during times when fewer families and couples seek lodging and accommodations. Even during off-season, you still have to ensure the resort property is secure, maintained and well cared for, as well as the keep up with the costs to own the property such as mortgage payments, utilities and taxes.
Many tourists are respectful of resort property and surrounding areas, but some tourists leave their rooms and villas in such disarray, resort property owners debate whether it’s prudent to turn them away when they want to rebook a future stay. Vacationers damage property or steal items that are costly to replace. Insurance covers many incidents but property damage claims -- particularly when you file them repeatedly or if they are large sums -- can increase your insurance premiums.
Competition constantly challenges resort property owners to raise the bar to stay one step ahead. If you property is in a resort that is not continually upgraded, or loses access to world-renowned amenities, such as fabulous spas with the newest, cutting-edge beauty treatments or local clubs and restaurants with world-renowned chefs and entertainer's, the property's value can decrease. Continually upgrading your property requires significant reinvestment, which can diminish its overall worth.
Family and friends who want to save money on vacation spending might ask for complimentary stays at your resort property. Depending on the size of your family and your resort home, providing gratis stays affects your ability to open it up for paying vacationers. One of the disadvantages of being a resort owner is how well liked you become with family and friends.
Unpredictable or catastrophic weather conditions and unprecedented climate changes due to storms and the effects of global warming can make it difficult to use or market your resort property to vacationers. Minimal snowfalls put ski resort owners at a disadvantage in much the same way that an untimely rainy and cool summer affects beach-side resorts and otherwise ideal surfing locales.