Travel Payments

COVID-19’s Chilling Effect on Summer Vacation Rentals

Travel coronavirus

The travel industry is being decimated by the coronavirus. The cascade effect of multi-state lockdowns has had a chilling effect on any number of verticals, from airlines, of course, to hotels.

Then add rental homes — where owners open their doors to vacationers — to the mix.

There’s an old line by F. Scott Fitzgerald: The rich are different from you and me. And in a scattering of cases, those with rather large wallets may be seeking temporary new digs beyond urban areas, to skirt crowds and microbes.

The New York Times reported last week that at least some New Yorkers may be fleeing the city for the Hamptons.  The New York Post reported that one socialite couple has listed their “party palace” for people fleeing COVID-19 in March and April for $50,000 a month.

But dig a little deeper, and those one-off headlines don’t begin to tell the real tale.

In an interview with Karen Webster, Joanne Logie, managing director and co-owner of New England Vacation Rentals, a site offering vacation home rentals in several towns on Cape Cod, laid out a reality that is far starker, showing ripple effects of the ongoing pandemic.

To put it bluntly: The families that were looking to get away from it all for a relaxing spring and summer break are looking to shift the plans made months ago — if not cancel them outright.

Beyond looking to cancel the most immediate trips, she said, “We’ve had people asking us to postpone their vacations that are coming up in April and May.”

That’s a 180-degree turn from just a few months ago, when, during January and February, Logie said her firm had seen its highest booking levels in over three years. Fast forward to mid-March, she said, and bookings activity simply, stopped.

As of right now, states have varied their approaches to battling COVID-19. Some states have placed strict limits on social gatherings and have mandated that non-essential businesses must close. And as Logie noted, in Massachusetts, amid the self-quarantining, as businesses shutter and restaurants embrace takeout and delivery, and shop shelves are bare, life on Cape Cod has become a “day by day, week by week situation.”

In a nod toward the rental vacation industry, and for firms like New England Vacation Rentals, said Logie: “We’re performance-based, we get paid based on reservations that are booked, and get commissions based on that. If there are no reservations, there is no performance income — and there is no income to run your company.”

She said that New England Vacation Rentals has been busy examining its cash flow, trying to stop cancellation requests (they are non-refundable reservations, and so for the customers, deferring those trips is a better option), and keep staff working.

“It’s been difficult for everyone,” Logie said.

The Bigger Picture

To get a sense of how deep the disruption has been, she told Webster that her husband runs an accounting, tax and financial consulting business for smaller firms such as restaurants and day care facilities.  She said that through the past several days he has been working through the wee hours of the morning, scrambling to help them secure loans. Getting a loan, of course, is a process, one that involves paperwork and a host of steps — and time.

Time, of course, is in short supply, especially when it comes to keeping the lights on and paying staff.

“A lot of these restaurants,” Logie told Webster, waiting for walk-in/take-out and delivery orders that don’t seem to be coming,  “are just plain closing.”  The ripple effects have, and will, extend to the businesses that rely on tourist traffic, such as package stores, apparel shops and other firms.

Small business loans are unlikely to fix the problem, said Logie, because loans must be paid back — and without revenues and cash flow in place, that’s an impossibility. There’s been a rising incidence of GoFund me pages, she said, where donations can be used to keep operations afloat and pay workers — and “free money” (especially from the government) may increasingly have to be an option to stave off economic calamity. In the meantime, charity and good deeds are on the rise — indicating a positive side-effect of the current crisis.

(Logie pointed PYMNTS and its readers to #savetourism and #Don’tCancelPostpone as worthy online, community-wide efforts to help tourism on a global stage.)

Looking Toward The Other Side

Looking at what might lie on the other side of all this, Logie speculated that companies of all sizes — and especially smaller ones — will become introspective about what it really takes to run a business. Many companies may consolidate offices and, increasingly, shift to a remote-working model.

Beyond the structural shifts, no matter the business vertical, demand is bound to return, Logie predicted. Once the tide is turned against COVID-19, she said, and an effective remedy is in place, people will feel safe in their jobs.

“Once people feel like they are going to get paid,” she told Webster, “I think you are going to see the biggest rebound ever.”

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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