Collapse in city markets-Surge in Ohio Valley
The coronavirus pandemic has dealt a body blow across the country to both the economy and the health of its population. The hospitality and leisure sector has been particularly hard hit with airlines, hotels, and services struggling to stay above water. However, there are also pockets that have bucked the trend and are even seeing a boost in demand.
In economic terms, the numbers are stark. The pandemic has caused the sharpest decline to the US economy since the Great Depression. GDP fell at an annualized rate of 32.9% in the second quarter of the year. The hospitality and leisure sector has suffered as much as any. According to the World Travel and Tourism Council the US economy will lose $155 billion in 2020 or $3 billion per week because of the impact of Covid-19. In May, 52.1% of small businesses leisure and hospitality sector temporarily closed and 35.2% cut the number of paid employees. At the end of July more than half of hotel rooms across the country were vacant and the American Hotel and Leisure Association is predicting occupancy rates of just 38% for 2020. Between mid-February and the end of August, hotels lost more than $46 billion in room revenue. Bureau and Labor data shows that 4.8 million jobs had been lost in the hotel and leisure industry as of the end of August and 70% of employees had been laid off or furloughed. In Ohio, Ohio governor Mike deWine and then director of Ohio Health Department, Amy Acton, ordered the closure of all bars and restaurants in March, a move that was followed by other states.
However, not all parts of the leisure and hospitality industry have been affected by the pandemic in the same way. While the hotel industry has been hammered, for operators like Airbnb the picture has been much more mixed. In general, urban areas have suffered badly, while rural locations have actually seen an upsurge in business. Areas with less than 1,000 people per square mile saw a 27% year-on-year increase in March with a 10% boost for areas with 3,000-4,000 per square mile. On the other hand, the largest urban centers witnessed steep falls of 27% in year-on-year revenue. Ohio and West Virginia both saw a 23% increase in Airbnb revenue from March 2019 to March 2020, while neighboring Pennsylvania witnessed a 3% fall.
So, why are rural Airbnbs booming? All the signs point to urban residents trying to escape from the stress of lockdowns and the fear of contracting the coronavirus in in urban areas. City dwellers are seeking a respite from a pandemic that shows no signs of letting up. Naturally, in the face of a pandemic people are minimizing risk by seeking out activities and destinations that feel instinctively safe – staying away from airports and cities and traveling to less crowded destinations. They’re looking for open spaces, blue skies, and fresh air. It’s a chance to breathe out the tension and stress and declutter their minds. It is unsurprising that staying in a self-contained unit has become so desirable, offering as it does more safety in terms of social distancing compared to a hotel. Additionally, most Airbnb properties don’t require sharing an elevator or amenities. The company itself has adapted to the new situation through such measures enhanced cleaning protocols – standardized guidelines for sanitizing homes that are informed by CDC advice and comprise a five-step cleaning process, room by room checklists and so on.
“I feel a ton more comfortable sitting at a house [rather] than being in a hotel where there’s tons of people in and out of those rooms,” said Brandon Gibson, 36, an Ohioan, who reserved an Airbnb in West Virginia to celebrate his brother’s bachelor party near the end of June. He was the only one staying and said he felt more comfortable there than in a hotel or resort.
Travelers are also seeking out locations that are far, but not too far from home, and accessible by road. Research by Rented.com and Weiss Analytics found that destinations within 2-5 drive of major metropolitan areas are seeing a boom in demand. This avoids the need to fly, which is seen as inherently riskier. National air travel has plummeted this year – down 73% in August. However, Airbnb has seen overall spending fall just 15%. Driving offers greater ability to socially distance and generally control the surrounding environment. Research by Columbus-based travel research firm, Longwoods International, found that many travelers were planning on venturing within a radius of around 200 miles and getting there by road. For similar reasons, the RV rentals have increased over 4,000% with the majority of these are coming from first-time users, showing the market is expanding.
The case of Trisha Mixer represents a snapshot of the mixed fortunes of Airbnbers. As reported by CNBC, Mixer has properties outside of Austin, Texas and saw reservations plummet as outbreaks of Covid-19 occurred in the area. She estimated a loss of $40,000 in cancellations. However, when the state began relaxing restrictions she was inundated with requests. Mixer has two properties, a lake house and a cottage, that are located 30 minutes and 90 minutes outside of Austin, respectively. Interestingly, most of the customers staying these days are Texas residents, especially from Austin, who are seeking a break from the crowds. Mixer is seeing bookings come in not just for the weekends, but through the week as well. To try and tamp down demand, she raised prices but this didn’t stem the flow, and she was fully booked for the whole of the summer, with brisk weekend demand right through until the end of October.
Kathryn Langer has two properties in Texas, one in rural Lake Travis and the other, in an urban
location, in Fredricksburg. While the getaway has been fully booked, the urban location has become like a ‘ghost town’.
What are they coming for?
Activities that allow for social distancing, such as outdoor activities like hiking, kayaking, and fishing have been opening more quickly than closed venue events, such as concerts. This has benefitted the Ohio Valley. Rafting is a major draw to the area and was given the go ahead to open back in May. The Coal River has benefitted from a major clean-up operation led by conservation group, American Rivers, that have made the water safe and turned the river banks from black to their natural color. The coronavirus disease has forced communities and businesses to work to overcome the special challenges forced upon them. Outdoor activities, while not 100% free of risk, do represent a much safer alternative than indoor events. On Coal River the weekends are as busy as they have ever been with visitors jumping at the opportunity for fresh air and healthy exercise along the length of its 88 miles.
It’s not just rivers that are seeing an upsurge in demand. The National Recreation and Park Association reported that two-thirds of parks are reporting an increase in visitors, with more than 80% of trails seeing a rise in numbers. People are rediscovering national treasures. In August, visits to Valley Forge in Pennsylvania reached peaks not seen in several decades. Incredibly, the Chesapeake and Ohio Canals attracted more visitors in July than the Grand Canyon – the first time this has happened in more than 30 years. Visitors have also been returning to the National Road Bikeway at St. Clairsville, as well as the obstacle courses and ziplining at centers, such as Adventure Creek. Also in the area is Barkcamp State Park, which combines an area of historical importance with camping and lake paddling in the 117-acre lake. Nearby Egypt Valley Wildlife Area with over 14,000 acres of conservation and viewing has also seen greater demand. Historical locations are also attracting visitors. Wheeling has seen visitors returning to West Virginia Independence Hall, where the state of West Virginia was formally created. The town is also situated on several historically important transport routes, such as the B&O Railroad, National Road, as well as the Ohio River itself.
As well as tourists, the Ohio Valley has also been the beneficiary of energy jobs in in the oil and gas industries. A longer term trend has been the influx of workers based in the fields. The sector has seen more and more people coming from out-of-state to towns like Wheeling and others in the Upper Ohio Valley. It is difficult to calculate numbers, as individuals usually retain their home state residence and so, are excluded from census counts, but they are estimated to be in the thousands, boosting local populations, which have suffered from locals gravitating towards the cities in recent years. A not insignificant number of these energy workers have gravitated towards Airbnb, often taking properties for 3-6 months at a time.
The pandemic has accelerated the tendency towards remote working. With shutdowns and companies requiring staff to stay away from offices, we have seen more employees working from home. However, workers are taking that one step further, realizing that remote working need not necessarily mean working from home, but can allow people to base themselves away from home, either temporarily or on a longer term basis. The figures for Airbnb stays show that guests are staying for longer than the traditional weekend visit, averaging 4.27 days in the first six months of 2020. People are getting away from densely populated urban locations and taking the opportunity to get some breathing and head space in more peaceful surroundings. Smaller towns and cities are enjoying something of a resurgence, offering a less frenetic and frankly less urban pace of life.
Technology has made working from home a feasible option with platforms like Zoom and Microsoft Teams offering an almost seamless link to the workplace. The foundations that were already in place before the pandemic began to be fully utilized as restrictions took hold. Twenty years ago businesses and their workers may have been stranded and relying on fax and telephone to patch a a service together. However, online technology with video conferencing and cloud-based services have allowed many businesses to continue operating during the pandemic with limited disruption. Employers and office-based workers are realizing that businesses can be run effectively from a variety of locations, especially from home. This has naturally led both companies and their people to question the need to travel to a central location. And if workers can work from home, saving time and money by doing so, why travel to the office every day?
Cost of living is also proving attractive with rural locations tending to be much more affordable than urban centers. Comparing Wheeling to Cincinnati rent is one-third lower in Wheeling. A three-bedroom apartment in Cincinnati will cost on average $2,120, while a similar apartment in Wheeling cost just $900. While wages are higher in Cincinnati, for those working from home, locations like Wheeling hit the sweet spot between quality of life and affordability.
The pandemic has disrupted normal life and forced sudden changes on companies and ordinary people. In other ways the coronavirus may have accelerated longer term trends and we may be witnessing a permanent reorganization in the way we live that may refocus living away from urban centers and towards rural areas.