Villas and rentals homes in need of upgrades; other island improvements could be catalyst

gsmith@islandpacket.comMay 18, 2013 

As tens of millions of dollars in renovations are completed or underway at Hilton Head Island's resorts, plantations and developments, many say it's time for the rental-unit sector to follow suit.

Otherwise, a vital segment of the island's tourism industry will lose tourists to nearby, highly competitive destinations that include Kiawah Island, Myrtle Beach and the Gulf Coast.

Although estimates vary, there seems to be consensus that most island visitors rent villas or rental homes -- not hotel rooms-- making updated kitchens and bathrooms vital.

The island boasts about 4,500 professionally managed villas and homes that are rented out, 2,500 that are rented out by their owners and about 2,200 timeshare units, according to a 2012 inventory by the Hilton Head Island-Bluffton Chamber of Commerce.

Occupancy rates and rental rates took a plunge during the recession, and owners put off renovations, say property managers and the chamber.

But as the economy regains its footing, now is the time for renovations, according to island property managers who are urging their owners to make the investment.

"Everybody wants affluent travelers to visit their area," said Robert Stenhammer, president of Hilton Head Accommodations, which manages nearly 200 rental properties on the island. "But those travelers want affluent accommodations. The (rental) home and villa segment has to be able to compete, to keep pace with the other renovations on the island."

Hopes are high that renovations in other sectors will prompt rental-unit owners to be next.

More than $60 million in upgrades have recently been completed at the island's five beachfront hotels, a $74 million redevelopment of the former Mall at Shelter Cover is underway and nearly $30 million in improvements at Sea Pines have been completed, with another $30 million to $50 million planned for the next few years.

Town of Hilton Head town leaders are also working on improvements to the Coligny area.

Mike Alsko, manager of ResortQuest Hilton Head Island that oversees nearly 300 rentals units, said he and his team have been talking with owners for the past two years about needed upgrades.

"People are calling in and we're giving them great (rental) options and they'll say, 'We're looking for a more updated option.' The most updated properties are the ones renting," he said. "It used to be they were happy to get a chance to come to the beach on Hilton Head and have a roof over their head. But today, the travelers are a little more discerning.

"The vacation rental market has taken off across the country. They've stayed in hotels and want that hotel kind of experience in a rental unit where the mattresses are great and the towels are soft."

That hotel experience includes modern furnishings and lighting, a kitchen with stainless steel appliances and granite countertops and crisp bedding with pillow-top mattresses , he added.

The message is beginning to sink in.

About 20 of Alsko's properties have undergone improvements this year of about $50,000 or more, including remodeled kitchens and bathrooms and new furnishings. Another two dozen have made cosmetic improvements, such as repainting, replacing some furniture and switching out bedding.

"It's still a small percentage, but they're realizing it's something that consumers want," he said.

Stenhammer estimates about 65 percent of his owners have done some kind of renovation in the past year, with kitchen improvements topping the list -- specifically, new countertops, appliances and cabinets.

Stenhammer's company and others on the island offer owners free assessments to suggest upgrades to make units more attractive to renters and command higher rates. Kitchen and bathroom updates often top the list, along with pillow-top bedding, flat-screen TVs and hardwood floors to replace carpet.

Some of the companies like Stenhammer's even help finance the work, rolling renovation costs into the management fees and recommending bonded and insured contractors to owners.

But it will take several years before the renovation trend progresses sufficiently, some property managers speculate.

"I think it's going to be maybe a two- to five-year push to get everybody up to the standards that we need," Stenhammer said.

Many owners are still reeling from the economic downturn and don't have the cash to make the big renovations -- particularly after several years of renting their properties for less money.

"A lot of people still don't have the disposable income to upgrade as quickly as we would like," said Mike Wood, manager of Hilton Head Vacation Rentals, which manages nearly 300 island properties.

When money is an issue, Wood encourages them to think smaller, starting with switching out old TVs with flat screens.

"Anyone (shopping for a rental unit) can immediately look at a picture and tell it's a dated unit if there's a box TV," Wood said. "And there's still a lot of them out there. It's a good place to start."

Follow reporter Gina Smith at twitter.com/GinaNSmith.

Related content:

Sonesta resort on Hilton Head officially reopens after $30 million renovation, May 16, 2013

Westin to reopen this week after $30 million renovation, April 16, 2013

Sea Pines, others making improvements to keep Heritage, tourists, April 14, 2013

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