Airbnb boom in Beaufort area makes housing shortage worse, group says. What they propose

A northern Beaufort County hospitality group says the rapid growth of home-sharing services like Airbnb is contributing to a housing shortage for the area’s workers and hurting the local hotel industry.

The Beaufort Area Hospitality Association wants stricter rules for the rentals, in part to limit the number of rentals allowed in neighborhoods and how often they turn over. The association asks for a level playing field. Those recommendations and others came in a report from a task force formed by the hospitality group to investigate troubling hotel numbers and the hospitality industry’s difficulty hiring and retaining workers.

Hospitality leaders presented their recommendations to Beaufort and Port Royal officials in August.

Owners of short-term rentals bristled at what they perceived as blame for declining occupancy rates and the housing shortage. The lodging market is changing, they told the Beaufort City Council last week, and hotels should adapt their business instead of changing the rules for others.

The city of Beaufort updated its rules for short-term rentals in recent years to include capping how many can operate in individual neighborhoods. Port Royal will hear recommendations Wednesday for potential new rules recommended by a town task force.

The hospitality group says its intent with more proposed rules changes isn’t to eliminate vacation rentals, and that short-term rentals and operators are welcome as part of the local overnight industry.

“We just want to slow the growth,” said Jonathan Sullivan, chairman of the association’s board and a member of the task force that produced the report. “Because it’s hurting our workforce and the cost of living for people who want to live in northern Beaufort County.”

Rapid rise in rentals

The coastal communities of Beaufort and Port Royal are a draw for travelers who want to experience the walkable neighborhoods leading to restaurants, the waterfront and a wide array of picturesque cottages.

Investors have taken note.

About 375 short-term rentals operate in northern Beaufort County — more than 1,100 when counting rentals at traditional vacation spots on Harbor and Fripp islands. That’s up from 243 in 2017, according to numbers in the task force report from companies that track the rental data.

In Beaufort, the number of the rentals has grown to 105, from 62 units two years ago. In Port Royal, the number has increased to 98 short-term rentals from 34.

Short-term rental occupancy has hovered around 53% since 2017, up from 41% in 2016.

Meanwhile, hotel occupancy in northern Beaufort County has dipped from a high of 58% in 2016 to 52% last year, according to the Greater Beaufort-Port Royal Convention and Visitors Bureau. Occupancy in the first quarter of this year dropped to a “critical low” of 49.1%, the hospitality task force report said.

The shaky numbers have led to hesitancy in developing new hotels or expanding existing lodging, the task force report said.

“Lenders typically prefer to see a consistent occupancy rate of at least 55% to justify investment in traditional lodging,” the report said. “While individual months or quarters may show improvement, the constant fluctuations do not bode well for a stable lodging market.”

Numerous hotel projects are in various stages of planning or development in northern Beaufort County.

Sullivan’s Spartina Hospitality Management and partner 303 Associates have proposed a boutique hotel at the site of a former Coca Cola warehouse in Port Royal. The developers also plan a conference hotel on vacant property in Beaufort Town Center off Boundary Street.

Traditional hotels are also planned elsewhere on Boundary Street and Trask Parkway.

The Beaufort Town Center project would include ample meeting space and seek to draw group of business travelers, a market the Beaufort area hasn’t previously tapped, Sullivan said.

But it’s an expensive undertaking, and the market is not ripe to build right now, Sullivan said.

What’s proposed

In the report, the task force, composed primarily of hotel managers and neighborhood representatives, offered recommendations for further regulating vacation rentals.

Among their proposals:

• Cap the number of allowed rentals at 4% of the homes in a specified neighborhood or designated area.
• Allow only one stay per week to reduce how often visitors come and go from neighborhoods. Travelers could book a two-night stay, but the operator couldn’t rent the unit again within the seven-day period.
• Adopt new safety rules to include exit signs and lighting, fire sprinklers, exit routes in each bedroom, and landline phones and accommodations for people with disabilities.
• Lobby for state regulations requiring all short-term rentals to pay local and state sales and accommodations taxes and for the businesses to be considered commercial lodging and subject to the same building regulations.

A group of short-term rental operators who spoke to Beaufort City Council after a presentation on the task force report largely dismissed the prospect of additional rules.

“To say that they’re concerned about the traditional neighborhood is not right,” said Robert Achurch, a Beaufort attorney and short-term rental owner. “This is a barely or thinly veiled attempt to get rid of the competition of the hoteliers that are in this association.”

Beaufort resident Josh Gibson, a member of the city zoning board but speaking as a citizen and rental owner, said new rules were only recently enacted and haven’t been allowed enough time to assess how they’re working.

The hospitality organization leaders say the task force report isn’t meant to pit the hotels against short-term rental operators but to address a critical need for housing that hospitality employees and other workers can afford locally. They pointed to a recent study on Beaufort County housing showing that hundreds more units renting for $875 or less will be needed in the next few years and that the market needs an influx of available homes for sale at all price points.

They note that short-term rentals are more profitable for owners than long-term rentals, even if only occupied for a fraction of the year.

Beaufort Area Hospitality Association director Lise Sundrla said rental operators who feel shut out of the local group are welcome to join and participate. She acknowledged the rentals can improve the look of homes, show visitors and potential home-buyers the best of the area and allow owners extra income.

“There’s always a way for people to sit down and talk to each other,” Gibson said.