North Carolina’s sizzling visitor economy continues to be a top economic driver for the state and, judging by several new legislative conversations in the General Assembly, the impacts of this burgeoning economy are being heard loud and clear on Jones Street.
Among the many sectors within the visitor economy, few if any are as topical right now as our state’s booming vacation rental industry. And as one of the most visited states in America, the impact of our visitors has simply never been as pronounced. Traditionally a small subset of larger visitation trends to North Carolina, the vacation rental industry has rapidly grown to represent a substantial portion of the overall visitation economy, especially since the pandemic.
As a reflection of that vibrancy, North Carolina’s Vacation Rental Manager’s Association is proud to join with North Carolina’s Association of Realtors in supporting Senate Bill 667, which we believe, if passed, supports both this economy and our entrepreneurs.
Support for Senate Bill 667 is support for economic vibrancy, entrepreneurial value creation, and the ability to invest in our state without fear of subsequent restriction.
The rapid growth we’re experiencing in North Carolina, as is so often the case, has come with opportunities and challenges. It’s a national, state, and local issue as well. North Carolina isn’t alone in the challenge as places like Nevada, Hawaii, and many others are discovering.
Opportunities include visitation spending (and subsequent tax revenues) being up in all 100 counties at some point since the pandemic and an enormous amount of revenue being collected by homeowners leasing their homes. As an example of that economic impact, Airbnb hosts recently reported more than $350 million in revenue in rural North Carolina alone last year, and the overall industry is much larger than that.
Second- and third-order impacts of those trends potentially include slowing labor participation as a function of income offsets and increasing home prices related to revenue generation as well. But above all, the ability of homeowners to rent their homes has been a strong jolt to our state’s economy since the pandemic.
Another positive note in this trend has been the emergence of a wide array of diverse entrepreneurs from the mountains to the coast. These entrepreneurs excel at delivering a craft hospitality that puts North Carolina squarely in the minds of economic investment both within the state and nationally.
In terms of challenges, the popularity of vacation rentals has highlighted important conversations around affordable housing, transient populations, and perceived disruptions to the quality of life of local residents not directly participating in the visitor economy.
Several bills currently under consideration in the General Assembly seek to address both these opportunities and challenges. Senate Bill 667 suggests a state-mandated restriction on local governments’ ability to restrict homeowners from renting their homes (a proverbial coal-mine canary for this thinking was tested in Wilmington recently). As with all bills, it comes with controversy, although it clearly supports both the private property rights of homeowners and the importance of our visitor economy.
In addition, ongoing conversations around the little-known and yet critically important Vacation Rental Act continue to focus on a level playing field within the remarkably fragmented vacation rental space in the state. For example, while the act is clear in some cases, it’s also vague in others. And that vagueness has been a target for business disruption and varied enforcement mechanisms.
Conversations also continue on crucial zoning laws across the state, with an emphasis on supporting the challenges of affordable housing. As the popularity of vacation rentals has increased, that “supply” has in many cases come at the expense of residential homes instead of traditional purpose-built rental homes.
All of this debate is good, and recognition in the committee rooms of the General Assembly of the importance of the vacation rental industry is a good thing for the visitor economy. If we are to shape this sector to ensure its health and vibrancy in years to come, laws that support private property rights, level playing fields, and thoughtful ways to support affordable housing are timely and needed.
That said, in times of an economic boom the temptation can be to put high-pressure short-term restrictions in place that, when not properly thought through, can actually have the opposite effect in terms of the economy. An example of that could be restrictions on the vacation rental sector that, while tempting, can in the end increase complexity, reduce competitiveness, bind the private sector, and ultimately make places less welcoming to work, play, and welcome visitors to do the same.
Support for Senate Bill 667 is support for economic vibrancy, entrepreneurial value creation, and the ability to invest in our state without fear of subsequent restriction.