It seems like an easy sell. Take a trip to sugar-white-sand beaches, crystal-clear water and the promise of shopping, eating and relaxing. But so many factors can create a black cloud over the coastal tourism industry in Orange Beach and Gulf Shores. Fortunately, the silver lining is usually just around the corner.
Gene Brett, principal in Brett/Robinson along with his brother Tillis Brett and partner Tommy Robinson, has been in business for more than 40 years with his real estate, contracting and management company. He has seen trends come and go, but one thing remains the same.
“I have yet to sell a condo to someone who needed it, ” he says. “Owning a condo is a want, a desire.”
Historically, between 60 and 70 percent of people who owned condos would rent them out as part of their financing strategy. Today, only 50 to 60 percent rent their condos. According to Brett, a major deciding factor is the price paid for the condo. If a sales price is $250, 000 or lower, the condo is more likely to be rented out to others.
“Most who buy condos are still working and live away from the area and don’t want thousands of dollars just sitting there and not producing anything, ” he says. “But very few buy that have to rent them out to pay for them. That happened more in the ’70s and ’80s. Now, people buy for pleasure.”
Before the bubble burst, people would buy to resell condos. But, according to Brett, that didn’t last. Now, salespeople don’t sell as an investment. Instead, condos are sold for the pleasure of owning. Brett has seen prices climb about 2 to 3 percent per year and a slow increase in value. Over the past three years, the supply has decreased dramatically. At one time, there was a two-year supply of condos. Now, the supply is less than six months. About 1, 400 condos per year are selling.
“The market is nothing like what it was in the 2000s, but it is a good, healthy market, ” Brett says. “This is the third cycle I’ve seen since we’ve been around. Now we’re on the uptick of a good cycle. We should have some good years.”
According the Michelle Nelson, COO for Meyer Vacation Rentals, prices for rentals are currently at an affordable point for most people. In the past, the core market for renters was within driving distance. Over the past few years, that demographic has expanded. People are flying in or driving longer distances to visit the Alabama Gulf Coast. The Hangout Music Festival, in its fifth year now, brings more than 40, 000 people from all over the country. Families are renting 11-bedroom houses and spending a week during the spring or summer. Winter visitors are staying from one to three months. The average stay for guests is 5.3 days. The increase in guests is due in part to the publicity that came after the 2010 oil spill.
“We are also seeing an extended travel peak season, ” Nelson says. “Guests help us publicize by word of mouth. The demand has gone up for rentals. We spent more weeks at a high occupancy last year than we ever have.”
An increase in visitation to the Gulf Coast in the past few years is a welcome change from the oil spill days of 2010. For 100 days beginning in April, people feared the worst.
“I don’t know of anything worse, ” says Orange Beach Mayor Tony Kennon. “With a hurricane, you know when you’ve reached the end. The best we could do is just go one day at a time.”
According to Kennon, the Gulf Coast region had suffered some setbacks even before 2010. In 2004, Hurricane Ivan struck. Then in 2005, it was Hurricane Katrina. The banking crisis of 2008 added to the concern. Just as reservations started to pick up in 2010, the oil spill happened in April. Tourism plummeted 60 percent.
“It happened at the worst possible time. It killed the summer for us, ” says Kennon.
Working hand in hand with BP, the area got cleaned up and then turned its attention to marketing. Concerts were held on the beach, including Brad Paisley and Jimmy Buffett. The Jimmy Buffett concert brought out 30, 000 to 40, 000 people. Cleanup efforts still happen on a daily or weekly basis as needed, but things have gone back to normal. Because of the marketing efforts, the Gulf Coast was ready to see its best tourism season ever in 2011 — that is until 2012 and then 2013.
Herb Malone, president and CEO of Gulf Shores and Orange Beach Tourism, says that 2011 set a new record. Then in 2012, tourism went up another 15 percent, with Baldwin County hosting 5.3 million visitors who spent $2.9 billion. Tourism is the largest industry in Baldwin County, translating into 45, 000 jobs and a $1 billion total payroll.
“We had three back-to-back record years since the oil spill, ” Malone says.
In 2010, the Gulf Coast implemented programs to keep people updated on the progress of the cleanup and the state of the beaches. With grants from BP for marketing, people across the country became aware of the Alabama Gulf Coast and learned to trust the news coming from the area.
“Everyone working together is the key to success, ” Malone says. “People are educated now that Alabama has such beautiful beaches.”
According to Malone, the area sells itself and 2014 is expected to be another year of growth. The Alabama Gulf Coast enjoys lots of repeat business with new visitors wanting to come back, even if it isn’t in the very next year. Malone expects the momentum will carry on.
“I personally think the market has changed for the good, ” says Gene Brett. “Back in the late ’70s and ’80s, people didn’t even know about Gulf Shores. When you stop growing, you start dying.”
Laura Stakelum is a freelance writer for Business Alabama. She lives in Dothan.
Text by Laura Stakelum • Photo by Matthew Coughlin
