Visitor numbers to the Asheville area are booming — but national headwinds could spell bad news for the area’s hotels, according to the head of the Buncombe County Tourism Development Authority. Members of the body dissected the numbers Wednesday at their monthly meeting.
“Hotel demand growth undershot U.S. GDP growth, and historically those are very intrinsically tied,” TDA President and CEO Vic Isley said, referring to a recent decision by Tourism Economics and analysis firm STR to downgrade their 2024-2025 hotel performance forecast. “So, the fact that hotel demand has not kept up with GDP growth was a warning sign for them.”
Nationally, the slower performance growth is being driven by a higher cost of living and a rise in hotel operating expenses, the firms said. Economy and mid-tier hotels have been hardest hit, while upscale hotels have been less affected.
Earlier this month, Visit NC released a report by Tourism Economics showing that nearly 14 million visitors traveled to Asheville and Buncombe County last year, spending nearly $3 billion, an all-time high. The figure amounts to roughly 20% of Buncombe County’s total annual economy.
For the first time, tourism-generated income in 2023 exceeded $1 billion and supported 29,000 jobs, which is equal to roughly one in seven jobs throughout Buncombe County, Isley said.
Asheville’s rapidly-expanding airport has also seen record numbers of travelers, with passenger numbers up 11% through the first half of 2024.
Despite the unprecedented visitor numbers, several factors slowed the performance growth of local hotels.
Higher-spending travelers are tending to travel abroad more frequently than they did years ago, Isley noted.
“And there’s been a return to larger cities, so places like DC, New York, Boston, Seattle are seeing those double-digit returns, where we were seeing those sooner coming out of the pandemic,” she said.
Short-term rentals, also known as STRs or vacation rentals, are also cutting into hotels’ dominance of the lodging market.
From 2019 to 2024, hotel demand in Buncombe County grew 5%, while vacation rental demand grew a staggering 57%. Hotel demand remains slightly above vacation rental demand, although the gap has narrowed considerably. The county’s overall lodging demand in July was up 5% year-on-year.
The growth in vacation rental inventory is slowing, and some units are being converted back into long-term rentals, Isley noted.
“So that balance is something we’re going to continue to keep an eye on through the end of this year,” she said.
The TDA meeting came hours ahead of the first gathering of a new, 11-member committee tasked with providing the Buncombe County Commission with proposed regulations for new short-term rentals – a hotly-debated issue.
The group, known as the Ad Hoc Short-Term Rental Committee, meets every other Wednesday at 5 p.m. and is expected to make its recommendations to the Planning Board in November.
