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Vacant Luxury Rooms With a View

Rentals: Some high-end coastal properties are languishing as vacationers opt for fewer frills.

July 18, 2002|DARYL STRICKLAND | TIMES STAFF WRITER

Upscale vacation rentals on the Southern California coast that go for thousands of dollars a week are not drawing enough paying guests to suit their owners this summer, setting off a scramble to book them before the sand turns cold.

Reservations of luxury properties started slowly this year and have continued to drag as some wealthy foreigners and well-heeled Americans take a pass on extended stays at the beach.

This is in contrast to the much bigger part of the vacation rental market: smaller, less expensive homes with fewer frills. These homes generally have been leased up.

Some owners of luxury seaside retreats have taken the unusual steps of cutting prices or offering an incentive of staying five weeks for the price of four to lure last-minute renters.

For The Record
Los Angeles Times Tuesday July 23, 2002 Home Edition Main News Part A Page 2 National Desk 10 inches; 373 words Type of Material: Correction
Luxury rentals--A photo caption with a story about high-end home rentals in Thursday's Business section incorrectly described summer bookings at Sunset Cove Villas in Laguna Beach. The Villas' owner said the units are fully rented this summer. Reservations are not down, as the caption indicated.
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In Laguna Beach, Danielle Purcell showed a visitor through a dramatic home where the turquoise waves of the Pacific nearly curl into the living room and are easily seen through a wall of glass that extends the length of the villa.

She temporarily cut the monthly rent to $16,000 from $20,000, but the house, along with several other costly rentals Purcell manages, is available through early September. It is the first time in more than a decade that she can recall a vacancy for a beachside home during the peak season.

"I keep lowering prices, but I have no tenants," said Purcell, an agent at Village Rentals in Laguna Beach, as she headed down a spiral staircase to the bottom floor. She shrugged her shoulders. "There's nothing else I can do."

Expectations were high this year for a brisk vacation rental market, from high-end beach homes to low-end inland cottages. A poll of more than 500 property managers nationwide predicted an 8% rise in revenues from short-term rentals compared with a year ago, according to the Vacation Rental Managers Assn., a Santa Cruz-based group.

The upbeat view came despite a growing number of consumers, particularly baby boomers in their peak earning years, who have been pulling money out of the stock market or other investments to buy second homes that can be turned into rentals, adding to the inventory in many resort areas.

But with the economy still laboring and travel concerns lingering after Sept. 11, consumers have scaled back their plans for expensive vacations, said Michael Sarka, the rental association's executive director. The Travel Industry Assn. of America predicted only a 2% increase in summer travel this year. That survey found tourists were planning to take shorter trips, spend less money and stick closer to home.

Travelers also planned their trips later this year, Sarka said, probably hoping to stretch their dollars further. Heading into summer, many property firms nationwide found bookings were less than 90%, he said, leaving them concerned about whether the season would be a financial success.

Along the Southern California coast, from Santa Barbara to San Clemente, property owners have reported mixed results. Although some have seen a decline largely because of fewer affluent couples or groups willing to rent exclusive homes, others have seen a steady stream of families willing to rent more modest homes.

On Catalina Island, mid-priced condominiums located off the beach with a distant view of the Pacific Ocean lease for $1,400 a week and remain 98% occupied by vacationers who return each year, said Kevin Strege, owner of Catalina Island Vacation Rentals Inc. Overall, he said, business has grown 10% from a year ago as more travelers opted for shorter trips instead of flying to faraway places.

With travelers staying closer to home, cottages in Oxnard renting for $1,200 a week have been filling up with value-conscious visitors, said Annette Schaefer, who operates Channel Island Realty in Oxnard. Vacancies have remained on par with a year ago, she said.

"We're just about full," said Jim Jacobs, who heads Associated Realty Services on Newport Beach's Balboa Peninsula, where mid-range and upscale rentals have been more than 95% occupied this summer, slightly ahead of the same time last year.

But in other resort areas, vacancies in the upper-end were easier to spot while more modest homes were hard to find.

In Santa Barbara, some owners of luxury properties have taken the unusual step of negotiating monthly rates, as an estimated 10% stands empty this season, said Gary Goldberg, who owns Coastal Getaways Realty. In a couple of cases, he said, the price fell to $20,000 from $25,000, as some homeowners were willing to cut rates 20% on expensive units that usually are the first to be reserved.

"People just aren't throwing their money around as much," Goldberg said. "I think our high-end has been hit by the stock market more than anything else."

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