Tybee Island limits short-term rentals in residential areas. Could Hilton Head do the same?

Short-term rental restrictions in tourist destinations have made local and global headlines for over a decade, begging the question: Could Hilton Head Island consider getting rid of short-term housing for vacationers?

In residential neighborhoods, Georgia’s Tybee Island voted to stop issuing short-term rental permits and prohibit their transfer upon sale in June. The same month, in Spain, Barcelona Mayor Jaume Collboni announced plans to ban short-term rentals starting November 2028. His announcement didn’t stop Barcelona residents from demonstrating against overcrowding and housing shortages caused by short-term rentals by squirting water guns at visitors.

Hilton Head Island is undeniably different than Tybee Island and Barcelona. Still, local Facebook and NextDoor pages, and conversations between residents hold similar sentiments to the European protesters holding “tourists go home” and “you are not welcome,” signs.

During the Town of Hilton Head Island’s discussion last month over whether to move forward with the William Hilton Corridor project , dozens of residents attended meetings condemning the project and saying that Hilton Head tourism is big enough. To make matters more complicated, much of Hilton Head’s economy is tourist-dependent.

Phasing out short-term rentals in residential neighborhoods, as Tybee Island is, would be a major change for the island. Hilton Head Island Mayor Alan Perry said that the Town Council hasn’t discussed what the neighboring island is doing and if it would apply to Hilton Head.

“We have not had a chance to dive into short-term rentals, what Tybee has done, or what anybody else has done recently,” Perry said.

In June town meetings he pointed toward stricter regulations. Perry said that Hilton Head Island doesn’t have occupancy caps on short-term rentals, hasn’t implemented its parking plan , and lacks a municipal court so it could issue parking tickets. He also said the town needs to address its Land Management Ordinance and “get rid of eight units an acre.”

“We don’t control what we are,” he said. “If we talk about how to reduce traffic, we’ve got to put these policies in place to make certain that we are addressing it.”

The town started to address short-term rentals in 2023 with an ordinance requiring renters to buy a $250 short-term rental permit and have business licenses to operate.

Is the money worth the noise?

Sea Pines collected millions of dollars in gate fees last year. At the same time, tourists going into the gated resort can back up traffic at the Sea Pines Circle for what feels like an eternity.

The entrance to Harbour Town illustrates the crux of the discussion: whether the economic impact is worth the disruption to residents. Government representatives at a neighboring beach with the same conundrum believe so. To protect tourism revenue the City of Myrtle Beach approved a nine-month moratorium on turning short-term rentals into long-term properties in April.

On Hilton Head there’s added debate over whether the traffic, noise and parking problems can be attributed to short-term rentals or to day-trippers driving onto the island from Hardeeville and Bluffton. But regardless of where they’re coming from tourists stimulate the economy with what they spend on the island. Secondary homeowner dollars are also a major contributor to local schools. In South Carolina, primary homeowners are exempt from school operation taxes. Instead, funding comes from secondary homeowners and local sales and use taxes.

“Thirty-seven thousand people cannot sustain this island and everything it has to offer,” Realtor Peter Geary said of Hilton Head’s around 37,660 full-time residents. “We only are successful with tourists.”

There are about 6,700 active permitted short-term rental properties on the island, according to the town’s dashboard. Last year, the town logged 335 short-term rental complaints by 153 complainants through its complaint form. Most of the complaints were noise or trash-related . Homeowners tell horror stories of living among rentals, sometimes advertised for 30 people, in residential neighborhoods. They have also proven dangerous. In 2022, a Palmetto Dunes rental property caught fire , killing one occupant.

The other side of the coin is exactly that: coin.

Home and villa rentals on Hilton Head Island had a direct economic impact of $985,790,272 in 2023, 8% more than in 2022, according to Charlie Clark at the Hilton Head Island-Bluffton Chamber of Commerce. She said they use data from a third-party travel research firm called KeyData to get the amount. The number is nearly $1 billion and about one-third of the $3.1 billion tourism brought to Beaufort County in 2023.

At the same time, slightly fewer people are renting homes and villas. Clark said rentals are down 3.2% over the same time frame and the increase in economic impact despite fewer visitors can be attributed to higher rental rates, which hover at an average of $318 per night, compared to hotels’ average of $282 per night.

“I think it’s really important for the island, but I also think it needs to be regulated,” Geary said, mentioning that a ban or extreme regulation would also impact the real estate market.

Impact to Hilton Head real estate

A moratorium on short-term rentals would fundamentally change how Realtors market homes and eliminate the segment of buyers who want to use homes and villas as rental properties.

“If we change the use of a property, then that limits who would buy it,” Hilton Head Area Realtors CEO Jean Beck said. She also mentioned that with the area’s gated communities, buyers can already self-select the community they want based on whether the community policies align with short-term rentals.

For example, about one-third of Sea Pines properties are short-term rentals, said Geary, who works at Sea Pines Real Estate. On the contrary, another large community, Hilton Head Plantation, doesn’t allow rentals for fewer than six months .

Geary said that many of his clients look to purchase property that they can rent short-term, but “it’s not because they’re looking to make money.”

Instead, many buy properties and temporarily rent them short-term during the busy season as a step toward home ownership, he said.

“They’re getting into the market,” Geary said. “They’re using the property in the off-seasons, but ultimately they want to retire and they’re using the rental market to cover their costs.”

When will the discussion about new rules happen?

As to when the Town of Hilton Head Island will discuss potential changes to short-term rental regulations and managing the tourist population, “We’ll be talking about short-term rentals, parking, occupancy, and all that later in the summer,” Mayor Alan Perry said.