Ocean City, Maryland: A Coastal Gem for Seasonal Tourism-Driven Real Estate Investments

Ocean City, Maryland, a barrier island known for its iconic boardwalk and sun-soaked beaches, has long been a summer destination for East Coast travelers. Yet, its real estate market is evolving into a year-round opportunity, fueled by resilient seasonal demand and strategic infrastructure investments. For investors, understanding the interplay between tourism trends, regulatory shifts, and development projects is key to capitalizing on this dynamic market.

The Pulse of Seasonal Tourism: Resilience Amid Fluctuations

Ocean City's tourism economy is a study in contrasts. While its summer months (June–August) drive peak demand—accounting for 80% of annual visitor spending—the winter and spring seasons present both challenges and emerging opportunities. Recent data reveals a resilient recovery post-pandemic: in 2023, hotel occupancy and average daily rates (ADR) surpassed pre-2020 levels. However, March 2025 saw a 10% dip in hotel occupancy to 34.4%, while short-term rentals (STRs) held stronger at 38%—a stark reminder of weather's volatility.

Yet, spring 2025 rebounded strongly. The Boardwalk Rock music festival in April and sports events at the convention center spurred a 0.7% occupancy increase in hotels, outperforming nearby beaches like Myrtle Beach. This flexibility underscores Ocean City's ability to adapt: shoulder-season strategies (e.g., dynamic pricing, wellness packages) and event-driven tourism are now critical to sustaining demand.

The data shows STRs consistently outperforming hotels during off-peak months, signaling a shift toward investor-owned vacation homes.

Infrastructure Investments: From Resorts to Wellness Hubs

The Margaritaville Hotel & Resort project, while delayed by zoning disputes, remains a linchpin of Ocean City's infrastructure ambitions. Originally planned as a 265-room resort, it now faces scaled-down execution as a 230-room hotel, losing its “destination resort” branding. While this reduces its initial impact, the project's oceanfront location and accessory retail still promise to boost tourism revenue. More importantly, the $2.7M Downtown Recreation Complex—set to open in summer .2024—will anchor year-round activities, from kayaking to yoga, aligning with the growing demand for wellness tourism.

These projects highlight a strategic pivot: diversifying Ocean City's appeal beyond summer. The proposed five-night minimum stay for STRs in residential areas aims to balance tourism and housing needs, though its impact remains uncertain. For investors, the takeaway is clear: properties near new amenities (e.g., the recreation complex) or those offering extended-stay flexibility (e.g., 30+ night minimums) will thrive.

The Real Estate Market: Where to Invest?

1. Short-Term Rentals (STRs):
   STRs dominate Ocean City's market, accounting for 99.7% of active listings. Data shows a 2.6% YoY revenue growth, with the median annual revenue per listing at $24,507. Focus on properties with:
2. Oceanfront or near-beach locations (ADR reaches $295).
3. 2–3 bedroom units (68.4% of listings), catering to families.

4. Wellness amenities (e.g., outdoor showers, kayaks for rent).

5. Hotel Conversions:
   Renovated hotels like the Ashore Resort & Beach Club (formerly Fontainebleau) and the Hilton Garden Inn Ocean City exemplify the value of upgrading inventory. Investors should prioritize:

6. Beachfront or boardwalk-facing properties with updated dining options.

7. Flexibility for event hosting (e.g., meeting spaces for corporate retreats).

8. Year-Round Properties:
   The Gen Z/Alpha demographic (50% of visitors) and wellness trends favor spaces with:

9. Modern design (open layouts, eco-friendly features).
10. Proximity to the Downtown Recreation Complex for fitness enthusiasts.

Risks and Considerations

• Weather Dependency: A single cold snap or storm can disrupt occupancy, requiring investors to hedge with off-season revenue streams.
• Regulatory Uncertainty: Monitor the five-night minimum policy and its impact on STR demand.
• Margaritaville's Fate: If approved, the scaled-down hotel adds 230 rooms—potentially easing summer lodging shortages.

Final Take: Invest with a Long-Term Lens

Ocean City's real estate market is primed for growth, but investors must balance short-term volatility with long-term trends. The STR sector, supported by strong domestic demand and rising wellness tourism, offers the most immediate upside. Meanwhile, infrastructure projects like the recreation complex position the town to compete with destinations like Cape May and Stone Harbor.

For now, prioritize family-friendly, well-located STRs or renovated hotels with event capacity. Keep an eye on the Margaritaville project—its resolution could unlock further tourism expansion. As Ocean City evolves from a summer getaway into a year-round destination, the right properties will reward patient investors.

The upward trend reinforces the sector's resilience and investment potential.

Avi Salzman
June 19, 2025