Ocean City, MD: A Coastal Gem with Real Estate Potential Amid Tourism Growth and Infrastructure Boom

Ocean City, Maryland—a 10-mile stretch of beaches and boardwalks—has long been a summer retreat for East Coast families. But recent trends suggest it's evolving into a year-round destination, driven by surging tourism, infrastructure investments, and shifting vacation preferences. For real estate investors, this presents a compelling opportunity to capitalize on a market poised for growth.

The Tourism Surge: Resilience and Rebound

Despite a 10% dip in hotel occupancy in March 2025 compared to the previous year, Ocean City's tourism officials remain bullish. The decline was attributed to seasonal weather fluctuations, a common occurrence in coastal markets. However, spring bookings have surged, with the Boardwalk Rock music festival and strong summer reservations driving optimism.

Key drivers of this rebound include:
1. Post-pandemic recovery: Lodging metrics for 2023 surpassed pre-pandemic occupancy and average daily rates (ADR), signaling a resilient market.
2. Short-term rental dominance: STRs now account for 99.7% of active listings, with an average daily rate of $295 and median annual revenue of $24,507. Their 38% March 2025 occupancy outperformed hotels (34.4%), highlighting their appeal for families seeking kitchen-equipped units.

Infrastructure Investments: Laying the Foundation for Growth

Ocean City is betting big on infrastructure to attract year-round visitors and diversify its economy.

• Downtown Recreation Complex: A $2.7 million facility set to open in summer 2024 will offer indoor rock climbing, kayaking, and event spaces, reducing seasonal dependency.
• Hotel upgrades: Renovated properties like the Ashore Resort & Beach Club (formerly Fontainebleau) and the Hilton Garden Inn Ocean City Oceanfront now offer modern amenities, appealing to both leisure and corporate travelers.
• Margaritaville Beach Resort: A scaled-back 230-room project aims to add beachfront appeal, easing lodging shortages during peak seasons.

These investments signal a strategic shift toward wellness tourism and off-season engagement, reducing reliance on summer alone.

Investment Opportunities: STRs vs. Hotels

The real estate landscape offers two distinct paths for investors:

Short-Term Rentals (STRs)

• Pros: STRs dominate demand, with 2–3 bedroom units near the boardwalk or Downtown Recreation Complex commanding premium prices. The five-night minimum stay policy (pending public vote) could stabilize off-season occupancy.
• Risks: Regulatory uncertainty and economic pressures—some visitors have cut annual trips from 5–6 to 2–3 due to inflation.

Hotels

• Pros: Renovated beachfront hotels like the Ashore Resort cater to corporate and event-driven tourism. Their dynamic pricing strategies can maximize revenue during peak seasons.
• Risks: STR competition has reduced hotel ADR by 3% in 2025, and weather volatility remains a wildcard.

Recommendation: STRs offer higher returns for risk-tolerant investors, particularly in well-located units. Hotels are safer bets for steady cash flow, especially those with event hosting capabilities.

Risks to Consider

• Weather dependency: Unpredictable spring/autumn storms or cold snaps can disrupt occupancy.
• Regulatory shifts: The STR minimum stay policy could alter demand dynamics.
• Competition: Cape May and other coastal towns are vying for the same leisure dollars.

Conclusion: A Coastal Market with Legs

Ocean City's blend of tourism resilience, infrastructure upgrades, and evolving vacation trends positions it as a standout real estate play. While short-term dips occur, the long-term trajectory—bolstered by $295 average STR rates, post-pandemic recovery, and strategic investments—suggests strong upside.

For investors, the key is to prioritize location and adaptability: STRs near amenities, hotels with event space, and properties aligned with the Downtown Recreation Complex's year-round appeal are likely to outperform. Monitor occupancy trends closely, and stay ahead of regulatory changes—this coastal gem is worth the strategic bet.