It depends on what you want to do once you get there. You can get reasonable accommodations in the area, just not in the center of town. And you can get discount show tickets. It just depends on what you're looking for.
One thing we never sacrafice is location. We don't mind staying in a basic, clean hotel, but we always stay close to the action. That allows us to walk instead of driving, and cutting back on transportation time = more vacation time.
For example, when we visited Denver, we stayed downtown on the 16th Street Mall. Yes, we could've stayed on the outskirts of town more cheaply, but this allowed us to walk to a variety of restaurants, to the state capital, to the Mint, to all sorts of shops (including a fantastic bookstore about which my youngest is still talking). And the trolly took us out to the ballfield, to a concert location, and to other places beyond walking distance. The convenience was easily worth the extra hotel cost, especially since we didn't know the area. If we'd stayed in the outskirts of town, we'd have needed an extra day to do all we did -- and when added to the cost of parking in town, that'd have added up to the cost of the downtown hotel anyway.
We've found this "location trumps all" philosophy to be both most convenient and economical in almost every situation.
I agree with the OP. Here in Michigan, my friend and her family rented a basic condo in South Haven on Lake Michigan for a week and spent $3500 just for the condo! And while the complex is on the lake, her unit wasn't beach front or anything. DS and I can do Disney for a week (with flight) for WAY less.
In comparison, I"m renting a 3 bedroom/2 bath first-row place at the beach for Thanksgiving weekend for less than $800. I've stayed in this exact house before, and although I don't like the kitchen much (inconvenient layout), the rest of the house is great. Good parking, screened porch, comfortable living room, good beds. I know of plenty of 3rd, 4th, 5th row houses for half that price. You can quote examples of high-priced rental areas and low-priced rental areas all day, but the real question is, What's average?
There are not many places you can rent right on the beach at the Jersey shore. LBI is the exception to this rule
Whereas, here in the South, rental houses at the beach abound.
There'd be a reason why so many Northerners come South for the beach, yet we never go North.
Really? You can rent a house, pay for all of your meals, Boardwalk games, rides, water park admission and such for under $1,000 for a week for a family of 3? We are not beach people but I find that hard to believe.
Yes, this is totally possible -- well, except for the Boardwalk games; we don't really have that here. To stay under $1000, you'd need to choose off-season (the water's still great this time of year and for another month at least). And you'd have to choose a small house not right on the beach; for that price, don't expect a stylish, up-to-date place, but you could probably have a one-bedroom condo with a pool or a 3-bedroom house. Plan to cook most of your meals "at home", but you can still eat out a couple times for this price -- especially if you pick up some of those coupon books outside the Piggly Wiggly. And you'll have money left for some moderate activities; of course, I could also point you to two moderate hotels that includes a small water park.
Also, most of us know people who either own beach houses or timeshares -- they aren't all that expensive -- and we're constantly invited to go to this or that family's beach house for the weekend. For free, just bring groceries. Or people who put together 2-3 families to spend a week at the beach and share a big house. The draw of the beach is
people, not activities. You go with family or friends, and the activity is grilling out a big meal, then hanging out with friends at the beach house. We love going surf fishing after dark: We bring a big cooler of drinks and sandwiches and stay out on the beach 'til the wee hours of the morning. Kids ride bikes all day, go boogie-boarding, catch crabs in the tidal pools. Board games or card games, movies with the family, reading on the beach. For-cost activities aren't star features in Southern beach vacations.