For those in the thread who mentioned nightly rentals at rates less that The Pearl or WaterColor Inn, check out Lisbeth's B&B in Seagrove. Why South Walton doesn't pave the way for more B&Bs to meet the nightly need instead of hotels is beyond me. The current laws or zoning make it cost prohibitive for new B&Bs (I believe because you have to be to a hotel-like code, i.e. elevators/access, but I can't remember exactly - though we did look into it a few years back as I had worked in the industry and would have loved to own a similar place here)... So the owners of Lisbeth's purchased their home/location because it was grandfathered in having been a bed and breakfast previously. I'm guessing Highland House and the inn located in Grayton Beach are the same way. There is one villa in Alys now renting bedrooms nightly - not sure how they got around the legal limitations.
We've previously stayed at Pearl and WaterColor for staycations, and (especially after the management changes at The Pearl) we have found Lisbeth’s to be a much more enjoyable experience, and definitely our preference over the other two. The rooms may not be as "luxurious" and of course it's like comparing apples and oranges (for example, no pool yet at the B&B), but the location is actually a shorter walk to the beach: you just walk out the front door, cross the street, walk a small path and go down a sand hill. At the other places we had to go down long hallways, ride elevators, walk through resorts or cross large green-spaces, and then take large ramps or stairs down to the actual beach. (And neither of the hotels include beach chairs and an umbrella - in WaterColor it is an extra $25+ a day and in Rosemary Beach we were charged a separate “daily resort fee” during our second stay to cover the cost whether we used them or not.) And the homemade breakfast at Lisbeth's was far superior to the other two places - and already included in the rate.
I'd really love to see the regulations change to pave the way for more locally-owned B&Bs in current homes vs. the taller, bigger, corporate-owned hotels for nightly visitors.