I'm not sure when the last time you were in Wilmington was but it's far from withering. There are at least five restaurants open for dinner and another two breakfast spots. Property values have soared since the pandemic and although they have stabilized or even come down a bit, they're still double what they were in 2019. During the summer and fall the mountain biking scene continues to grow as more trails are developed or improved. The motels don't often fill up because most folks Airbnb it these days.
As far as staying in Wilmington versus LP, I don't blame anyone for wanting to stay in a beautiful touristy town like LP while they're on vacation. When I pick vacation spots, I am definitely thinking selfishly....but then again I'm probably thinking selfishly most of the time, I'm kind of an a**hole.