South Carolina’s hospitality industry sees a strong start to 2023

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South Carolina’s hospitality industry has had a strong start in 2023 despite a decrease in the number of rooms available statewide, according to a recent report from Colliers South Carolina.

Statistics show that the industry has outperformed year-over-year, with a strong first quarter in 2023.

Investors in the industry as well as property owners have been dealing with a unique market situation as they navigated the current lending environment, according to the report. Buyers have realized the high cost of debt and adjusted underwriting while sellers, which resulted in softer transaction volumes in the first quarter of this year, the report said.

Strong hotel performance is partly the result of a recovery in corporate travel from the need of team building meetings and in-person regrouping, and group travel has increased because of short work weeks nationwide and remote working, analysts said.

Revenue generated per room, or RevPAR, increased statewide, along with the average daily rate per room and occupancy, which indicates a robust environment for the hotel industry. The first quarter of 2023 outperformed both the first and fourth quarters of 2022, including rooms under construction. While the supply of new rooms is small, 652 new rooms should deliver by the end of this year, the report showed.

In the first quarter of 2023, the overall occupancy rate statewide was 66.5%, with 1,700 rooms under construction. Revenue per available room stood at $85.54, and the average daily rate statewide was $128.57.

In the Columbia area, occupancy in the first quarter increased to 70.1%, higher than the occupancy of first quarter 2022 which was 66.1%. RevPAR was $79.54 and the average daily rate was $113.53. According to the report, economy and midscale hotels in Columbia are seeing a positive impact from the recent start of construction on the I-26 “Carolina Crossroads” project, which has provided the market with an influx of construction workers needing temporary housing.

The hospitality industry in Greenville-Spartanburg continues to recover because of an increase in business travel, the report said. Key indicators have remained stable and increased slightly, indicating the Upstate has been less influenced by or depending on business and tourism-related visits compared to other South Carolina markets.  Occupancy rates were in line with the first quarter of 2022 at 71.5% while RevPAR and average daily rate were up to $81.83 and $114.53 respectively, compared to $57.21 and $100.12 in the fourth quarter of 2022.

During the first quarter of 2023, Charleston experienced strong growth and outperformed Q1 2022 and Q4 2022 despite the high benchmark. RevPAR, ADR and occupancy all surpassed 2022 year-over-year and quarter-over-quarter with a RevPAR of $139.24, an ADR of $176.50 and an occupancy rate of 78.9%. There are some indicators that the Charleston market will remain strong but may level off during the spring and summer seasons.

Notable recent sales statewide included the 123-room Courtyard Charleston for $8.3 million, a 110-room Hampton by Hilton in Columbia for $7.5 million and a Red Roof Inn in Greenville which sold for $4.1 million.