Rising interest rates are causing investment in South Carolina’s hotel market to soften, according to a third quarter report from Colliers South Carolina. However, average daily rates and occupancy remain higher than they were prior to the pandemic.
A combination of interest rates, surging inflation and overall macroeconomic challenges have caused an anticipated wave in distressed hotel assets coming to market not to occur, according to the report. However, that is expected to change in the next six to nine months. Colliers also noted that the conversion of hotel properties to multi-family housing is increasing because of population growth and an increased need for housing statewide.
Columbia hotel occupancy increased to 62.72% to end the third quarter. Average daily rates increased to $103.47 and revenue per available room increased to $80.64. Both rates and occupancy are significantly higher than the same time in 2021, according to the report. The return of University of South Carolina football and its influx of visitors caused the market to increase second-quarter rates, which is usually considered the most active quarter in the region’s hotels.
Occupancy in the Greenville market was 64% during the third quarter, while revenue per daily room decreased slightly to $70.71 and average daily rates rose to $109.71, according to the report. The region’s hotel market increased with the Grand Bohemian and Four Points hotels adding 324 rooms in the Greenville-Spartanburg market.
Charleston’s occupancy rate fell to 68.89% following the busy summer tourism season. The average daily rate decreased to $155.92 and revenue per available room was $107.82. Colliers predicts that an uptick in year-end travel will likely push both rates and occupancy up in the Charleston market at year’s end. New hotel construction and hotel development in the market continues to be strong.
Other coastal markets saw a decrease in occupancy rates and average daily rates as the strong summer tourism season came to an end. The average daily rate in the Hilton Head/Beaufort area decreased to $221.99, revenue per available room dropped to $140.45 and occupancy was 63.27%. The average daily rate in Myrtle Beach decreased to $151.65, while the occupancy rate fell to 63.3%. Activity along the Grand Strand is expected to remain steady for the next several months with a slight year-end uptick.