United States -  Charleston

The Charleston hotel market continued to strengthen in 2017, reaching a historically high market-wide occupancy level of over 75%, with average rate climbing slightly above $140. Charleston benefits from strong diversification efforts. The city, which is home to JointBase Charleston, the Medical University of South Carolina, and Boeing, enjoys robust military, educational, healthcare, and retail sectors, as well as strengthening manufacturing, energy, and technology industries. An affordable cost of living, relatively low unemployment figures, and a diverse economy remain attractive to business professionals and families. As new businesses enter the market, demand continues to spread out to the various submarkets, specifically Mount Pleasant and Summerville. One of the biggest new demand generators for the market is Volvo; Volvo is currently building a $500-million facility in Berkeley County that will produce up to 100,000 cars per year and could create up to 4,000 jobs. The presence of the military, multiple colleges and universities, and the continued expansions at Boeing should continue to spur growth for the Charleston area.

Supply growth has remained moderate in recent years, adding guestroom inventory to each of the submarkets. While a 50-room ban was placed on new hotel growth on the peninsula in 2015, several projects had been preapproved, including the 179-room Hotel Bennett, which is expected to open in the summer of 2018. Furthermore, the Port Authority building will be demolished after the completion of their lease and a new, 200+ luxury hotel is expected to open in 2022. The addition of these luxury hotels and several other openings of luxury and upscale properties over the last two years, including The Dewberry, The Spectator Hotel, and The Grand Bohemian, have all had an impact on average rate in the market. With the high barriers to entry, new hotels must command a high average rate in order to be feasible. While Charleston is not a top-25 market, it is one in which many large REITs and development companies hope to own and/or manage a trophy asset. In addition to the growth in Downtown Charleston, new supply has been strong in Mount Pleasant, North Charleston, and Summerville. We anticipate occupancy to continue to decline slightly in 2018 and 2019, followed by stability in 2020.

The pace of transactions in the Charleston market remained modest in 2017 and during the first quarter of 2018, with most local activity occurring in North Charleston among the nationally branded, limited- and select-service assets. The November 2017 sale of the Courtyard by Marriott Charleston Summerville at roughly $210,000 per room, represented the highest sale price per key in the greater Charleston area in 2017. While we expect future sales to command higher transaction prices, we do not anticipate high turnover in the market, as most owners prefer to hold onto their assets in this market.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Change In Value For Market:

Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Charleston RevPAR Change

Charleston RevPAR

Year RevPAR
2007 76.56
2008 72.13
2009 62.52
2010 67.93
2011 72.98
2012 77.42
2013 83.78
2014 92.97
2015 97.27
2016 102.07
2017 106.51
2018 (f) 109.13
2019 (f) 112.39
2020 (f) 115.76

For more information, please contact:

Heidi Nielsen
[email protected]
  • +1 843 847-1986 (w)