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 (ADR) climbing slightly above $140. Charleston benefits from strong diversification efforts. The city, which is home to Joint Base 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 to 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.

Charleston is a popular tourist destination; Condé Nast Traveler magazine readers have ranked Charleston the top tourist town in the United States since 2010, and in 2012 and 2016, the readers voted Charleston the top tourist destination in the world. As Charleston continues to gain prestigious accolades as a popular tourist destination, leisure demand has continued to increase; in addition, this has also influenced group demand, with Charleston being a top destination for weddings and a growing destination for reward travel by companies. Furthermore, in 2009, Boeing entered the market, allowing for a quick recovery following the Great Recession. Boeing continues to expand, and a considerable number of supporting businesses have entered the market since 2009. New airlines entering the market and increasing passenger traffic has also continued to support demand in the area. Additionally, the deepening of the Port of Charleston will allow larger ships to enter in the future. As the Volvo facility is constructed and production begins, we anticipate demand to increase in the Summerville and North Charleston submarkets. Furthermore, Charleston is home to over 250 tech companies, such as Blackbaud, which is opening a new, 36,000-square-foot headquarters facility in 2018. These factors all bode well for the market. While, new supply is expected to outpace demand in 2018, we anticipate the supply to be absorbed quickly and occupancy to flatten because of the aforementioned factors.

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 at the end of its lease, and a new, 200-room 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 positively affected 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 on to 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 $109.13
2019 (f) $112.39
2020 (f) $115.76

For more information, please contact:

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