2020 YE Hospitality South Carolina Report

2021 will see stabilization and improvement

Key Takeaways

• With the availability of the new COVID-19 vaccine, occupancy and revenue per available room (REVPAR) is anticipated to increase. 
• The passage of the COVID-19 Relief Bill at the end of 2020 should provide financial stabilization to hotel properties. 
• There will be a tourism boom beginning in the fall of 2021 as the vaccine is fully deployed and households begin spending their savings.
• With the improvement of market fundamentals, transactional volumes should increase over the next year.

South Carolina Market Overview

The hotel sector was negatively impacted across the nation in 2020. Occupancy dropped to nearly 20% in April, recovered to 50% and slowly fell back to 40% as the number of cases surged in November and December.  In South Carolina, occupancy dropped to about 50%, the average daily rate (ADR) was reduced by 17% and revenue per available room was halved. Geographically, results varied substantially. Drive-to markets like Myrtle Beach, Hilton Head and Charleston outperformed similar fly-to markets. Similarly, economy and mid-scale properties with fewer amenities and limited convention and meeting space performed better. 

Operationally, the hotel industry was one of the most adversely impacted over 2020. There were two pieces of legislation passed in 2020, the CARES Act and the COVID-19 Relief Bill to address this. Both provided funds to small businesses in various forms to offset the negative impact of government shutdowns and reduced economic activity. Each materially impacted the hotel industry with low interest and forgivable loans. However, the health of hoteliers varied substantially depending on the mix of properties and rooms within their portfolios and their relative financial position prior to the pandemic. Operators whose mix of income was dominated by upscale, upper upscale and luxury properties lost the most business and had the largest ongoing expenses to continue to operate. Conversely, operators whose income was generated by economy, midscale and upper midscale properties fared much better with lower operational costs and greater occupancy levels.