Market Trends
The Midlands Hospitality Industry Showing Signs of an Improving Economy
By Tom Sponseller, President & CEO, South Carolina Hospitality Association
As spring flowers begin to bloom, the Midlands hospitality industry is showing signs of an improving economy. While hotels and restaurants are reporting more favorable sales compared to the same period last year, hotel average daily rates continued to decline through the end of February.
Last year, 2009, was not a good year for the Midland's tourism economy. Hotel occupancy rates declined from 62.1% in 2008 to 55.9%, a 10% decrease. On top of less overnight visitors to the Midlands, room revenue decreased 6.4% in 2009 for a total decrease of 15.7% in revenue per available room. That is about 16% less money in the economy from visitors, but also less to benefit our local governments, recreational facilities, arts and culture and tourism facilities like the zoo, EdVenture and local museums that depend on the taxes generated by these visitors.
While the first two months of 2010 show improvements in visitors to the Midlands area, occupancy rates are only up 3.8% over January and February 2009, the average daily rate continues to decline as the lodging industry is working to fill rooms with discounted rates. The average daily rate for the two months of 2010 is down 4.5% from last year to a low of $66.95 per night.
Last year, the Midlands and Greenville Spartanburg saw the largest declines in the lodging industry in our state. Statewide occupancy was down 6.7%, yet Columbia was down 10% and Greenville Spartanburg was down 13%. The state's high tourism areas, Hilton Head, Charleston and Myrtle Beach were down 2.2%, 5.4% and 4.7% respectively. Other areas, primarily along the Interstates either saw minimal decreases in occupancy or in some cases, a minor increase over the prior year.
In other words, 2009 saw less business travel in 2009 than 2008 as the Midlands and Greenville Spartanburg are more dependent on business travelers than individuals. But, the truth be known, both of those communities have a unique opportunity in this economy to not only improve hotel occupancy rates, but the entire local economy by attracting individual travelers who might not be aware of some of the things available in the local area.
If you have watched television lately, I am sure you have seen the ad where a young man is playing basketball with his son and the ball goes over the fence. The father jumps the fence to find himself on a downtown Charleston city street. The gist of the ad is Charleston is close by with lots of things to do.
The Charleston Convention & Visitors Bureau is spending money to attract visitors from within a four hour drive, and I might say, successfully doing so as their 2010 year-to-date through February hotel occupancy is better than both Myrtle Beach and Hilton Head. Charleston understands that people have pent up desires to get out again, but they are doing so closer to home and typically with their families. To attract that pent up desire, Charleston is marketing their closeness and desirable attractions.
The Midlands could do the same by marketing the area's family-oriented attractions like the zoo, EdVenture and State Museum to family's in Charlotte, Atlanta, Augusta and yes, even Charleston and Greenville to encourage multiple things to do for the family, therefore encouraging the overnight visit. A marketing program also aimed at history featuring our historic homes, the State House and other important attractions might be what motivates someone from Asheville or some other area to come to the Midlands and stay overnight to see the sights while at the same time spending money in area restaurants and retail stores.
But, to market our community as a tourism area for individual travelers, it takes money to buy advertising to get the word out as to what the area has to offer. That money, well spent, will increase taxes in the community, benefiting everyone including those organizations that benefit directly from out of town visitors. The opportunity for the Midlands is very good as people today are traveling closer to home, taking shorter vacations and looking for value with things to do for their families or related interests.
To be able to take advantage of this immediate opportunity, local governments must look at how they are spending tourism promotional money – specifically accommodations and hospitality taxes – to make sure they provide enough money for tourism promotion to entice new visitors to the community whose spending will not only increase accommodations and hospitality taxes in the future, but the total economy for the Midlands. Research shows that businesses who continue or increase advertising in a bad economy, see the highest growth in sales during the recession and up to the three years following. Now is the time for the Midlands to increase tourism advertising to help improve the economy and all who benefit from visitors to the community by spending tourism taxes for promotion and advertising.
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