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Known for its subtropical beaches and islands, South Carolina attracts millions of tourists every year. In 2022 the state hit record highs for tourism spending with the hospitality industry raking in $29 billion — of which $6.6 billion was lodging revenue. Over half of this annual vacation rental revenue was generated during the summer months (June-August).
But how is the travel sector performing in South Carolina this year? Is the state a top destination that property investors and managers should be keeping on their radar? To find out, we’re deep diving into the state’s short term rental market data to identify its top-performing destinations indicating the best places to invest in real estate.
South Carolina Destinations To Watch
According to direct market data as of May 30, short term rentals in the state of South Carolina have seen a 13% year-over-year decline in occupancy and nights sold per property, causing guest check-in and the average revenue per available rental (RevPAR) in the destination to drop by 9% and 11% respectively versus 2022 levels.
It’s possible this fall in guest demand could be down to the slight rise in supply the destination has received — our direct data from property managers recorded a 5% year-over-year increase. Or maybe it’s connected to the small changes occurring in the short term rental industry, such as a shift in booking habits. The average booking window for South Carolina is shrinking — now at 121 days, which is 5% lower than last year — suggesting that travelers may simply be taking more last minute trips. It’s also worth remembering that the average occupancy rate across the entire United States has been lower this year.
The good news is that the average daily rate (ADR) of the destination remains relatively steady, increasing by 3% year-over-year after a larger 9% rise between 2021 and 2022. The state’s average nightly rate is currently $365. South Carolina also has a higher average length of stay (6 days) than the national average (4 days).
Using short term rental market data as of May 1 each year for 2021-2023, we’re taking a deeper look into the travel performance of three destinations across the state.
1. Myrtle Beach and North Myrtle Beach
The Myrtle Beach area, also known as the Grand Strand, is made up of fourteen communities that stretch along the South Carolina coast. Home to 60 miles of sandy beaches, world-class golf, and southern hospitality, the area receives over 19 million annual visitors.
Mirroring the fortunes of the wider state, Myrtle Beach has suffered an occupancy decline over 2022 levels (down by 22%), leading to a 20% drop in RevPAR and 10% decrease in nights sold. It’s very likely that this data reflects the sudden jump in supply rather than lessening guest demand. Our direct source data from property managers revealed a 24% year-over-year increase, after already recording a 16% rise between 2021 and 2022.
What’s promising about the location is that ADR has risen in line with the state average, rising by 3% over last year’s levels, the average length of stay remains higher than the national average at 5 days, and the booking window is shortening (down 6% year-over-year to 90 days).
For North Myrtle Beach specifically — including but not limited to Windy Hill Beach, Crescent Beach, Ocean Drive Beach, and Barefoot — occupancy is 26% lower than 2022, resulting in a 26% drop in nights sold per property, a 27% decrease in guest check-ins, and a 21% decline in RevPAR. With barely any movement in direct supply, these trends could be attributed to the 7% ADR increase at the destination, which is higher than the state’s average.
The average booking window in North Myrtle Beach is larger (144 days) and short term rental guests tend to stay for longer (9 days) than in other areas of South Carolina.
2. Hilton Head Island
Despite having fewer than 40,000 residents, Hilton Head Island welcomes 2.5 million visitors every year. The destination is often voted one of the best vacation spots in the world because of its breathtaking beaches, world-class golf courses, and bicycle trails that span over a 100 miles.
Hilton Head Island has fared slightly better than its South Carolina counterparts with a much smaller drop in occupancy, RevPAR, and nights sold — here these key performance indicators (KPIs) are all down by just 8% over 2022 levels. According to our direct data from property managers, supply in the area has risen slightly by 4%, possibly causing this downward pressure. The ADR ($497), average length of stay (8 days), and booking window (124 days) for the area remain similar year-over-year.
3. Charleston Area
The Charleston area — including but not limited to Kiawah Island, Wild Dunes, Folly Beach, and Isle of Palms — attracts 7 million tourists annually, which is about nine visitors for every resident. Last year a report declared Charleston the second ‘hottest travel destination’ in the nation, likely due to its historic city, which boasts cobblestone streets and pastel houses.
The destination has outperformed Hilton Head Island, Myrtle Beach, and the state in terms of short term rental occupancy levels. Where South Carolina’s average is currently 13% lower than this time last year, Charleston has only seen a dip of 5%, meaning RevPAR and nights sold have also only declined by 5%.
There’s been little change in the destination’s ADR — currently $480 per night — and average length of stay (5 days). Charleston’s booking window is shortening too, now 7% lower year-over-year to 104 days, suggesting traveler habits are changing and that lower occupancy rates now aren’t necessarily an indicator of performance over the remainder of the year and summer season. Keeping this in mind, Charleston may pose a good investment opportunity for investors looking to expand their portfolio in 2023, since our source data from directly managed properties in the area shows no supply increases so far.
Why Have Paid Occupancy Rates Dropped In South Carolina?
After hitting record highs in tourism spending last year, the short term rental market data for South Carolina indicates, at first glance, that fewer travelers are booking trips to the state in 2023. But really these year-over-year declines represent a return to normal after the peaks hit in 2022 when the state benefited massively from post-pandemic pent-up demand. RevPAR, for example, which factors in ADR and occupancy, supports this theory as data from 2023 is very similar to figures recorded in 2021 for most areas in the state.
Shortening booking windows across South Carolina also present hope that the rest of the year will play out differently, since the suggestion is that travelers are simply booking trips with smaller lead times.
Key Takeaways
- Occupancy rates across South Carolina show a significant dip year-over-year, but shortening booking windows suggest not all is lost for the months ahead.
- The Charleston area is outperforming other destinations in the state.
- South Carolina has a higher average length of stay than the national average, meaning guests are booking longer trips to the destination.