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Travelers from the Southeast and Midwest flock to the South Carolina coast during the summer. Last year, 55% of annual vacation rental revenue was generated during June, July, and August, making the summer season a make-or-break time for short-term rental operators and the local economies. This year, occupancy on the books for the summer is much lower than the previous two years and, in some markets, is even lower than pre-pandemic. Often, we search for one primary explanation for year-over-year decreases, such as a global pandemic during 2020, but this year, many small changes are adding up to a significant shift. While occupancy is pacing lower than last year, not all hope is lost; booking windows have shortened and many reservations are made within 30 days of arrival, so there is still time to turn things around. Read on for an analysis of summer pacing on Hilton Head Island, at Myrtle Beach, and around Charleston, including strategies for navigating the shifting landscape.
Charleston
Charleston and the surrounding area, including but not limited to Kiawah Island, Folly Beach, and Isle of Palms
Vacation rentals in the Charleston region are currently 42% occupied by guests for the summer, down from 47% at this time last year. The average daily rate is at $706, up 3.5% from last year. The rate increase has not fully offset the occupancy decline, leading to an adjusted RevPAR of $295, down 8.5% from last year. Of the three markets included, this is the smallest year-over-year decline in RevPAR. The number of listings managed by our property managers is unchanged from last year, preventing the oversupply dynamics that other markets are experiencing. Instead, declining occupancy is being caused by shifting guest demand as overall guest reservations for the market are 4% lower than last year. Further, a 4% decline in the average stay length booked, combined with a 4% decline in guest reservations per property, has led to an 8% decline in nights sold per property from last year. Smaller properties in the Charleston area are performing better than large homes.
While reservation activity has been slow, it has started to pick up in the last six weeks. The booking window for reservations made for the summer is six days shorter than last year. Additionally, reservation activity for stays 15-60 days out is increasing year-over-year while reservations made more than 60 days in advance have slowed. These trends indicate that travelers are waiting longer to book their trips and demand for summer stays should increase soon. Last summer, 19% of guests booked within 14 days of arrival, and 51% booked within 30 days of arrival. Make sure your pricing and marketing strategies are optimized to capitalize on these last-minute bookings.
Hilton Head Island
Summer occupancy rates on Hilton Head Island are at 47%, down from 56% at this time in 2022. The average daily rate has increased by 4% to $815, not quite balancing out the occupancy decline but softening the blow; adjusted RevPAR is down 12% compared to last year. Unlike in Charleston, one- and two-bedroom properties have the largest year-over-year declines in summer occupancy rates. Small changes in supply and stay length, paired with larger declines in reservations, are adding up to significantly fewer guest nights booked per property. Stay lengths are down only 1% from last year but guest arrivals on a per-property basis are 12% lower, leading to a 15% decline in guest nights booked per property. The number of properties managed has increased by 3%, but overall guest reservations for the market have fallen by 9%, further degrading per-property performance.
Hilton Head’s average booking window for guest reservations made so far is 154 days, which is four days shorter than at this point last year. There are similar slowdowns in activity across all booking windows for the year-to-date. As in Charleston, there’s still room for improvement for savvy operators. Last summer, 11% of all reservations were booked within 14 days of arrival and 33% were made within 30 days of arrival.
Myrtle Beach and North Myrtle Beach
Of the three markets, Myrtle Beach is experiencing the largest decline in demand and property performance. Occupancy on the books so far for summer is only 39%, compared to 58% last year. The average daily rate is up 9% from last year to $423. Adjusted RevPAR is down 25% from last year, which will have significant impacts on annual revenue if the trend continues. The average stay length has dropped 5% from this time last year. Combined with a 29% decline in guest checkins per property, guest nights booked per property are 32% lower than last year. Supply increases, in addition to lower guest demand, are contributing to the decline in guest checkins per property. For the market overall, property managers have 9% more properties to fill than last year but guest reservations are down by 22%. Mid-sized properties have the largest declines in occupancy rates while smaller properties have the largest declines in stay length.
Reservation activity and occupancy pick-up continue to lag behind last year but reservations did increase over the last two weeks. Reservations made at least 60 days in advance have declined the most from last year so guests may be waiting longer to book, rather than not booking at all. Last year, 34% of guest reservations were made within 30 days of arrival. Capitalizing on these last-minute reservations will be the key to improving summer performance.
As demand patterns shift, and shift again, reacting promptly is the key to continued success. Understanding changing booking windows and the dynamics between rates and occupancy will help property managers fill their summer calendars. Our dashboards show these trends and more for your market and inventory. Contact us for a demo today.
