By Ashley Fletcher Frampton
aframpton@scbiznews.com

Charleston is suffering from an economy that has forced many would-be tourists and business travelers to rethink their plans, recent hotel occupancy reports suggest. 

Charleston County hotel occupancy rates fell 13% in September and 11% in October when compared with the same months last year, according to a report from the College of Charleston’s Office of Tourism Analysis.

Occupancy rates, a key indicator of the tourism industry’s strength, have fallen every month this year, though by smaller percentages in the first eight months than in September and October, when a troubled national economy spun into chaos and shook consumer confidence.

Local tourism officials say that, although they are pursuing strategies to bolster tourism, the outlook for the sector in the coming months depends largely on the pace of the nation’s economic recovery. 

Nationally, the Travel Industry Association of America expects leisure travel in 2009 to be down by 1.3% and business travel to fall by 2.7%, based on a mid-October survey.

Good mixed with bad
The news isn’t all bad for the Charleston area, tourism officials say. Although occupancy has fallen, average daily rates held steady in September and October compared with last year, meaning most hoteliers are not yet slashing room charges to chase demand.

Another upside is the occupancy rate itself. At about 70% in October, it’s still decent, officials say. The year-to-date rate at the end of October was 72.5%.

“Obviously, we want the hotels to be as busy as they possibly can, because that means there are more people in the community, spending money throughout the community,” said Perrin Lawson, deputy director of the Charleston Area Convention & Visitors Bureau.

But “Any time we can be over 70% on an annual basis, we’re pretty comfortable with that,” he said. “A lot of areas would be happy with a lower rate.”

Lawson said another indicator of tourism, the number of hotel rooms sold per month, shows a less dramatic fall-off in recent months: Demand for rooms in Charleston County fell by 6.7% in September and 8.7% in October.

Though still a decrease, those numbers are perhaps a more accurate measure of the industry over time because they aren’t affected by increasing supply, as occupancy rates are, Lawson said.

Charleston-area occupancy rates have not fallen as much as some competitor destinations in the region, Lawson said. For example, Hilton Head Island, Myrtle Beach and Savannah all saw higher year-over-year drops in occupancy in September than Charleston.

“We haven’t seen as a big a downturn as many of our competitors, so we’re hopeful that, when things turn, we’ll be better off,” he said.

In the meantime, Lawson said the recent plummet in gas prices could be a plus for the Charleston area, where 80% of tourists arrive by car.

S.C. gas prices in late November were down $1.10 from a year ago, according to AAA Carolinas. Prices were down $1.59 from Labor Day weekend.

October in perspective
The Sleep Inn in Mount Pleasant, located just over the Arthur Ravenel Jr. Bridge, had its best month ever in May, revenue-wise. Just three months later, in August, the hotel saw one of its worst months ever, general manager Michael Rowell said.

The negative trend continued through October. And October, according to Rowell, is not a month to write off as the offseason for tourism.

October traditionally is a strong month for visitors, after the prime spring months, said Rowell, who has worked in local hotels for nearly a decade. It’s when many leisure travelers plan trips to avoid the summer’s sweltering heat, he said.

Because the year’s most significant decline in tourism occurred toward the end of the calendar year, hotels have a better chance of breaking even for 2008, Rowell said. The Sleep Inn, for example, has reduced its staff recently to lower expenses.

But if the decline in hotel business continues through the winter and into the spring, Rowell said the trend will be a greater challenge.

Submarket trends
But not all hotels and areas of Charleston County fared poorly in October.

The Days Inn on Meeting Street in downtown Charleston saw occupancy rates increase in October. The hotel was about 77% full in October, up from 73.5% in October 2007, assistant general manager Doreen Carlson said.

Carlson said the Days Inn’s room rates are about the same as they were last year. She offers special corporate discounts year-round to business travelers, who help boost occupancy in the cooler months.

“They kill us in the summer and save us in the winter,” Carlson said of the discounts.

While occupancy fell 11% countywide in October, the drop was 3.8% in the peninsula submarket. Year-to-date, the occupancy rate on the peninsula is up 1.6%.

Downtown Charleston has traditionally been the center of tourism activity, and occupancy rates there are a good indicator of leisure travel in the area, Lawson said.

Occupancy rates were down by the highest percentage in the North Charleston submarket — 18.5% in October. Lawson said that is, in part, a reflection of new inventory that has come online recently in North Charleston.

Most new hotels in the area are in North Charleston, he said, and the area represents about 43% of the county’s total hotel rooms.

The Sleep Inn’s Rowell also suspects that, as room rates fall downtown, travelers who previously might have stayed in cheaper rooms farther out can move to downtown hotels and pay similar prices.

That would keep downtown hotels full while outlying hotels struggle.

Marketing efforts
In an effort to combat the economy’s downward pull, Lawson said the convention and visitors bureau is stepping up its work with online travel distributors — companies like Travelocity and Expedia — to push Charleston as a destination.

The bureau is also encouraging hotels in the area to create value packages to entice tourists.

A recent promotional e-mail from the bureau featured three downtown hotels with special holiday packages. Among the freebies: spa treatments, $100 restaurant and shopping gift certificates, tickets to a local holiday lights festival and in-room breakfast.

Travel industry experts say package deals such as these are a better way to lure tourists than lowering room rates.

“It’s been proven time and time again that rate will not stimulate demand,” Lawson said. “What will stimulate demand is value.”

Keeping room rates intact is also a better long-term strategy for hotels, Lawson said.

The Market Pavilion Hotel on East Bay Street in downtown Charleston is among the hotels offering a value-packed stay in Charleston. The hotel is offering a “Shop till you Drop” special during the holiday season.

With a minimum stay of two nights, visitors receive two foot massages or pedicures, complimentary package pickup from nearby boutiques, gift-wrapping and a carriage ride.
General manager Gary Cohen said package deals have long been a strategy of his but are perhaps more important in a weak economy.

“The hotel customer is a little more discriminating because they can be at this time,” Cohen said.

Reach Ashley Fletcher Frampton at 843-849-3129.