Recession and the Implications for Grand Strand Tourism:Summer Update

Dr. Don SchunkResearch EconomistBB&T Center for Economic & Community DevelopmentCoastal Carolina University

July 9, 2009

Myrtle Beach Area Chamber of Commerce

SC Total EmploymentJan 1990 – May 2009

June 2000:1,883,300 jobs

May 2009:1,852,000 jobs

Job Growth, S.C. & U.S.Jan. 1940 – May 2009

Unemployment Rates, May 2009

Headwinds AffectingConsumer Spending

U.S. Labor Market IndicatorsJan. 1976 – June 2009

Households are saving more…

Households are trying to reduce debt…

Households are not taking on new debt…

Total Income is generally flat…

Job losses, flat incomes, household rebalancing translates into weak consumer spending

May 2008 to May 2009:

US Retail Sales down 9.6%

Horry County Retail SalesJan. 1990 – April 2009

YTD 2009 (through April):

Horry County Sales down 16% vs. 2008

U.S. Consumer Confidence

Implications of weak spending

• Consumer spending accounts for 70% of the U.S. economy

• Sluggish spending will continue to pressure the overall economy…. Which will continue to pressure consumer spending

Horry County Labor Market IndicatorsJan. 1990 – May 2009

May 2008 to May 2009:

Employment down 6.7% (8,700 jobs)

U.S. Real GDP Growth1990Q1 – 2010Q4

2008Q1 0.9%

2008Q2 2.8%

2008Q3 -0.5%

2008Q4 -6.3%

2009Q1 -5.8%***

2009Q2 -3.1%

2009Q3 -1.2%

2009Q4 0.1%

2010Q1 1.0%

2010Q2 1.6%

2010Q3 2.0%

2010Q4 2.5%

***’09Q1: 1st release = -6.1%2nd release = -5.7%

S.C. Labor Market Indicators1976Q1 – 2010Q4

Unemployment:2009 12.8%2010 15.0%

Job Growth:2009 -4.2%2010 -1.6%

THANK YOU.

Dr. Taylor DamonteClay Brittain, Jr. Center for Resort Tourism

Wall College of BusinessCoastal Carolina University

Grand Strand Lodging Performance: The Most Recent Tourism Cycle and Predicting Short-Term

Changes in Occupancy Levels

Clay Brittain, Jr. Center for Resort Tourism

Clay Brittain, Jr. Center for Resort Tourism

Average occupancy for hotels, condo-hotels, and campsites and the average reservations level for vacation rental properties along the Grand Strand appear to have similar cycles.

Clay Brittain, Jr. Center for Resort Tourism

* The sample measures reservations and listed price of rental homes based on their website listing.

The Brittain Center’s weekly sample of hotels, condo-hotels & campsites consists of approximately:

31% hotels

62% condo-hotels

8% campsites

The sample size during the most recent 52 week period averaged 10,961 units.

Clay Brittain, Jr. Center For Resort Tourism

* The sample measures reservations and listed price of rental homes based on their website listing.

The Brittain Center’sWeekly Scientific Random Sample of

Vacation Rental Homes*

Clay Brittain, Jr. Center for Resort Tourism

Grand Strand Hotel, Condo-Hotel, and Campsite Occupancy and Vacation Rental Home Reservations, Jan, 2008 – July 2009

Vacation Home Rental Performance, L.T. Damonte, August, 2006 - 2008

Weekly Average Reservations of Vacation Rental Properties

Clay Brittain, Jr. Center for Resort Tourism

Clay Brittain Jr. Center For Resort TourismWeekly Average Occupancy in Hotels, Condo-Hotels, Campsites, Jan., 2008 through July, 2009

Clay Brittain, Jr. Center for Resort Tourism

Average daily rates for the HCHC segments of the lodging industry versus the vacation rental property segments follow similar cycles though they have had different rates of change during some seasons of some years.

Clay Brittain, Jr. Center for Resort Tourism

Average Daily RatesMost Recent 52 Weeks & Prior 52 Weeks

Clay Brittain, Jr. Center for Resort Tourism

Through observing rental websites for a random sample of vacation rental properties, the Brittian Center is able to create forecasts for changes in VRP occupancy. These forecasts can be used as a leading indicator of changes in hotel, condo-hotel, and campsite occupancy up to four weeks in advance.

Clay Brittain, Jr. Center for Resort Tourism

Clay Brittain, Jr. Center for Resort Tourism

Clay Brittain, Jr. Center for Resort Tourism

Clay Brittain, Jr. Center for Resort Tourism

For example, VRP reservations for the current week have been up by more than 2 occupancy points compared to the previous year. Average occupancy for HCHCs during the weekend of July 3rd – 4th, 2009 was nearly 97%, higher than it has been since 2006. However, VRP occupancy levels begin to decline slightly during the rental week to come, which suggests that weekend occupancy for HCHCs will likewise decline slightly compared to the previous weekend

Clay Brittain, Jr. Center for Resort Tourism

Clay Brittain, Jr. Center for Resort Tourism

Questions?

THANK YOU.

Coastal Carolina University