Economic outlook by Charleston Metro Chamber

2013-2014 Charleston Region, South Carolina

Table of Contents • Introduction

• Economic Outlook Board

• Forecast Overview

• Consumer Prices

• Finance

• Labor Force and Employment

• Residential Real Estate

• Retail Trade

• Transportation

• Visitor Industry

• Methodology

Introduction The annual economic forecast for the Charleston region is a partnership project between the Charleston Metro Chamber of Commerce’s Center for Business Research and the College of Charleston’s School of Business and Economics. The 2013 Economic Outlook Conference marks the 22nd annual conference and forecast. During the past two decades, the economy of the region has undergone a significant shift from a military/defense-dependent economy to one now more diversified and anchored around the activities of the Port of Charleston, the multi-billion dollar visitor industry, healthcare industry, growing manufacturing sector and the military. The region’s quality of life, history and culture also continue to attract new residents of all ages, helping to fuel the real estate and development industry as well. The forecast is based upon historical data tracked and collected by the Chamber’s Center for Business Research. Data on each of the key economic indicators that drive the region’s economy are collected and provided to the College of Charleston, Office of Economic Analysis. The data is reviewed by Dr. Frank Hefner. Using an econometric forecasting model, a projection for each indicator is developed. The model also forecasts national indicators. The key to the success of the forecasting project has been the Economic Outlook Board. The collective insight of the Economic Outlook Board provides information that may not be picked up in a statistical analysis of the data. The Board often has information on future developments that no statistical model would capture. Furthermore, the data is often reported in a lag. The Economic Outlook Board reviews the statistical forecast and adds the “real-time, realknowledge” insight into the actual performance of the local economy. Each member of the Board represents a different sector of the economy, and both individually and collectively, their expertise and knowledge are invaluable. Because of the Board’s first-hand knowledge of changes occurring in the economy, the results are a more useful and timely forecast for the business community.

Economic Outlook Board Penny Benton, Tanger Outlet Centers Charlie Carmody, CB Richard Ellis Carmody Katie Henderson, Dunhill Staffing Systems Danny Kassis, SCE&G Angie Johnson, Daniel Island Company Inc., Charleston Trident Association of Realtors Wilbur Johnson, Young Clement Rivers LLP Perrin Lawson, Charleston Area Convention & Visitors Bureau Tripp Meares, Wells Fargo Barbara Melvin, South Carolina State Ports Authority Steve Slifer, NumberNomics Peter Steketee, Embassy Suites Hotel Charleston Area Convention Center Sue Stevens, Charleston County Aviation Authority Steve Warner, Charleston Regional Development Alliance

Department of Economics and Finance, School of Business, College of Charleston Frank Hefner, Ph.D. Mark Witte, Ph.D.

Center for Business Research, Charleston Metro Chamber of Commerce Mary Graham, CCR, IOM, CCE Jacki Renegar

Forecast Recap The accolades for Charleston kept coming in 2012 with rankings and articles touting the region’s great business climate, economic and job growth, and recognition as a world class visitor destination. The region was recognized for its growth in the manufacturing sector and for outpacing most areas of the United States for economic growth. The region is now in direct competition with communities around the world. It competes for business and talent, and has been thrust onto the global stage. Consider just within the past 12 months, significant developments that put Charleston in the global spotlight include: • The April rollout of the first South Carolina made Boeing 787 Dreamliner • In August, golf fans from around the world both descended on the area or tuned in to the international coverage of the 2012 PGA Championship at Kiawah • The October delivery of the first South Carolina made 787 to Air India • In November, Charleston was named the number one tourism destination in the nation and the world by Conde’ Nast magazine. The economy of the region expanded in nearly every sector during the year, with the housing market and residential building activity leading the way. Sales of homes grew by more than 13 percent for the year and both the average sales price and median sales price of homes increased by 3.9 and 4.3 percent. The region’s multi-family market expanded as well with vacancies dropping in area apartments and rental rates increasing as more and more people moved to the area and looked to rent before buying. 1,700 new multi-family building permits were issued during the year and an estimated 2,600 new units were under construction by the end of 2012. Port volumes also increased during the year, with the container volumes increasing by more than nine percent compared to Savannah’s growth of less than one percent. The Port’s strong leadership and a solid strategy for attracting new customers and business to the Port are showing strong results. The harbor deepening study was well underway by year end, with a projected completion of study and construction now projected by 2019. Armed with plans for a post-Panamax depth and room for growth, the Port’s sales team is focused on bringing new customers to expand Port volumes. Charleston’s Harbor deepening project moved forward in 2012 with two significant developments. First the S.C. General Assembly committed $300 million towards the project, effectively providing the needed funding to complete the project even if the federal government portion did not come through. But the federal money did begin when the President included the project in his budget and named port deepening one of the most important in the nation. The study is well underway and if all goes to plan, Charleston’s harbor will be able to accommodate postPanamax ships 24/7 by 2019 instead of on a limited basis as it does today. Construction began on both a complete renovation of Joint Base Charleston’s longest runway and Charleston County Aviation Authority began its $162 million renovation and expansion of the airport’s passenger terminal. The terminal project will provide a much needed update to the terminal but will also add gates, space and re-design the terminal to accommodate security in the post-9/11 world. Construction also started on the $142 million renovation of the Gaillard Performance Hall in downtown Charleston, thanks to the generous support of philanthropist and Charleston native Martha Rivers Ingram. When complete, the Performance Hall will provide one of the finest acoustical performance centers in the United States and seat 1,800 people. The center will also house 15,000 square feet of meeting space. Charleston County Council voted in December to advance the completion of I-526 after months of inertia. The existing 19.26 mile stretch in Charleston opened in 1992, and since its inception, there have been plans for the road to connect from Hwy. 17 North in Mt. Pleasant to the James Island Connector. The completion of I-526 is crucial to address population growth, community safety, regional accessibility, quality of life and economic development. The completion of the seven mile section is expected to cost $558 million. All of these developments will help to fuel the region’s growth over the next few years. The forecast for 2013 and 2014 is for the economy to expand with the momentum climbing over the next two years. The region will expand at a pace that far outpaces other regions in the Southeast and throughout the United States. The only cloud on the horizon is the impact of Sequestration and the upcoming Department of Defense budget cuts. This along with an expected round of Base Closure and Realignment Commission (BRAC) in 2015 will impact the military in the region, but the specifics remain unknown. Joint Base Charleston is one of 12 joint bases created by the Department of Defense in the 2005 BRAC. Within Joint Base Charleston are dozens of facilities and commands including the Air Force, Navy, Army and Marines. Additionally, the United States Coast Guard has a large presence in the region. All of these facilities, missions and activities will be up for review in the proposed BRAC and none can be taken for granted given the magnitude of the proposed budget cuts. All of these factors position the Charleston region as an international business location destined for future success. To achieve its full potential, the region must work to address issues of managing and accommodating growth, develop the needed infrastructure to support it and work to significantly increase the pipeline of skilled workers to support the future business.

Consumer Prices Consumer Price Index The Consumer Price Index (CPI) measures the inflation of the typical basket of goods bought by the average household. The CPI is based on prices of food, clothing, shelter, fuels, transportation fares, charges for doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living. The CPI can be very volatile on a month-to-month basis since unusually large changes in one good can cause large changes in the overall index. The CPI is split into two commonly used measurements. The first is the headline CPI which includes all goods while the second is the core CPI which excludes food and energy goods from the basket. Inflation rates as measured by the consumer price index (CPI) are expected to be moderate though there is evidence to suggest that the rates may increase over the next two years. Increasingly global firms are under pressure to increase profit margins and this often means incremental price changes. The forecast is for slightly higher “core” inflation relative to “headline” inflation. “Core” inflation excludes fuel and food because of their price volatility. Agricultural prices had fairly significant price increases in 2012 (due to weather conditions) but will likely be unable to match those high prices in 2013. Prices may increase further if monetary policy around the world, in addition to the United States, tends to be more dovish towards inflation.

Consumer Price Index (all urban consumers) CPI with food and energy Annual Inflation Rate

Core CPI (no food or energy) Annual Inflation Rate

2001

1.60%

2.78%

2002

2.48%

1.96%

2003

2.04%

1.09%

2004

3.34%

2.27%

2005

3.75%

2.14%

2006

2.00%

2.70%

2007

4.00%

2.30%

2008

1.60%

2.00%

2009

1.50%

1.70%

2010

1.20%

0.60%

2011

3.30%

2.20%

2012

1.80%

2.10%

2013(f)

1.90%

2.40%

2014(f)

2.80%

3.40%

Year

Source: U.S. Bureau of Labor Statistics (f) - forecast

ACCRA Cost of Living Index The Center for Business Research is an active participant in the ACCRA Cost of Living survey. Staff collects the data quarterly on each of the 57 items that are compiled to produce the index.

Components

The ACCRA Cost of Living Index Comparison of Select Metro Areas Selected Metro Area Austin, TX Charleston, SC Area Charlotte, NC Everett, WA Greenville, SC Jacksonville, FL Knoxville, TN Lexington, KY New York (Manhattan) Raleigh, NC Richmond, VA San Diego, CA Savannah, GA Washington, DC

Source: ACCRA Cost of Living Index, 2012 Annual Report

The ACCRA Cost of Living Index Charleston Metro Area

All Items Index 95.6 98.4 94.7 111.9 93.1 96.7 89.3 90.2 225.3 90.8 102.1 131.8 91.0 144.7

Grocery Items Housing Utilities Transportation Health Care Miscellaneous Goods and Services All Items (Composite)

Index 106.0 85.4 113.2 95.8 105.2 101.4 98.4

Source: ACCRA Cost of Living Index, 2012 Annual Report

The ACCRA Cost of Living Index is not a measure of inflation, but rather a comparison of the relative cost of living among various communities. The ACCRA Cost of Living Index is a survey that compares the relative cost of living of professional or executive households among U.S. metropolitan areas and cities. The survey is based on 57 specific items. Prices are collected three times per year and an index is produced. Additionally, an annual index is produced in the fourth quarter of each year, based upon the data collected in the previous three surveys.

Finance Interest Rates The Federal Reserve has been unprecedentedly transparent by announcing their intentions to keep interest rates low until the unemployment rate falls below 6.5 percent, perhaps because they also anticipate low inflation. Based on the Federal Reserve announced strategy, the forecast is for low interest rates into the next few years, especially for the prime rate. There will likely be increasing pressure on the Federal Reserve by the end of 2013 to begin to tighten monetary policy. The three month bond rates will increase in the next two years but will remain below 0.20 percent for 2013 and below one percent for 2014. The interest rate on 10 year bond is expected to increase over the next few years but remain below three percent until the end of 2014. Much depends on global financial market jitters regarding the European Union debt crisis and the slowdown of growth in emerging markets. Global stability in the rest of the world will lead investors away from safe U.S. Treasuries, thereby raising U.S. interest rates. However, turmoil abroad will bring investors to the safe haven of U.S. bonds and keep interest rates low. Additionally, the market will likely rush to the stability of U.S. Treasuries (paradoxically) if debt and spending negotiations in the Federal government are acrimonious. Similarly, mortgage interest rates are also expected to gradually increase but they should accommodate the housing market for the next two years with average rates below four percent. Innovations in mortgage financing created during the housing boom still exist and they make long-term, conforming mortgage rates very low. Loan Rates Mortgage Rate

Prime Rate

2001

7.00%

6.70%

2002

6.54%

4.68%

2003

5.82%

4.12%

2004

5.84%

4.34%

2005

5.87%

6.19%

2006

6.41%

7.96%

2007

6.34%

8.05%

2008

6.04%

5.09%

2009

5.04%

3.25%

2010

4.69%

3.25%

2011

4.46%

3.25%

2012

3.66%

3.25%

2013(f)

3.66%

3.31%

2014(f)

3.80%

4.13%

(f) - forecast

T-Bill

T-Bond

2001

3.70%

5.00%

2002

1.60%

4.61%

2003

1.01%

4.02%

2004

1.37%

4.27%

2005

3.15%

4.29%

2006

4.73%

4.79%

2007

4.35%

4.63%

2008

1.37%

3.67%

2009

0.15%

3.26%

2010

0.14%

3.21%

2011

0.05%

2.79%

2012

0.09%

1.80%

2013(f)

0.13%

2.16%

2014(f)

0.93%

2.89%

(f) - forecast

(f) - forecast Source for all data: Federal Reserve

Labor Force and Employment The regionâ&#x20AC;&#x2122;s civilian labor force experienced a slight gain during 2012, up just 0.4 percent. Total employment, however, grew at 1.5 percent with the region adding more than 4,600 jobs during the year. As a result, unemployment declined by 12.1 percent to an annual rate of 7.4 percent. By comparison, unemployment for the U.S. was 7.8 percent and S.C. 8.4 percent at the end of 2011. The largest job gains were experienced in Manufacturing (+9.3%), Construction (+6.3%) and Retail Trade (+4.5%). Leisure & Hospitality, Information and Financial Activities sectors had losses for the year. For the Charleston region, job gains are expected in both 2013 and more modest growth in 2014 as the region absorbs defense cuts. The civilian labor force is expected to remain flat for the next two years as a result of a lower number of people seeking work, not from lack of actual population gain. As the economy strengthens, some of those in the labor force stop looking for work. Others leave because unemployment benefits expire. The result is unemployment will continue to decline, falling to 5.9 percent by the end of 2014.

Source: U.S. Bureau of Labor Statistics (f) - forecast

Labor Force Charleston Region Year

Labor Force

Employment Unemployment

Unemployment Rate

2001

259,706

248,806

10,901

4.2

2002

266,312

254,189

12,124

4.6

2003

277,055

262,459

14,596

5.3

2004

287,022

271,604

15,419

5.4

2005

294,751

278,794

15,958

5.4

2006

302,860

287,401

15,460

5.1

2007

313,850

299,992

13,858

4.4

2008

318,204

300,535

17,668

5.5

2009

317,622

287,254

30,369

9.6

2010

321,936

292,044

29,892

9.3

2011

328,687

300,914

27,773

8.4

2012

329,952

305,537

24,415

7.4

2013(f)

330,202

309,945

20,257

6.2

2014(f)

330,361

310,758

19,603

5.9

Source: U.S. Bureau of Labor Statistics (f) - forecast

Source: U.S. Bureau of Labor Statistics (f) forecast

Employment by Sector Charleston Region (000) 2008

2009

2010

2011

2012

Mining, Logging, Construction

19.0

15.4

14.2

14.3

15.2

Manufacturing

22.8

20.9

20.7

22.5

24.6

8.9

8.1

8.2

8.1

8.3

Retail Trade

36.3

34.1

34.3

35.5

37.1

Transportation and Utilities

12.4

11.1

10.9

11.6

11.9

5.6

5.3

5.0

4.9

4.8

Financial Activity

14.2

13.1

12.8

12.9

12.8

Professional and Business Services

43.1

40.3

41.8

43.5

44.7

Education and Healthcare

32.4

32.9

33.7

35.2

36.2

Leisure and Hospitality

37.2

35.6

35.4

36.4

34.7

Other Services

11.4

10.9

10.5

10.6

Government

57.9

57.7

59.1

59.2

301.0

285.3

286.7

294.7

300.1

Wholesale Trade

Information

Total Source: U.S. Bureau of Labor Statistics

Residential Real Estate The region’s housing market had strong gains during 2012 in terms of sales of homes and the market began to rebound. The average sales price of homes sold increased by 3.9 percent this year, during which the median sales price also increased by 4.3 percent. A total of 10,496 homes were sold through the Charleston Trident Association of Realtors’ Multiple Listing Service during 2012. The average sales price for all homes sold was $261,065 while the median sales price for 2012 was $190,372. The forecast for 2013 and 2014 is for continued strengthening in the region’s housing market. Total sales of homes are expected to rise by nine percent in 2013 and another five percent in 2014. The average sales price is expected to rise by three percent for each of the next two years. The region’s multi-family market was the hot spot, both in terms of apartment rentals and new construction. By the end of the year, apartment vacancies were averaging 94 percent, with rental rates rising. There are currently 2,600 new multi-family units under construction with another 7,500 proposed. If all are completed, the inventory in the region will be expanded by nearly 10 percent. Construction in the region’s residential market also took off during 2012. Building activity is expected to continue to strengthen during 2013 and 2014 with projects such as Nexton, Carnes Crossroads and Carolina Park moving forward. The commercial and industrial real estate market also showed signs of improvement during 2012. As the region’s economy continues to strengthen over the next two years, the commercial and industrial markets are also expected to see continued overall improvement.

Residential Home Sales Year

Sold

Average Sales Price

Median Sales Price

2001

8,265

$172,070

$147,033

2002

9,364

$185,310

$155,780

2003

10,778

$196,183

$162,584

2004

12639

$220,229

$178,987

2005

15740

$246,362

$190,199

2006

14,240

$263,895

$206,705

2007

11,530

$277,067

$209,742

2008

7,907

$299,721

$201,777

2009

8,702

$251,604

$179,208

2010

8,765

$265,987

$187,560

2011

9,239

$251,323

$182,519

2012

10,496

$261,065

$190,372

2013 (f)

11,442

$269,725

$192,184

2014 (f)

12,014

$278,895

$195,067

Source: Charleston Trident Asociation of Realtors (f) forecast

Source: Charleston Trident Association of Realtors (f) - forecast

Residential Real Estate

(contâ&#x20AC;&#x2122;d)

New Building Permit Activity # New Permits Value of Permits ($000)

Average Value Per Permit

Single Family

Multi Family

Total Residential

2001

3,839

1,184

5,023

$692,196

$137,805

2002

4,649

746

5,395

$838,027

$155,334

2003

5,466

1,368

6,834

$900,356

$121,768

2004

6,948

1,417

8,306

$1,217,189

$146,543

2005

7,901

2,134

10,035

$1,759,990

$162,691

2006

6,935

1,813

8,748

$1,593,011

$175,577

2007

5,026

1,431

6,457

$1,267,712

$196,331

2008

3,422

1,108

4,530

$864,511

$190,841

2009

2,802

245

3,047

$512,509

$168,201

2010

2,713

260

2,973

$606,191

$203,899

2011

2,636

1,125

3,761

$669,201

$177,932

2012

3,234

1,706

4,734

$869,075

$183,582

2013 (f)

3,299

1,723

5,022

$949,556

$189,089

2014 (f)

3,398

1,758

5,155

$994,280

$192,871

Source: U.S. Bureau of the Census (f) forecast

(f) - forecast ~ Source: U.S. Bureau of the Census

Retail Trade Total retail trade in the three county region increased in 2012 from the previous year as the regionâ&#x20AC;&#x2122;s housing market began to rebound and as the result of a strong year for the tourism. The outlook for retail sales is for modest growth for 2013 and 2014. Total retail sales are expected to increase by 2.9 percent in 2013 to a total of $21 billion. For 2014, the forecast is for an increase of 2.7 percent to $22 billion. A number of significant mixed use developments in the region will bring construction of additional retail space within the next two years. The Carnes Crossroads area near Summerville has three major residential/mixed use developments that will add additional retail space. Additionally, Carolina Park East and other housing developments throughout the region that are now beginning to build will likely attract new retail development over the next few years.

Gross Retail Sales ($000) Berkeley

Charleston

Dorchester

Total Region

% Change

2001

$2,690,691

$9,026,356

$1,150,097

$12,867,144

-0.8%

2002

$2,679,686

$9,217,606

$1,136,977

$13,034,269

1.3%

2003

$2,792,175

$10,042,059

$1,207,613

$14,041,847

7.7%

2004

$2,916,269

$10,681,929

$1,404,172

$15,002,370

6.8%

2005

$2,774,618

$12,050,201

$1,571,065

$16,395,884

9.3%

2006

$3,338,564

$13,085,582

$1,709,947

$18,134,093

10.6%

2007

$3,717,883

$13,088,854

$1,783,614

$18,590,351

2.5%

2008

$3,999,639

$12,963,950

$1,773,190

$18,736,779

0.8%

2009

$3,617,756

$11,173,603

$1,483,891

$16,275,250

-13.1%

2010

$4,263,732

$12,802,234

$1,789,304

$18,855,264

15.9%

2011

$5,380,665

$13,077,151

$1,923,379

$20,381,195

8.1%

2012

$5,444,764

$13,026,323

$1,836,212

$20,307,299

-0.4%

2013(f)

$5,591,773

$13,378,034

$1,885,790

$20,855,596

2.7%

2014(f)

$5,742,750

$13,739,241

$1,936,706

$21,418,697

2.7%

Source: S.C. Department of Revenue (f) forecast

Source: S.C. Department of Revenue (f) - forecast

Transportation (Port) Port The Port of Charleston had a great year in 2012, with the total number of TEUs handled increasing by more than nine percent and breakbulk cargo increasing by more than 30 percent. A focused strategic growth strategy to attract new customers and business, along with strong export markets of manufactured goods from the United States, attributed to the increased volumes. The expansion of BMW exports through the Port of Charleston also helped the S.C.S.P.A. to handle increased trade in 2012. The forecast calls for container volumes to increase in each of the next two years, as the Port of Charleston begins to regain its position among the country’s top ports. Charleston’s current position of being able to accommodate the larger post-Panamax ships should also help increase volumes, especially as the Post-45 Harbor Deepening project continues to move forward. The new $40 million cruise terminal redevelopment project is expected to begin construction in 2013. A total of 88 cruise ships are expected to call on Charleston in 2013. The annual economic impact of the cruise ship business is $37 million annually to the area’s economy and is expected to help boost both retail sales and tourism in 2013.

Port of Charleston Activity

Port of Charleston Breakbulk/Bulk Pier Tons* Calendar Year

Pier Tons

2000

545,234

2001

622,078

14.1%

2002

555,079

-10.8%

2003

708,356

27.6%

2004

699,656

-1.2%

2005

727,679

4.0%

2006

649,826

-10.7%

2007

649,228

-0.1%

2008

587,388

-9.5%

2009

538,106

-8.4%

15.5%

2010

647,811

20.4%

1.2%

2011

788,288

21.7%

Year

TEUs*

% Change From Previous Year

2001

1,546,537

-5.5%

2002

1,592,837

3.0%

2003

1,690,849

6.2%

2004

1,863,918

10.2%

2005

1,984,888

6.5%

2006

1,968,475

-0.8%

2007

1,754,376

-10.9%

2008

1,635,535

-6.8%

2009

1,181,357

-27.8%

2010

1,364,501

2011

1,381,350

% Change

2012

1,514,585

9.6%

2012

1,031,248

30.8%

2013(f)

1,580,126

4.3%

2013(f)

959,564

-7.0%

2014(f)

1,673,334

5.9%

2014(f)

978,535

2.0%

*TEUs: twenty-foot equivalent units Source: S.C. State Ports Authority (f) forecast

Source: S.C. State Port Authority (f) - forecast

*Excludes Georgetown & Port Royal Pier Tons

Transportation (Airport) Airport Total passenger activity at Charleston International Airport increased by three percent in 2012 as a result of Southwestâ&#x20AC;&#x2122;s new service to Charleston. Passenger volumes for all airlines serving Charleston increased during the year with Southwestâ&#x20AC;&#x2122;s low fare impact resulting in a dramatic drop in ticket prices for nearly all flights. Total passenger volumes are forecast to continue to grow over the next two years with the addition of JetBlue service into the market. JetBlue has already experienced strong pre-bookings for their flights to New York and Boston. Charleston International Airport began redevelopment and expansion of the airport terminal during 2012. The first phase will include an expansion of the parking area outside the terminal for airplanes servicing Charleston. The apron expansion will be followed by terminal construction and include additional gates and a renovated baggage handling area along with other improvements.

(f) - forecast ~ Source: Charleston County Airport Authority

Charleston International Airport Passenger Activity* % Change From Year

Enplanements

Deplanements

Previous Year

2001

794,371

799,310

2002

791,341

805,768

0.8%

2003

804,134

812,121

0.8%

2004

912,604

915,993

12.8%

2005

1,073,437

1,069,668

16.8%

2006

943,305

934,326

-12.7%

2007

1,141,364

1,134,180

21.4%

2008

1,170,908

1,163,438

2.6%

2009

1,096,605

1,093,646

-6.0%

2010

1,012,183

1,009,145

-7.7%

2011

1,260,704

1,260,125

24.9%

2012

1,297,330

1,295,733

2.8%

2013(f)

1,336,250

1,334,605

3.0%

2014(f)

1,376,337

1,374,643

3.0%

*includes civilian and military passengers Source: Charleston County Aviation Authority (f) forecast

Visitor Industry The region’s visitor industry expanded in 2012, with area experts reporting another strong year of activity. The year also brought international recognition as Charleston was named the world’s number one destination by Conde’ Nast in late 2012. Kiawah Island also hosted the prestigious 2012 PGA Championship in August 2012, bringing international media exposure to the region. Average hotel occupancy increased during the year to 70 percent. The average daily rate charged by area hotels was $122.74. RevPAR, or revenue per available room, is a standard measurement by the lodging industry, increased by 5.6 percent from the previous year. RevPAR is used as an overall metric indicating financial performance of a property. Total attendance at area attractions remained flat in 2012 and is forecast to remain so over the next two years. The profile of Charleston’s typical visitor includes a high level of repeat visitation so the historic attractions continue to be challenged to find new and creative ways to attract attendees. The forecast is for the region’s visitor industry to continue to strengthen over the next two years. The addition of JetBlue and international exposure the region is receiving will continue to attract leisure and business travelers to the market. The only negative is the downturn in the defense industry is expected to impact military-related travel, impacting both hotel occupancy and meetings and conventions.

Charleston County Lodging Occupancy Trends Average Occupancy

Average Daily Rate

% Change

RevPAR

2001

65.06%

$94.15

2002

67.35%

$95.82

1.77%

$64.53

$61.25

2003

69.07%

$96.32

0.52%

$66.53

2004

68.56%

$99.07

2.86%

$67.92

2005

69.83%

$104.50

5.48%

$72.97

2006

70.09%

$110.78

6.01%

$77.65

2007

71.83%

$120.81

9.05%

$86.78

2008

67.74%

$124.31

2.90%

$84.21

2009

62.67%

$114.91

-7.56%

$72.01

2010

69.11%

$112.67

-1.95%

$77.87

2011

69.82%

$116.49

3.39%

$81.33

2012

70.02%

$122.74

5.37%

$85.94

2013(f)

70.21%

$127.65

4.00%

$89.62

2014(f)

70.32%

$134.69

5.52%

$94.71

Source: College of Charleston, Office of Tourism Management (f) - forecast

Attendance at Area Attractions* % Change 2001

2,054,562

2002

2,097,997

2.1%

2003

1,889,458

-9.9%

2004

1,764,574

-6.6%

2005

1,711,030

-3.0%

2006

1,690,060

-1.2%

2007

1,692,547

0.1%

2008

1,514,128

-10.5%

2009

1,543,429

1.9%

2010

1,583,664

2.6%

2011

1,654,289

4.5%

2012

1,652,423

-0.1%

2013(f)

1,652,423

0.0%

2014(f)

1,652,423

0.0%

(f) - forecast ~ Source: College of Charleston, Office of Tourism Management

Source: Center for Business Research (f) forecast *Attractions include: Fort Sumter, Fort Moultrie, Charleston Museum, Heyward Washington House, Joseph Manigault House, Aiken Rhett House, Charles Towne Landing, Middleton Place, Edmondston-Alston House, Gibbes Museum, Nathaniel Russell House, Drayton Hall, Patriots Point, Charles Pinckney and the S.C. Aquarium.

(f) - forecast ~ Source: College of Charleston, Office of Tourism Management

Methodology Data for the forecast is collected by the Charleston Metro Chamber of Commerceâ&#x20AC;&#x2122;s Center for Business Research. The survey methodology has been reviewed by the College of Charleston. The Chamber also collects regional specific data, which is collected by other regional agencies, such as the transportation data and local housing conditions. Data reported by national and state agencies, such as employment, inflation and interest rates, are downloaded directly from those agencies. The statistical methodology used to generate the forecast herein is Vector Autoregression or VAR. This technique uses the previous outcomes of a variety of different economic series to forecast one particular economic variable. This technique often outperforms more complicated theoretical models and is more flexible than a simple autoregressive formulation. The results were discussed at length among the Economic Outlook Board members who provide valuable insight into the local economy. These insights are then incorporated into the forecasts, where necessary.

Center for Business Research Charleston Metro Chamber of Commerce 843.577.2510 www.charlestonchamber.net

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