Is Charleston getting too many new hotels? City to study lodging as it strives to maintain balance on peninsula

Charleston Mayor John Tecklenburg (right) talks with Jeff Anderson, an owner of The Restoration, at the boutique hotel’s reopening event last week. Tecklenburg is concerned about the number of new hotel rooms planned for the peninsula.

With new hotels going up in downtown Charleston and more on the drawing board, the inevitable question arises: How many are too many?

The answer isn’t straightforward.

Dan Blumenstock, chairman of the Charleston Area Convention and Visitors Bureau and director of operations for Lowcountry Hotels, said he didn’t have an opinion as to whether the market is in danger of getting overbuilt. But he noted that a study the city is planning could “shed some light” on the issue of supply and demand.

Blumenstock also said that developers analyze markets carefully before they enter them.

Gramling Brothers, for example, has determined that the Charleston market can absorb 100 new rooms, said Mikell Harper, who handles commercial development for the Charleston-based company. The firm is proposing to build two 50-room hotels side by side near Anson and Market streets in the historic City Market area.

“We wouldn’t be continuing to work on this project if we thought it was past the tipping point,” Harper said. “If we thought the hotel market ... was oversaturated then ... we wouldn’t be looking at this project.”

The Gramling properties were two of four hotel projects approved recently by the Board of Zoning Appeals at a single meeting. Based partly on that, Mayor John Tecklenburg said last week, “it occurred to me that it was time for discussion.”

Within the last year, four hotels have opened on the peninsula, adding several hundred rooms to the supply base. At least two other sizable properties — Bennett Hospitality’s hotel on King Street near Marion Square and the nearby Dewberry Hotel at the former Mendel Rivers Federal Building — are well underway.

The city has said the peninsula has about 4,800 hotel rooms, including those coming out of the ground, and that 11 proposed deals could add another 763 rooms, or 16 percent more.

Wesley Bloomfield, spokeswoman for Avocet Hospitality Group, which owns the Vendue hotel near Waterfront Park, said the downtown market does not appear to be too crowded. “As of right now, I think there’s enough demand to still fill what we have,” she said.

Bloomfield said she might not say the same if the current pace of development continues.

Tecklenburg proposed a moratorium on new lodging applications for the rest of the year. The idea was to give the city time to assess the impact of planned and existing hotels “as it relates to maintaining a balance of uses” on the peninsula, he said in a written resolution.

Charleston City Council didn’t take up Tecklenburg’s idea when it met last week. Instead, it directed staff to study the state of the industry over the next three months.

Councilman Dean Riegel said a room cost analysis and occupancy rates will be part of the study.

Josh Martin, senior adviser to the mayor, said that the details of the review haven’t been finalized, but the recommendations include re-evaluating how the Board of Zoning Appeals approves hotels and studying the current 50-room limit for lodgings south of Calhoun Street.

J.R. Anderson, one of the owners of the Restoration on King, which last week held its formal reopening after a renovation and expansion, said the city should look at the impact of leisure business Thursday through the weekends and group business Monday through Wednesday.

“Charleston is right to study it all,” Anderson said.

The peninsula has been a strong market for hotel operators in recent years, which helps explain the demand from the development and investment side. Occupancy has climbed in four of the past five years, according to data from the College of Charleston. The outlier was last year, when rates for Charleston County and the peninsula slipped 1.1 percent and 1.9 percent, respectively, largely because of new rooms and cancellations tied to the historic October floods.

“The hotel market is doing well,” said Bing Pan, head of research for the college’s Office of Tourism Analysis. Pan said he didn’t know how much more supply the city can handle.

Reach Allison Prang at 843-937-5705 or follow her on Twitter @AllisonPrang.