A new analysis of data from 164 hotels in the Charleston region demonstrates that cruise ship activity increases occupancy and raises rates, generating 1,158 room nights and more than $108,000 in additional room revenue every time a ship begins and ends a cruise in Charleston.
The study by Dr. John Crotts, a hospitality researcher and professor, and Michael Wolfe, a marketing consultant, took an in-depth look at occupancy, rates and revenue statistics from 17,598 guest rooms during 1,004 days at commercial lodging establishments across the region.
The analysis revealed that embarkation cruises have a significant impact on hotel occupancy and rates up to two days before the ship arrives for embarkations, as well the day of debarkation.
The study found that 1,158 additional room nights were sold in the metro Charleston region on the days before and after a cruise turnaround. Over the study period, that translated into $13.5 million in additional revenue for hotels in the region.
"This analysis spanned a time of economic hardship, yet hotel occupancy and room sales remained a bright spot in the local economy," Crotts said. "The performance of the hotel sector trended upward during this time, and cruise activities contributed favorably to this positive trend."
Michael Wolfe, of Bottom-Line Analytics LLC, agreed.
"We found remarkable consistency in the data, demonstrating a significant and measurable effect of cruise ship embarkations and debarkations on hotel sales in all communities of the greater Charleston region," he said.
While cruise boosted occupancy and rates in properties in Mount Pleasant, West Ashley, North Charleston and throughout the region, the 17 hotels in peninsular Charleston were the biggest beneficiaries. Over this period, these downtown hotels saw demand up to 3.4 percentage points on days before a cruise embarkation, and 4.9 points higher on the days when a cruise ends.
The cruise operation is primarily a maritime commerce activity with significant spending by the ship and crew for local products and services. This analysis focused on the business sector that arguably has the least to benefit from cruise activity — the hotel sector.
However, some cruise guests choose to add a day or more to their visit to enjoy Charleston and the surrounding area's attractions. Previous surveys have revealed the great diversity of spending and visitation trends for cruise guests across the metro area, which includes visits to the islands, plantations, and other destinations.
"The results of this study were consistent with our survey results, where more than a third of passengers indicated that they extended their trip, staying overnight in paid accommodations in the metro area," Crotts said. "The data show only positive benefits of embarkations and debarkations on hotel revenue, from what is a modestly-scaled cruise operation."
There were 125 cruise ship embarkations over the 1,004-day study period that ran from Jan. 1, 2009, to Oct. 1, 2011. The analysis employed advanced econometric modeling to isolate the benefits, while controlling for the effects of day of the week and seasonality known to affect hotel demand.
A copy of the full report can be found online in the press room section of scspa.com, the website for the South Carolina State Ports Authority.