Is the Myrtle Beach vacation economy changing? Why so many area hotels are for sale
With many Myrtle Beach area hotels being sold or placed on the market recently, the growing trend could indicate larger changes in consumers’ vacation tastes.
Experts say that Myrtle Beach visitors have different standards for their vacation lodging than previous generations. National trends in the hospitality industry are also putting market pressure on hotels. At the same time, growing debt in the sector at the national level is also noticeable.
Real estate professionals listed several high rises, motels, and other hotels on platforms like LoopNet in 2024. One beachfront property was sold through bankruptcy proceedings. These include:
- Built in 1971, the 57-room Mermaid Inn lists for $6.49 million.
- Built in 1986, the 60-room Aqua Beach Inn lists for $5.9 million.
- Built in 1960, the 14-room La Dolce Vita lists for $2.35 million.
- Built in 1974, the 54-room Indigo Hotel lists for $7.4 million.
- Built in 1980, the 42-room Southern Breeze Oceanfront lists for $4.9 million.
- Built in 1968, the 63-room Happy Holiday Motel lists for $6.29 million.
- Built in 1960, the 26-room Lily & Bloom hotel lists for $2.59 million.
- A 60-room hotel built in 1972 listed for $5.99 million.
- Buyers purchased The Yachtsman Resort at 1304 North Ocean Blvd. out of bankruptcy in February 2024.
These locations and others across the Grand Strand service a vacationing population of primarily families within driving distance of major metropolitan areas in the southeast United States. Neil Flavin has worked for years engaging this market and demographic. Flavin, the chief operating officer for the Charlotte, N.C.-based hospitality industry consulting firm HVS, has worked in hotels for more than 40 years.
Between 1996 and 2006, Flavin oversaw all franchise properties for the international hotel chain IHG and served as a liaison between operators and the company for the Myrtle Beach area. Flavin said several factors could be causing properties to go on sale now.
The lack of recent renovations could be a significant factor for some locally owned locations built in the mid-to-late 20th century. Flavin said the lack of re-investment and maintenance into hotels by their owners could lead to a drop in quality. For some hotels considered small properties by today’s standards, Flavin said these locations near the oceanfront serve as prime opportunities for developers.
“If you’re not maintaining your property, then, yes, it is going to reach a point of no return, and an owner has probably milked the money that they would like to get out of that asset,” Flavin said in an August 2024 interview with The Sun News.
As Myrtle Beach moves from a seasonal economy to a year-round one, Flavin said knocking down some hotels built during the 20th century and converting them into new properties is an attractive investment opportunity.
“To make the investment, to get that hotel to be profitable, it may not be there,” Flavin said. “To knock it down, you’ve got a prime piece of real estate, you can build something new, and you can go even higher with more rooms, or you can partner with a developer that wants to do that, then that’s a distinct possibility.”
In an email to The Sun News, Interim President and CEO of the Myrtle Beach Area Chamber of Commerce and Convention and Visitors Bureau Tracy Conner wrote that the Grand Strand’s desirability as a place to live boosts the area’s hospitality industry.
“The current trends impacting the Myrtle Beach area’s hotel industry can often be attributed to our destination’s success, appeal and resilience following the pandemic. The Grand Strand remains an incredibly desirable place to live, work and visit. Some property owners may see this as an opportune time to sell, while new stakeholders are drawn to invest,” Conner wrote. “The Grand Strand is continually evolving to meet the needs of both residents and visitors, but what makes Myrtle Beach great will never change. This includes our 60 miles of beautiful beaches, amazing culinary experiences, entertainment and recreation around every corner, and the friendly people that make us so special. The Myrtle Beach Area Chamber of Commerce is committed to fostering progress that honors the time-honored, family-friendly character of our region, while propelling our vibrant communities forward and enhancing our shared quality of life.”
Flavin also said some families traveling to the area are less comfortable going to independently owned properties for fear of lower quality than a hotel operated by a national chain. While some families will spend their vacations at mom-and-pop establishments that are part of years-long traditions of visiting, Flavin said franchised locations provide a safer bet to these consumers. He added that IHG studied this during his time with the firm.
Consumer preferences could also be an indirect factor. While features like a pool and ocean view attracted previous generations’ occupants, strong Wifi and Bluetooth are also essential for travelers looking to work while on holiday. New vacationers are more experience-driven, looking for unique locations and perks from the places they stay.
Scott Smith has examined this trend. Smith is the associate director of the School of Hospitality and Tourism Management at the University of South Carolina. Smith previously worked in the hotel industry for brands like Marriott and Sheraton.
He said that a focus on experience-driven vacationing and the rising costs of operating hotels compared to years past make operating hotels independently less appealing for business owners than in previous years. He added that modern high rises that offer more amenities and unique experiences are also partly responsible for this change and are out-competing other hotels.
“If you’re on the beach and you’re an older hotel, now is probably your chance to get out,” Smith said in an August 2024 interview. “Some developer will come along, buy it up, bulldoze it, and then either turn it into condos or more efficient hotel.”
Smith added that hotels frequently get sold because they serve as investment assets for firms. He said the current real estate market lends itself to putting them on the market to get a return on an owner’s investment.
“People might just be trying to cash out on hotels right now,” Smith added.
Knocking down a hotel to build new condos for year-round residents may be more difficult now due to a City of Myrtle Beach policy enacted this year. In April 2024, the city placed a temporary moratorium on converting short-term rentals for long-term use. The freeze pertains to properties near the beach from the intersection of Highway 17 and Ocean Boulevard to Grande Dunes Boulevard. Indeed, many Myrtle Beach area hotels are within the limits of the moratorium. The moratorium was supposed to expire in January 2025, but the city is considering continuing the moratorium for 60 more days and approved the extension on a first reading on Nov. 12, 2024.
The city enacted the temporary measure to determine if converting short-term rentals would impact government revenue. Myrtle Beach commissioned a limited-scope report on the impact of converting hotel and motel units and condos into long-term rentals. Released in October 2024, the study found that the city and county could lose between $4.58 million to $7.78 million in government revenue if business owners converted large amounts of short-term rentals into long-term ones.
While the moratorium could present a local challenge in the short term, billions of dollars in hotel debt at the national level might hurt the Grand Strand hotel industry in the long term.
Hospitality faces a nationwide debt problem that could impact the Myrtle Beach area. Hoteliers are facing significant debt, some of which will be due by the end of 2024. According to the hotel brokerage firm Hotel INNvestments, about $5.8 billion in loans designated for hotels must be addressed sometime in 2024.
Smith said these national trends hurt family-owned hotels in places like Myrtle Beach. Independents also struggle to raise prices to cope with the increased costs of running a hotel, as Smith said that customers aren’t willing to pay more.
“The cost of labor and supplies has gone up substantially, and people are still price resistant,” Smith said. “So that’s what’s causing a really big squeeze, especially among smaller independent hotel operators.”
However, the recent selling of some hotels and motels also doesn’t necessarily mean all will go on the market or get bulldozed. Flavin also said these locations can sustain themselves by re-investing in necessary renovations and keeping properties clean. He added that positive online reviews by former customers will also attract customers looking for a homey, retro experience.
“You do not have to have the newest and the shiniest hotel in town. If you have the cleanest and the friendliest, you will be successful,” Flavin added. “It may be something that someone is willing to say, ‘Hey, look at the reviews they’ve got. Let’s give this a try.’”
