After a year marked by economic uncertainty, the Charleston area’s leading pro-business advocacy group is feeling cautiously optimistic as it looks down the road.
The Charleston Metro Chamber of Commerce presented its yearly predictions during its Economic Outlook Conference March 10, which this year was held virtually and focused on recovery and resiliency as the region marks 12 months since the COVID-19 health crisis reached the Lowcountry.
While unemployment ballooned last spring, it tapered later in the year and is expected to continue to improve locally, especially as vaccinations help to revive the tourism sector.
Similarly, though retail sales dropped by 12 percent last year, consumer confidence is starting to recover, according to the report.
Now in its 30th year, the forecast has tracked changes in the region’s economy over those three decades. By 2019, population in the tri-county area had swelled by 58 percent, and the number of private-sector employers had jumped 73 percent.
“And then there was 2020,” said Jacki Renegar, director of the chamber’s Center for Business Research, while introducing the 2021 forecast last week. “In March of last year, everything changed.”
When the chamber held its previous outlook event in 2020, the looming health crisis had not yet been declared a pandemic.
South Carolina was a couple days away from identifying its first cases of the coronavirus, and, by the end of that month, Charleston was under a stay-at-home order. Many employees began working from home, restaurants closed or switched to takeout only, and tourism came to a near halt.
But, without knowledge of what would happen in the weeks or months ahead, business leaders predicted on March 4, 2020 that another year of growth was in store. Almost every metric showed positive predictions. The tight labor market was projected to become even tighter, and tourism was expected to have another banner year.
With the onset of COVID-19, though, hotel revenue fell sharply. Employment, instead of growing 2.5 percent, as predicted, fell 3.8 percent. And Charleston International’s prediction that it would cross the 5 million-passenger mark for the first time was upended as air travel plummeted.
In its new forecast, the chamber predicts most metrics will see year-over-year growth in 2021, but, given what the 2020 numbers looked like, that does not mean gains over pre-pandemic figures, at least in most categories.
One exception is the Port of Charleston. If it hits the 6.7 percent cargo volume increase that’s been predicted, it will exceed its 2019 record.
Numbers related to tourism, however, only look impressive when compared to 2020.
With an estimated improvement of 25 percent, revenue per available hotel room would come out to about $68 this year, better than $54 in 2020 but well below the $116 of 2019, which remains the high-water mark for tourism in the region.
Similarly, the airport is predicted to see airplane boardings and arrivals improve by 10 percent, but that will mean a passenger count that’s less than half of the 5 million travelers that, without the effects of COVID, should have passed through the passenger terminal last year.
Renegar said it’s difficult to predict when Charleston International will reach that suddenly elusive milestone. The forecast predicts 2022 won’t be the year, but it’s impossible to know now if the actual numbers will be better or worse than predicted, since tourism growth will depend heavily on the speed and success of the vaccination process.
Anirban Basu, CEO of the Baltimore-based consulting firm Sage Policy Group, said Charleston should expect a real payoff from the anticipated surge once more vacationers feel comfortable traveling again.
The region will “see so many visitors … it’s going to boggle your mind,” Basu told conference attendees during a presentation focused on national trends.
While COVID vaccinations and pent-up demand from a year’s worth of cabin fever are likely to kickstart leisure travel, the rebound could be weighed down by continued lags in business travel and group business, according to Renegar of the Center for Business Research. That’s largely why hotel revenue isn’t predicted to snap back as quickly.
“The wealthy leisure visitor may come back in the latter half of 2021,” Renegar said. “But we think the convention and group business won’t really swing back until maybe 2022.”
Beyond next year, though, there is more optimism for the sector. Despite the fact that the leisure and hospitality industry was hit hardest by employment losses — roughly 27 percent of those jobs in the Charleston area hadn’t returned at the end of last year — it’s still the category expected to add the hire the most workers in the region by 2024.
Beyond the bread-and-butter tourism industry, the health crisis also exacerbated a perennial issue for the Charleston economy: Housing affordability. High demand for more square footage in 2020 drove up home prices in the region to a median of more than $300,000. Demand this year will push that figure 5 percent higher in 2021, the chamber predicted.
The “biggest challenge” for the housing sector will be inventory, or the number of properties that are actively seeking buyers, according to the forecast.
One group that claimed some of the increasingly scarce supply: Workers who are moving from larger cities, motivated, in part, by employers that opted to go remote permanently, allowing them to relocate to places like Charleston and keep their jobs.
“That definitely had an impact on our market by soaking up the little bit of housing supply that we did have,” Renegar said.