June 2014

Where to Stay: Hilton Head Hospitality's Return to Glory

Author: Frank Dunne, Jr. | Photographer: Emily J Novitski

Fortunately the news is good and possibly getting better. Not so much just a few short years ago for Hilton Head Island’s hospitality market. The late 1960s marked the beginning of the island’s rise to prominence as one of the Southeast’s premier—if not the premier—seaside destination resorts. You know the story: Charles Fraser’s vision for Hilton Head Island and the development of Sea Pines Plantation, then a stroke of good fortune like no other in the form of the inaugural Heritage Classic (now called RBC Heritage) in 1969. Who knows? With so many assets going for it, including beautiful beaches, warm weather, ideal terrain for golf course construction, and location, it’s likely that Hilton Head Island would have eventually become a world-class destination anyway; but nobody doubts that publicity generated by the first Heritage gave it a huge shot in the arm.

Supported by a sharp marketing strategy targeting the Midwest, Northeast, and Southeast—a day’s drive or less—people began flocking to Hilton Head Island for fun in the sun, golf, tennis, or just to enjoy the beauty of it all. The island enjoyed a competitive edge over other coastal resort towns, thanks to Fraser’s land planning philosophy based on extraordinary sensitivity to the natural environment, which other developers adopted as the community grew. There would be no rows of high-rises lining the beaches as in Miami Beach, for instance. Folks loved that they could come here and feel like they were communing with nature alongside enjoying the usual resort activities and amenities. Hilton Head Island was unique; it was special, and it was in demand.

Naturally, with high demand comes opportunity, and the hospitality industry took notice of the lucrative opportunity here. For decades, Hilton Head Island enjoyed status as an elite high-end destination with top-notch hotels and resorts dotting the island and prospering. But, just as naturally, things can change, and they did. Waves of new golf-oriented resorts, many of them also in coastal towns, stiffened the competition for golfers and beachgoers. It became harder and harder to fill the rooms, villas and homes. Then the economy took a turn for the worse in the mid-2000s, which certainly didn’t help the situation. Almost as if to add an exclamation mark, Verizon dropped its Heritage sponsorship and the island was at risk of losing the tournament and one of its most important marketing and public relations vehicles. Things looked pretty gloomy.

But guess what? We’re back! Hilton Head Island is experiencing a renaissance, as Warren Woodard, director of sales and marketing at the Omni Hilton Head Oceanfront Resort referred to efforts by hospitality properties’ efforts to re-energize the industry. How important is that? When you consider that according to the Hilton Head Island-Bluffton Chamber of Commerce there are approximately 6,000 villas, 3,000 hotel rooms, and 1,000 timeshares (not to mention two RV resorts) on Hilton Head Island, it’s pretty important.

“The investments and upgrades being made by the hotels have been a long time coming,” said Bob Hawkins of The Vacation Company, which manages some 250 short-term rental villas and custom homes, “but it’s happening and the outlook is very good for all of us.” He is referring to recent major renovation projects at, for example, the Omni and Sonesta Resort Hilton Head Island (formerly the Hilton and Crown Plaza respectively) that have turned the fortunes around for what were underperforming properties. In a case of a rising tide lifting all boats, the hotels’ resurgence is trickling down into other segments like short-term rental. According to Hawkins, the short-term rental companies are also making some investments in their properties, but of a different kind, because they cater to a different type of guest and also have to be responsive to the owners of the properties under their management.

Short-term rental guests typically stay for a week or longer as opposed to 2-4 days for hotels. They’re looking for privacy and a home-away-from-home atmosphere where the family can sit down to dinner at the kitchen table. “It’s a matter of waking up and being able to walk downstairs to meet in the kitchen or living room in your pajamas like at home,” said Tom Ridgway of Hilton Head Rentals & Golf, “or being able to make a home cooked dinner and still have that beautiful oceanfront view.” A short-term rental operation can also offer a wider variety of choices like beachfront or golf course views, and amenities like a private swimming pool.

“Demands constantly change with regard to guest expectations,” said Ridgway. For example, and not surprisingly, several years ago high-speed Internet in all units became mission critical. Today it is even more important than cable TV, speaking of which, that TV had better be a hi-definition flat screen set. Ridgway also pointed out that in the short-term rental business, you have to be ready to help with everything from bike rentals to beach chairs to babysitters. “Guests will call to find out if there’s an ice cream shop nearby,” he said. Basically, the rental management company has to be their guests’ guide to Hilton Head Island.

Obviously the Internet has also changed the way short-term rental management does business on a daily basis. Nearly 100 percent of bookings and reservations occur online, so sometimes rental agents never even speak to a guest until they arrive to check in, and more and more of those transactions originate from a mobile device or tablet. That is, guests can book a house or villa pretty much from anywhere and at any time, so the volume is much higher than it used to be when it was done mostly over the telephone. Today reservationists spend most of their phone time confirming, not taking, reservations and answering questions.
“Another big change over the past two years is the ability to do more energy conservation in the homes,” Hawkens added. “We can monitor the thermostat remotely and make adjustments if a guest forgets to turn the air conditioning down when they leave. It’s the next big thing in the industry.” You might think that all those efficiencies brought on by technology would be bad news for rental company staffs, but it isn’t necessarily so, because efficiency breeds productivity. “Our per-agent activity is actually up,” Hawkins said. “Business has grown, so our staffing has stayed level.”

The hotel segment is a little different. “The length of stay for us is usually 2-3 nights as opposed to the week-long visits for rental,” said Chris Bracken, Sonesta’s director of marketing and sales. These guests are typically people who haven’t been to Hilton Head Island or have not been regular, repeat visitors, whereas rental guests tend to be regulars. “They’re checking it out.” Woodard added, “Our demo prefers to have a full-service environment.” That is, they like to have things like restaurants, concierge service, bike rentals, spas and so forth right on the premises. “They don’t want to have to get in the car and drive for everything.” The hotel segment is also well-equipped to serve the business market. “We get a lot of groups, conventions, and associations for meetings and things like that,” Bracken said. “A lot of them bring their families along and make a little vacation out of it.”

Both agree that the recent re-investment in the island’s hotel properties is paying off. Sonesta, the Omni, and the Westin Hilton Head Island Resort & Spa as well have all undergone multi-million dollar renovations in recent years. “We closed down in fall of 2012 and spent about $30 million on renovations, then reopened in April 2013. So we’ve been here for about a year, and business is very strong. We’ll be in the 90 percent occupancy range through the summer,” Bracken said.

Similarly, Woodard expects a strong Memorial Day to Labor Day season and beyond. “Our booking pace is excellent going into 2015.”

Let the good news—and the tourists—keep coming, because we all know that as tourism goes around here, so goes Hilton Head Island. “It’s made a great story for the island,” Woodard said. And it is being seen in all sectors of the hospitality business: hotels, rental homes, and villas, which is good news for visitors of every accommodations preference. 

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