Sleep Inn Summerville

Summerville, South Carolina

The Opportunity

CALL FOR OFFERS… Lodging Partners, LLC is pleased to offer for sale the fee simple interest in the 66-room Sleep Inn Summerville (the “Hotel”). Located approximately 23 miles from Summerville, Charleston, SC is a historic and popular destination, attracting over 7.7 million visitors annually.

The Sleep Inn Summerville is ideally located off Interstate-26, just 30 minutes from downtown Charleston. The area has strong roots in manufacturing and agriculture, with key economic drivers including KION North America, Boeing, Mercedes-Benz, Volvo, and local medical centers. KION, a leader in industrial truck manufacturing, is just a mile from the hotel.

Known as “The Birthplace of Sweet Tea,” Summerville offers attractions such as historic downtown, local shops, and nearby historic sites like Drayton Hall and Middleton Place. Charleston features numerous tourist attractions, including the South Carolina Aquarium and Gibbes Museum of Art. Higher education institutions like The Citadel and Medical University of South Carolina are within a 30-minute drive, and Charleston International Airport, 17 miles away, served over 6.1 million passengers in 2023.

Property Highlights

Excellent value-add repositioning opportunity

66-room, two-story interior corridor building with outdoor pool

Additional land available for future development, including truck parking or self-storage

Exceptional location off Interstate-26, close to shopping and dining

Investment Highlights

Value-add, underperforming property with a 43.8% RevPAR Penetration Index as of TTM August 2024. There is significant potential to grow RevPAR by optimizing ADR and increasing occupancy, offering an exceptional opportunity for an owner-operator to enhance performance and improve NOI flow-through.

By implementing a targeted renovation and repositioning strategy, a new investor could unlock considerable opportunities for boosting top-line revenue, improving expense management, and increasing operational efficiency, ultimately driving stronger bottom-line flow-through and profitability.

The opportunity to acquire this asset well below replacement cost presents an attractive investment proposition. A well-situated property in a thriving market like Summerville, coupled with significant upside potential, positions this asset for considerable future growth.

Upside Potential

RevPAR Improvement: As of TTM August 2024, the hotel currently achieves only 43.8% RevPAR penetration. With an occupancy penetration of 48.4% and ADR penetration at 93.5%, there is a clear opportunity for growth by adjusting pricing strategies and focusing on increasing occupancy.

Revenue Expansion: The Sleep Inn Summerville lags behind other regional Sleep Inns in SC. In 2023, its ADR was $20.07 (22.3%) higher, but occupancy was 10.2 points (18.9%) lower than comparable properties. Other Sleep Inns in the area, despite having lower ADRs, generate 17-18% higher revenue. This underperformance offers substantial potential for the new ownership to enhance overall revenue and profitability.

Sleep Inn Renewal or Conversion Opportunity: Hotel offered free of franchise with the new owner having the ability to either renew with Sleep Inn or reposition it to another brand. Expected 20-year renewal from Choice after completion of a PIP or the flexibility to reposition the Hotel with multiple potential branding options.

Re-Positioning Upside: Over the past several years, the property has averaged a Cashflow/NOI margin betweeen 14% to 22%. Industry benchmarks suggest a stabilized Cashflow/NOI margin of 38.0% to 45.0%. Cost reduction opportunities, particularly in rooms and administrative expenses, further enhance profitability prospects.

Attractive Acquisition Basis: The projected acquisition price coupled with the anticipated renovation cost will allow a new owner to acquire and upgrade the asset at a price that is well below replacement cost, enabling a new investor to realize a strong ROI in this dynamic Charleston market.

Property Overview

Guest Room Configuration: The Sleep Inn features 66 guest rooms with flat panel TVs, microwaves, refrigerators, coffee makers, hairdryers, and large desk spaces. Room configurations include 50 Double-Doubles, 12 Kings, and 4 Handicap-accessible Queens.

Nearby Restaurants: The hotel serves a daily Continental Breakfast and is close to various national and local dining options, including Oscar’s, Cracker Barrel, and Swig & Swine.

Franchise: Choice Hotels is expected to grant a standard license agreement following a Product Improvement Plan (PIP).

Management Flexibility: The hotel is offered unencumbered by management, allowing a new owner to implement customized strategies and enhance value.

Lodging Market

Charleston has become one of the most desirable lodging markets in the U.S., fueled by a strong economy and growing tourism sector. By the end of 2023, hotel performance saw significant growth, with ADR and RevPAR up 23% and 22%, respectively, compared to pre-COVID levels.

Competitive Set Summary

The hotel’s competitive set includes five hotels, ranging from 66 to 123 rooms, totaling 477 rooms. These were selected based on location, amenities, and market positioning, including extended stay and national brands. The competitive environment highlights opportunities for performance enhancement at the Sleep Inn Summerville.

Location

Market Overview

CHARLESTON, SC

Charleston, South Carolina’s oldest and second-largest city, is a top tourist destination and growing business hub, especially for the U.S. Air Force and Navy. Its population is growing three times faster than the national average, fueled by its emergence as a technology hub with over 400 tech companies. The city has attracted over $10.3 billion in capital investment, creating more than 32,000 jobs due to its business-friendly climate and transportation infrastructure.

Charleston consistently ranks as a premier U.S. city, topping Travel + Leisure’s World’s Best Awards for the 11th year in 2023. Visitors are drawn to its vibrant food scene, charming walkability, and Southern hospitality, blending historic charm with modern attractions.

ECONOMY

Charleston boasts a robust tourism industry, featuring diverse accommodations and high-end restaurants. It’s recognized as one of the top 25 art cities in the U.S. by American Style magazine. The city attracts millions of visitors annually, strengthening its economic base.

Charleston is also a vital commercial shipping hub. The Port of Charleston, the deepest port on the East Coast, has invested over $2 billion to enhance cargo shipments, and its terminals form part of the fourth-largest container seaport in North America.

The city’s technology sector is rapidly growing, with the Charleston Digital Corridor supporting new startups and established firms.

TOURISM

Tourism remains central to Charleston’s economy, offering a wealth of cultural and historical attractions.

Folly Beach: A short drive from downtown, this 12-square-mile island features activities, dining, and a laid-back vibe.
Sullivan’s Island: This charming island, known for unspoiled beaches and award-winning restaurants, retains a small-town feel.
Isle of Palms: Celebrated for its pristine beaches and wildlife, it ranks #6 among North America’s Top 10 Islands.
King Street: A blend of history and modernity, it’s a popular shopping destination, named one of the “Top 10 Shopping Streets” by U.S. News & World Report.
The Battery: This historic seawall offers stunning harbor views and features several historical memorials.
Rainbow Row: A collection of 13 colorful historic homes, this iconic landmark is a favorite for photographers.
Waterfront Park: A scenic spot along the Cooper River, ideal for leisurely strolls and visits to the Pineapple Fountain.
North Charleston Coliseum: A 14,000-seat venue hosting various events, including concerts and sports.

CHARLESTON INTERNATIONAL AIRPORT

Charleston International Airport (CHS) is the state’s busiest, with 12 airlines offering nonstop flights to numerous destinations. It contributes over $13.8 billion to the local economy and supports around 50,000 jobs.

AEROSPACE

Charleston has emerged as a global aerospace hub, home to Boeing’s final assembly and delivery center for the 787 Dreamliner. The area also supports companies like Gulfstream and Embraer, enhancing its aerospace industry prominence.

AUTOMOTIVE

The automotive industry is a major economic pillar, with manufacturers like BMW, Mercedes-Benz, and Volvo. Mercedes-Benz operates a $500 million plant in North Charleston, and Volvo has invested $1.1 billion in its facility.

BIOSCIENCE

Charleston is growing as a bioscience hub, anchored by the Medical University of South Carolina (MUSC), the largest biomedical employer in the region. Various research institutions are also based in the area, including ArborGen, the world’s largest tree seedling producer.

DISTRIBUTION

Charleston’s strategic location makes it ideal for distribution centers, with access to multiple transport modes. The Port of Charleston is near major highways and is complemented by the airport’s connectivity.

MARINE INDUSTRY

Charleston is known as the “boatbuilding capital of South Carolina,” attracting leading companies and new startups due to its skilled workforce and business-friendly climate.

PORT OF CHARLESTON

The Port of Charleston is a significant economic asset, accounting for about 10% of South Carolina’s GDP and generating $1.1 billion in annual tax revenue. Recent expansions have increased its capacity to handle larger ships.

JOINT BASE CHARLESTON

Joint Base Charleston is one of the largest military installations in the U.S., supporting over 22,000 personnel and having an annual economic impact of nearly $4.4 billion. It serves as a logistics hub for U.S. military operations.