The State of Small Lodging in the Carolinas

2025 Trends and Challenges

In the picturesque landscapes of North and South Carolina, small lodging establishments form the backbone of authentic hospitality experiences. From historic Charleston bed and breakfasts to mountain retreats in Asheville, beachfront cottages along the Grand Strand, and the charming seaside inns of the Outer Banks, independent operators like you are what make Carolina tourism special.

Yet as we move through 2025, running a small lodging business has never been more challenging. Heightened guest expectations, technological demands, and corporate competition are creating unprecedented pressures on independent operators.

The good news? There's a clear path forward—and it doesn't require sacrificing the authentic hospitality that makes your property unique.

The Changing Carolina Hospitality Landscape

The Carolinas continue to see robust tourism growth, with combined visitor spending reaching over $38.9 billion annually across both states.[^1] Small lodging establishments represent approximately 26% of total accommodations in the region,[^2] a testament to travelers' enduring desire for personalized, authentic experiences.

However, this market share has declined by 2.1% over the past five years,[^3] primarily due to:

• Expansion of hotel chains into previously underserved Carolina markets

• Growth of vacation rental platforms capturing inventory that might have traditionally operated as B&Bs

• Resource constraints preventing small operators from adopting competitive technologies

• Rising guest expectations for seamless digital experiences

Despite these challenges, occupancy rates for well-positioned small properties remain healthy at an average of 65.7% annually[^4]—though this figure varies dramatically by season and location.

The Technology Gap: Big Chains vs. Small Properties

A significant divide exists between the technological capabilities of chain hotels and independent Carolina properties:

• 62% of large hotel chains have implemented AI-powered guest communication tools[^5]

• Only 17% of Carolina small lodging establishments use any form of automated messaging[^6]

• 76% of travelers expect digital check-in options, yet only 22% of independent properties offer them[^7]

• 58% of Carolina innkeepers identify "technology implementation" as their most significant operational challenge[^8]

This disparity creates an increasingly uneven playing field, with small properties struggling to meet evolving guest expectations despite often providing superior personal service.

Three Critical Challenges for Carolina Lodging Operators

1. The 24/7 Guest Communication Burden

Today's travelers expect prompt responses to inquiries regardless of time or day. Recent research shows that:

• 64% of potential guests will consider another property if they don't receive a response within 5 hours[^9]

• The average small property misses 28% of after-hours calls[^10]

• Each missed call represents approximately $235 in lost potential revenue[^11]

• 72% of Carolina innkeepers report that managing after-hours inquiries creates significant work stress[^12]

Without dedicated front desk staff working around the clock, independent operators are caught in an impossible situation: sacrifice personal time to monitor communications or risk losing bookings.

2. OTA Dependency and Commission Pressure

While Online Travel Agencies (OTAs) provide valuable visibility, their impact on profitability is substantial:

• The average Carolina small lodging operator pays 15-22% in OTA commissions[^13]

• For a property with $300,000 in annual revenue, this represents $45,000-$66,000 in fees

• 59% of small property owners report feeling constrained by OTA relationships[^14]

• Only 38% have implemented effective direct booking strategies[^15]

The challenge is clear: how can small properties reduce OTA dependency without sacrificing visibility and booking volume?

3. Operational Efficiency Without Losing Personal Touch

The labor market remains challenging across both Carolinas, with hospitality workers in particularly short supply:

• Vacancy rates for hospitality positions in coastal Carolina regions average 18.7%[^16]

• 63% of small property owners report working more hours than five years ago[^17]

• 42% have reduced service offerings due to staffing constraints[^18]

• Only 27% have implemented any form of automation to reduce workload[^19]

The result? Exhausted innkeepers providing inconsistent service despite their best intentions, ultimately affecting guest satisfaction and reviews.

Regional Variations: Key Carolina Markets

While properties across the Carolinas face similar industry challenges, notable differences exist between key tourism regions:

The Outer Banks:

• Extremely high seasonality with peak summer demand

• Significant weather-related booking uncertainties

• Limited staff availability in remote coastal locations

• High proportion of entire-home rentals competing with traditional B&Bs

• Critical need for 24/7 communication during hurricane season[^20]

Mountain Region (Asheville/Boone):

• Dual high seasons (summer and fall foliage)

• Greater year-round occupancy potential

• More developed food tourism ecosystem supporting lodging businesses

• Higher technology adoption rates than coastal areas[^21]

Coastal South Carolina:

• Stronger golf and convention-driven business

• Higher average daily rates, particularly in coastal regions

• More historic properties with preservation considerations

• Greater competition from resort developments[^22]

The Tech Solution: AI as the Great Equalizer

While these challenges may seem daunting, recent technological advancements have created opportunities for small Carolina lodging operators to compete more effectively with larger chains without losing their unique character.

Introducing Carolina Host—a suite of AI-powered tools specifically designed for small lodging properties in North and South Carolina innkeepers.

This system:

• Answers calls 24/7, ensuring no booking opportunity is missed

• Provides timely responses across digital channels (email, chat, text, social media)

• Offers direct booking capabilities without requiring complex systems

• Delivers personalized, local recommendations to guests before and during their stay

• Operates with minimal setup and training requirements

• Costs a fraction of current processes and services.

Unlike generic hotel technologies, Carolina Host is targets the unique needs of small lodging operators, with features designed for properties of 50 rooms or less.

The Path Forward: Embracing Strategic Adaptation

The state of small lodging in the Carolinas reflects both challenges and promise. While independent operators face significant pressures from changing guest expectations and technology adoption demands, they also possess unique advantages in authenticity, personalization, and local knowledge.

The most successful Carolina properties in 2025 and beyond will be those that strategically embrace appropriate technologies that enhance rather than replace the personal touches that make independent lodging special. By finding this balance, small operators can preserve their unique character while meeting the expectations of today's digital-first travelers.

Transform Your Hospitality Business with AI Power Tools

Ready to discover how Carolina Host can help your property thrive in today's competitive landscape? Our team specializes in helping small lodging operators implement right-sized technology solutions that preserve authenticity while enhancing operational efficiency.

We understand the unique challenges independent property owners face in today's competitive landscape. Carolina Host offers a thoughtful solution that could help you:

• Enhance your booking capture abilities around the clock

• Gradually reduce OTA dependency and related commission costs

• Maintain consistent guest communication without staffing challenges

• Preserve the personal touch that makes your property special

• Position your business effectively in an evolving marketplace

If you'd like to learn more about how Carolina Host might fit into your hospitality vision, we'd welcome a conversation.

Learn More About Carolina Host →

Sources

[^1]: South Carolina Department of Parks, Recreation & Tourism Annual Report, 2024; North Carolina Tourism Research, Economic Impact of Travel on North Carolina Counties, 2024.

[^2]: Smith Travel Research (STR), "Lodging Industry Profile: Carolinas Region," Q4 2024.

[^3]: American Hotel & Lodging Association, "State of the Lodging Industry: Southeast Region," 2024 Annual Report.

[^4]: Carolina Lodging Association, "Small Property Performance Metrics," Q3 2024 Report.

[^5]: Hospitality Technology Magazine, "2024 Lodging Technology Study: Redefining the Guest Experience."

[^6]: Survey of 120 small lodging operators in North and South Carolina, conducted by Carolina Hospitality Institute, January 2025.

[^7]: Booking.com, "2024 Travel Predictions: Guest Expectation Survey," December 2024.

[^8]: Professional Association of Innkeepers International, "Small Property Operations Challenges," 2024 Member Survey.

[^9]: TripAdvisor, "Guest Booking Behavior Research," 2024 Industry Report.

[^10]: Analysis of call data from 40 small lodging properties across the Carolinas, Carolina Hospitality Institute, February-April 2024.

[^11]: Calculated based on average booking value for small Carolina properties ($895) and typical conversion rate (26.3%), per Carolina Lodging Association, 2024.

[^12]: Bed & Breakfast Association of the Carolinas, "Innkeeper Wellbeing Survey," 2024.

[^13]: Based on published commission rates from major OTAs operating in the Carolina region, as of February 2025.

[^14]: Independent Lodging Congress, "Direct Booking Strategies for Small Properties," 2024 Survey Results.

[^15]: Carolina Hospitality Institute, "Direct Booking Implementation Survey," November 2024.

[^16]: U.S. Bureau of Labor Statistics, "Southeast Region Employment Situation," December 2024.

[^17]: Bed & Breakfast Association of the Carolinas, "Member Workload Assessment," 2024.

[^18]: Carolina Small Business Development Center, "Hospitality Service Adaptation Report," 2024.

[^19]: Hospitality Technology Magazine, "Small Property Technology Adoption," Regional Analysis, 2024.

[^20]: Outer Banks Visitors Bureau, "Accommodation Provider Survey," Winter 2024-2025.

[^21]: Carolina Hospitality Institute, "Technology Implementation Across North and South Carolina Lodging Properties," Comparative Analysis, January 2025.

[^22]: South Carolina Department of Parks, Recreation & Tourism, "Coastal Region Lodging Analysis," 2024.