News Release

Moody's Ratings Upgrades Ratings for the Town’s Hospitality Fee and Beach Preservation Bonds

November 12, 2024

The Town of Hilton Head Island’s growing economy has led to higher bond ratings from Moody’s Ratings (Moody’s), one of the nation’s leading credit ratings agencies.

Moody’s recently upgraded the Town’s hospitality fee-backed debt rating to Aaa, its highest rating, from Aa2 and the beach preservation fee debt rating to Aa2 from Aa3. "The ratings highlight our dedication to maintaining financial stability while delivering essential services and advancing initiatives that enhance and sustain the quality of life for our residents, businesses, and visitors. This commitment is a top priority for our Town staff, Town Council, and mayor, all of whom are devoted to fostering a thriving local economy," said Town Manager Marc Orlando.

According to Moody’s, the increase in the Town’s hospitality bond rating derives from the broad revenue base of the hospitality fees, which "has limited volatility and is expected to continue its trend of steady growth given the town's expanding local economy and tax base."

Moody’s Aaa rating on the Town’s hospitality fee-backed bonds is based on the Town’s Aaa General Obligation rating and substantial annual hospitality fee collections that have seen steady growth over the past several years. The hospitality fee bonds are backed by the Town's 2% hospitality fee, which consists of a tax on the sale of prepared meals and beverages.

Hospitality fee collections can fund various improvements to cultural, recreational, and historic facilities, beach access and renourishment, roads and other means of access to tourist destinations, and water and sewer infrastructure.

Although it is a narrower revenue base, "the town's beach preservation fee revenue has experienced limited volatility and will benefit from the town's growing economy and tax base," Moody’s noted. Moody’s Aa2 rating on the Town’s beach preservation fee-backed bonds is based on the Town’s Aaa General Obligation rating and substantial annual beach fee collections that have seen steady growth over the past several years.

The beach preservation fee bonds are backed by the Town's 2% beach preservation fee, a tax assessed on revenue generated from hotels, short-term rentals, and other businesses that provide short-term accommodations.

Beach preservation bond proceeds help fund various projects that add to the beauty and accessibility of Hilton Head Island’s beaches. The proceeds of the most recent beach preservation bond issue in 2017 funded beach renourishment and dunes restoration. Funds were also used to improve public beach access and parking areas, and restroom facilities at beach parks.

For more information about rating methodology or to access the ratings announcement, please visit moodys.com.