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A 31-year-old Minster man has been released on police bail after being arrested when a Ford Ka left the road and smashed through a fence and into a chalet.
He was held on suspicion of dangerous driving, driving with excess alcohol, failing to report an accident and driving without a licence or insurance.
A second man remains in King's College Hospital with serious injuries to his head, arms and stomach.
VIDEO: The scene of the accident off Marine Parade, Sheerness
Emergency crews were called at the Catamaran Yacht Club, Marine Parade, Sheerness, at 5.30am yesterday.
A section of the road was cordoned off while damage was assessed and the car removed. The chalet was unoccupied at the time.
The arrested man, who has been ordered to report back to police on September 26, was initially taken to Medway Maritime Hospital with minor injuries.
He was questioned by police in connection with driving offences when he was released.
Speaking Sunday morning, a nearby resident said: "I didn't see it but it woke everyone up in my house and on the site and by the time we rushed out, people from the site and the chalet it crashed into was already out there."
Witnesses to the collision are asked to phone the appeal line on 01795 419119 or Kent Crimestoppers anonymously on 0800 555111 quoting reference 31-0289.