Primary markets jostle for position with new guestrooms

Nashville's hotel market continues to grow year over year, and is expected to gain even more momentum over the next three years. Photo credit: Getty Images/JByard (Predicting the growth trajectory of growing markets is a challenge, which is why hotel companies should pay attention to established markets and how they are evolving.)

It’s difficult to predict which market will become the “next Nashville” or the “next Austin.” However, it’s easy to see which primary markets will make the biggest leaps in premium hotel rooms over the next few years. The local population of upper-upscale and luxury hotel rooms is one of the critical pieces that meeting planners evaluate for citywide conventions and companies investigate for potential relocations.

The charts compare the 2010, 2018 and projected 2021 high-end hotel rooms among 41 major U.S. destinations (sans Las Vegas, New York, Orlando and Chicago, whose room supply levels are literally off the chart). This only incorporates data from the core downtown submarkets with the exceptions of Miami Beach, Fla., and Anaheim, Calif., which are located in nonurban settings.

Not surprisingly, Nashville and Austin, Texas, have moved up significantly in the rankings since 2010 with Nashville soaring nine spots and Austin jumping six. Although a smaller market overall, Milwaukee has subtly gained seven spots with several new upper-upscale openings.

Over the next three years, Nashville will continue to be a leader in room construction and consequently will move up six positions in the rankings. The openings of a new Loews convention hotel in downtown Kansas City and a gigantic Marriott Marquis project in downtown Miami will help each of those locales leapfrog four spots. Among the largest markets, the population of premier hotels in Miami Beach is projected to overtake downtown Atlanta by 2021.

Obviously, as some markets move up, others lose ground. Downtown Salt Lake City fell four spots since 2010 and is expected to recede again over the next three years.

That being said, Salt Lake City is expected to regain footing with a proposed convention center hotel slated to open in 2022. Similarly, downtown Portland, Ore., and Anaheim will benefit from convention center hotel projects over the next three years as new rooms are injected into their core submarkets. Meanwhile, downtown Denver has experienced a considerable amount of upper-upscale and luxury hotel development over the recent cycle, yet the submarket is expected to slide five slots in the rankings over the next few years as hotel development in other cities outpace it. Downtown Minneapolis slipped three spots since 2010 and is projected to fall another three spots by 2021.

While those are the biggest movers in these rankings, none of the markets are sitting idle in terms of major hotel development. More than a third of these markets either recently opened a new convention center hotel, have one under construction or have one in the planning stage. Essentially every market is growing. While an expanding hotel offering does not always equate to success, a stagnant market certainly prevents major destinations from maintaining a competitive position for attracting groups, conventions and new demand drivers.

Stephen R. Hennis is president of Hotelogy, a hotel research company. He can be reached at [email protected].