Nashville is one of STR’s top 25 markets, one of the few cities that—as of the latest data—is consistently reporting year-over-year growth in occupancy, rate and revenue per available room.
Jan Freitag, SVP of lodging insights for North America at consulting firm STR, credits the city’s growth to four factors that support travel-related industries “like a four-legged stool.” First, Nashville is Tennessee’s state capital and attracts plenty of regional government travel. Second, the city is home to 13 universities that attract students, parents, visiting speakers and athletes. Third, a range of industries have a strong presence in the city, including healthcare and technology.
Music is credited as the fourth leg of the stool, bringing not only industry insiders but fans to hotels across the chain scales to boost the city's leisure sector. “It’s a very, very happening leisure market,” Freitag said, joking that the weekends start on Thursday when the bachelorettes come through town. The popularity of the eponymous TV series also helped drive visitor numbers, he added, and the recent Ken Burns documentary on country music—“where ‘Nashville’ is every other word,” Freitag said—is likely to do the same. The proximity of the city’s airport to the downtown area is also a leisure demand driver, he added.
By the Numbers
STR reported that RevPAR in Nashville’s hotels was up 3.1 percent year over year as of October and average daily rate was up 2.9 percent. Occupancy during the month, at 82 percent, was up 0.2 percent year over year, but 6.8 percent more rooms were available than in October 2018, and the number of rooms sold was up 7 percent. Total room revenue generated from guestroom rentals or sales was up 10.1 percent year over year.
For the first 10 months of 2019, the city’s occupancy was 75.6 percent, just barely up from the 75 percent of the first 10 months of 2018.
According to consulting firm Lodging Econometrics, 1,965 guestrooms and 15 hotels—including the Dream Nashville—opened in the city during the first three quarters of 2019, and the company expects a further 67 hotels to open during the next three years.
As of November, STR calculated that 6,649 guestrooms and 37 hotels were under construction across Nashville. Five of these projects are considered luxury developments and account for 1,707 of the rooms. (The W Nashville, for instance, is slated to open in November 2020, and the Grand Hyatt Nashville will mark the brand’s entry into Tennessee.) Upscale hotels, however, dominate the construction pipeline, with 1,657 rooms and 12 properties underway. That is nearly matched by upper-midscale hotels with 1,696 rooms and 10 projects under construction.
Related: Dream Nashville officially opens
A further 43 hotels with 5,243 rooms were in the final planning stages, with upper-midscale hotels leading the way at 1,530 guestrooms and 15 properties. The upscale and midscale segments both have 11 hotels in this stage, with 1,421 and 1,050 rooms, respectively. STR counted 51 hotels with 5,753 rooms in the planning stage, again dominated by the upper-midscale segment with 18 hotels and 1,915 rooms.
These numbers demonstrate a substantial increase over the past five years. In 2015, the city did not have more than 700 rooms under construction in any of the chain scales, and had only 13 total properties in that stage of development. By 2016, only the upper-midscale segment had more than 1,000 rooms in active construction, but the pipeline had increased to 24 projects in that stage and a further 30 in the final planning phase of development, indicating what was to come.
The growth spurt is not over yet. As Robert Mandelbaum, director of research information services for CBRE Hotels’ Americas Research, wrote in August, the rise in the Nashville lodging supply is likely to lead to a 7.7 percent increase in the available room count. That increase, he said, will be “thoroughly absorbed” by an 8 percent increase in demand. According to the September 2019 edition of Hotel Horizons, CBRE expects hotels in Nashville to “see the negative impact from all the new competition entering this market over the past eight years.” The market's average occupancy is forecast to decline 2.8 percent in 2020, but the level will remain above 70 percent, Mandelbaum wrote.