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Hotel Development Insider

NEWS AND UPDATES FROM THE HOTEL DEVELOPMENT INDUSTRY
  • DCH News Team

Nashville's hotel development among strongest in the nation. Who will fill the rooms?

MOLLY DAVIS, NASHVILLE TENNESSEAN

June 12, 2024 at 6:02 AM


These days, it seems like everyone is investing in Nashville's hotel market — even Dolly Parton is developing a stop for tourists downtown.


There are 13,225 hotel rooms in the development pipeline in Nashville, where tourists spent more than $10 billion in 2023.


Among those under construction is the 210-room Caption by Hyatt in the Gulch and the nearby 181-room Canopy by Hilton Downtown. Next door to the JW Marriott, Tennessee’s first ever St. Regis is set to rise an impressive 46 stories, making the tower among the tallest in Nashville.


But, as national trends indicate a slowdown in tourism throughout this year, who will be staying in all those rooms?


According to Nashville’s chief tourism executive, Deanna Ivey of the Nashville Convention and Visitors Corp., there’s still plenty of demand for hotel rooms. And it won’t all come from leisure travelers.


“Nashville is a very desirable destination,” Ivey said. “It will slow down, it’s more moderate growth right now. But we feel good about our destination.”


Growing crowds of tourist drive new hotel construction


Nashville's tourism industry benefits from more than just leisure travelers — those who come for everything from spring break to bachelorette parties. It's also a magnet for large-scale conventions and business travel. And as a subcategory in the leisure sector, visitors come to the city for events ranging from CMA Fest to the city's July 4 celebration.


On May 3 and 4, for example, Morgan Wallen's Nissan Stadium concert, a Predator's playoff game, several university graduations and a concert at the Ryman Auditorium converged to create massive demand for downtown hotel rooms throughout the weekend. More than 75,000 hotel rooms were booked that weekend, breaking a record for the city.


"It was mind-blowing," Ivey said.


The bar area in a new hotel, Tempo by Hilton, Tuesday, June 11, 2024, in Nashville, Tenn. The hotel is one of three new high-profile developments in downtown Nashville


And one of the strongest sectors over the next year, according to Ivey, will be business travel. She said companies pulled back on employee travel immediately following the pandemic, but that demand has been growing ever since.


In turn, the high demand has resulted in more rooms in development over the past several years.


Nashville ranks sixth in the nation for the highest number of hotel rooms under construction, according to commercial real estate services firm CoStar Group.

In addition to the return of business travel, Ivey's office is focused on increasing international travel to Nashville, especially from Canada, the U.K., Germany, France and Australia, which have all been strong markets in the past.


New direct flights to Canada and England have helped that effort. Nashville International Airport officials are aggressively pursuing additional direct routes to Europe and Asia.


But the strongest travel demand, Ivey said, is coming from the nation's highest earners. That's why the NCVC has made a concerted effort over the past several years to market Nashville as a luxury destination. High-end hotels like the Four Seasons, JW Marriott, the Joseph and more have helped that effort.


"We want to keep our core demographic, the people who have come here for years and continue to come here, but we have to continue getting creative about how to market our city," Ivey said.


Hotel developer: Nowhere compares to Nashville


Michael Coolidge of HRI Properties has watched Nashville's tourism industry explode. HRI recently opened Tempo by Hilton in the downtown area. Caption by Hyatt, co-developed by HRI Properties, is currently under construction in the Gulch.


Tempo by Hilton front desk agent Khori Baker, left, and front desk supervisor Kim Green talk while working Tuesday, June 11, 2024, in Nashville, Tenn.


The company in 2017 opened the boutique hotel Holston House in the 1920s-era James Robertson Hotel building.


"As we continue to look at projects in Nashville, there’s not a lot of other places we feel as strongly about," Coolidge said.


Coolidge said he looks for tourism demand to come from group or convention travel as well as business and leisure. Nashville, he said, is one of the few U.S. markets that has demand across the board.


Coolidge also said he expects the new Nissan Stadium and surrounding real-estate development will have a significant impact on several facets of tourism demand in Nashville.


'We know how fast the city can transform'


The newly-opened Drift Hotel is strategically located near the East Bank, where hotel developer Philip Bates feels confident demand will increase.

Bates, co-Founder and CEO of TMC Hospitality, also developed Bode in the SoBro area, which opened in 2017. That hotel has apartment-style rooms, aimed at small group travelers. Drift, meanwhile, is a higher-end boutique hotel with a selection of unique food and beverage options.


Bates said Drift has already attracted a large number of leisure travelers, selling out multiple weekends after its March opening. But business travelers who visit Nashville monthly or quarterly have also been a target market for the hotel.

Those regular business travelers know the city and may want to visit restaurants and bars in the various neighborhoods of East Nashville.


"We're very well located for them," Bates said.


Drift opened on the same day the new Nissan Stadium broke ground, which Bates said was encouraging.


"We’re not building this to flip it in two years," he said. "We’re building this because we believe in the long term nature of Nashville. We know how fast the city can transform."


Reporter Molly Davis covers growth and development in Nashville. Reach her at mdavis2@gannett.com.


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