The Nashville, Tennessee, hotel market experienced its lowest performance of the past decade in 2020, based on data from STR, CoStar's hospitality analytics firm.
The impact of tornadoes and the pandemic in 2020 was so severe that it precipitated a steady decline in hotel occupancy, with the metric reaching a low of 40.9% in December.
Nashville is among STR's top 25 hotel markets in the U.S., and prior to the pandemic was outperforming other Tennessee markets in terms of average daily rate, particularly on Saturdays and Sundays due to the hosting of music festivals. However, during the pandemic, Nashville hotels underperformed on weekends, with occupancies in the market among the lowest in the historical STR data.
The pandemic has also somewhat reshaped the Nashville hotel market. Hotels in the Nashville central business district, which prior to the pandemic had a premium on occupancy, lost business share in 2020 as a result of shifting business and leisure travel patterns. As a result, in 2020, the largest Nashville submarket by number of properties was the Nashville Airport, followed by Murfreesboro and then the downtown.
During the past decade, hotel occupancy in the Nashville market has been significantly affected by segmentation, with group business driving increases as the transient, leisure bookings share declines. From year to year, the gap between groups and transients has gradually increased.
In 2020, there was a sharp decline in group and transient travelers at Nashville hotels. Historically, average daily rate for groups also declined sharply in 2015 and 2017, STR data shows.
The negative effects of the pandemic have trickled down to hotels in the development pipeline. All of the major hotel brands had rooms in the pipeline in the Nashville market. Marriott International — with its Moxy, AC Hotels and Autograph brands — led with 3,500 rooms in the pipeline followed by Hilton with 3,000 hotel rooms in development.
Nashville’s hotel market has grown rapidly over the past decade — particularly the upper-midscale segment in the past seven years. In 2019, the Nashville's pipeline had 31 properties in construction across all classes, and 34 properties in the final planning stages across all classes, STR data shows. The number of independent hotels in the market grew as well.
Overall, in the Nashville market, a significant gap exists between supply and demand. Properties in the in-construction phase likely will add to that supply, but other projects in earlier stages could be abandoned as many hoteliers potentially turn focus instead to improving or renovating existing properties.
The Nashville Area Chamber of Commerce had a Partnership 2020 plan in place in the Nashville region targeting job creation, capital investments and continued economic growth. The economic challenges of 2020 remain in 2021, and currently Partnership 2020 is focused on areas of critical need in the city: Leveraging aggressive recruiting by new companies and the growth of existing business to increase jobs in strategic target sectors.
The Nashville hotel market has faced several challenges during the past decade, and successful recovery periods in 2014 and 2018 show the market's resilience, which hoteliers hope will be highlighted again post-COVID-19.
Rachel Mammen is a Ph.D. candidate at Texas Tech University located in Lubbock, Texas.
The assertions expressed in this article do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please feel free to comment or contact an editor with any questions or concerns.