With a nickname like Music City, it isn’t surprising that Nashville has a reputation for great entertainment, but there is so much more to the city that has attracted visitors—both business and leisure—to the Tennessee state capital. It is even among the top-ranked cities for bachelor and bachelorette parties.
“People are coming from all over the country and outside of [it]to Nashville for the food, the music scene and the culture,” said Mitch Patel, president/CEO, Vision Hospitality Group, which operates 25 hotels in Tennessee, with six in Nashville. “We don’t have too many cities, if you think about it, in the United States that are very cultural…Nashville has embraced its identity, that ‘Hey, we are in the South. You’re going to have some incredible Southern food and other foods. You’re going to have incredible music, and we’re going be super-hospitable.’ It’s really coming together nicely.”
Mitch Patel Vision Hospitality Group
In the early stages of travel’s return post-pandemic, Nashville’s attractions for visitors and its location as a drive-to market for a large portion of the population make it a very popular destination.
According to CBRE Hotels Research, Nashville hotels finished 2021 with a RevPAR gain of 93.3% year-over-year, the result of an increase in occupancy of 49% and a 29.8% gain in ADR. The boost in Nashville RevPAR was better than the national average of 62%.
Nashville’s upper-priced properties finished 2021 ahead of its lower-priced properties in terms of RevPAR growth. The properties in this category achieved a 22.2% gain in ADR and saw an 83.7% increase in occupancy. Lower-priced hotels experienced an ADR growth rate of 24.3%, along with a 22.6% gain in occupancy. Looking toward 2022, Nashville RevPAR is expected to grow 40.7%. Occupancy is forecast to rise 18.2%, while ADR is projected to increase 19%. Revenue is expected to continue to climb in 2023.
With those projections, hoteliers are betting on Nashville to continue to be a destination of choice for travelers. In March, Twelfth Avenue Realty Holdings LLC completed the sale of W Nashville in the Gulch neighborhood—which opened in October 2021—to Xenia Hotels & Resorts Inc. for a sales price of $328.7 million, or $950,000 per key—the largest per-room sales record for any hotel in the city’s history.
David Tessier Hospitality Gaming Advisors/ Twelfth Avenue Realty
For David Tessier, president, Hospitality Gaming Advisors, and member of Twelfth Avenue Realty’s ownership group, despite the time and energy put into developing the property, the timing was right for the sale. “We really wanted to do something very special in Nashville, especially since it was an amazing market and nobody had really done a destination lifestyle resort,” he said. “So, we put a lot of passion to that…But, at the end of the day, the market was so hot, and it’s just a time that hotel real estate is really doing so well…We felt market timing was perfect to go out. We did a very discrete process and were able to get some interest and get a price that we couldn’t say no to.”
When Tessier first began developing the W Nashville, he said that he referred to the city as a best-kept secret. “Back in 2010, you had a brand-new convention center and you had a city that was vibrant with culture that was growing,” he said. “You had a lot of people from L.A. and New York moving to Nashville and a lot of companies coming in. You could see this was a city that was really taking off.”
Patel saw that growth firsthand from his company’s original property. He pointed to a number of factors that led to that. One was that new convention center in downtown and another was the “Nashville” television show that premiered in 2012.
Vision Hospitality Group and HRI have partnered on the development of the Tempo Nashville Downtown, which is set to open in spring 2024.
Other factors played into its growth as well. “Tennessee, in general, is super pro-business, no income taxes, high quality of life in Nashville,” he said. “Good school systems, low cost of living. So, what happened was, it was a perfect storm of companies that said, ‘Let’s set up shop in Nashville. Let’s set up a regional office in Nashville.’ There are incentives that were created by the city and the state to lure in companies.”
Patel, for one, is hoping that the things remain successful in Music City, as his company recently broke ground in partnership with HRI Hospitality on the Tempo by Hilton Nashville Downtown, a 16-story lifestyle hotel located adjacent to the evolving Nashville Yards development.
The hotel, set to debut in spring 2024, will be the second property in the city for HRI—and one that the company began developing in 2017, only to have it delayed by the pandemic.
“The reason we started a second project in Nashville all of five years ago was that we saw the evolution of the market from where it had been to where it was,” said Michael Coolidge, chief investment and development officer, HRI Hospitality. “Clearly in our industry, there’s been a lot of conversation about supply increase within the market. Everyone has an opinion on Nashville in the hospitality industry. Mostly positive, but there are certainly groups out there that think it has so much supply, can it continue to sustain what it has been and what it will be from a performance standpoint. We’re clearly firm believers in that.”
