Nashville hospitality stats continue to amaze

Friday, August 7, 2015, Vol. 39, No. 32
By Hollie Deese

With room rates higher than ever, an increased number of impressive venues competing for private party business and award-winning chefs earning awards and catching the attention of national publications, Nashville’s cache is hotter than its native hot chicken. Well, almost as hot.

And people are showing up and paying up, particularly visitors. At Nashville International Airport in June 2014, 508,576 people deplaned. This June, that number was 533,731 – the largest number of people to ever arrive in Nashville by plane in one month.

It has been a steady climb of impressive growth, says Butch Spyridon, president of the Nashville Convention and Visitor Center, as those visitors are booking themselves into new and renovated hotel rooms with ever-increasing rates.

“July will be 55 months in a row of the best respective month in the history of the city,” Spyridon says of the RevPar (revenue per available room), which was $110.05 in June. “January was the best January ever, March was the best March ever, etc. for 55 consecutive months. I have never seen, never heard that kind of sustained momentum.”

Rates, occupancy rise

Spyridon says hotel rates alone have driven visitor spending up. For the year 2014, room rates have increased 12.8 percent, and visitor spending totaled $4.9 billion in 2013.

Spyridon is awaiting 2014 numbers from the Tennessee Department of Commerce, but says he expects visitor spending to be close to $5.5 billion.

STR hotel data shows Nashville room occupancy rates at 73.5 percent in June, 8.5 percent better than last year. And part of that rate increase is due to the increased number of higher-end accommodations.

“That seems like a pretty hefty price increase, but keep in mind that our inventory is changing and that we have much newer, much nicer hotels now than we had a couple of years ago,” says Jan Freitag, senior vice president of lodging insights for STR Hotel Marketing Data and Benchmarking in Hendersonville.

“The supply is only up two percent from last year, but we have a lot of rooms under construction, so we will see that changing.”

Nashville is a top 15 market for hotel occupancy, according to STR, no easy feat in a strong national field.

“As an industry, we continue to break records,” Freitag says of the country’s hotel industry. Through June of this year we have had more rooms available than ever. We had the highest occupancy, the highest room rate and the highest RevPar.

“All those performance indicators were at an all-time high and, overall, it is a very, very good time to be in the hotel space. And Nashville is well above the national average.”

Food, experiences drive spending

Of course, once people check into their $400/night downtown accommodations, they certainly aren’t staying there. They are indulging in enhanced experiences, pricy cocktails, trendy restaurants and high-profile events that help Nashville compete on a world-class level.

“At no point in this 55-month run have we ever stopped to say we’re satisfied,” Spyridon says. “We are constantly trying to keep an eye peeled two, three years out, and how our booking pace looks, what we can do to grow a new audience, how do we sustain the momentum.”

The key is to keep Nashville in the conversation nationally, as a dining destination, music capital and host of amazing events.

“Using July 4 to throw the gauntlet down with the biggest fireworks show in the country, there was a method to the madness, and it worked PR wise and hotel-room wise,” he says.

“And as long as we deliver, then word of mouth will help carry those events moving forward. We want to be mentioned with D.C. on July 4th, and we want to be mentioned with New York and London and Sydney on New Year’s Eve.

“So you take some chances and spend a little money and deliver an experience that is authentic and unique to Nashville but on a scale that can hold its own in the major markets.”

Ride the wave

No matter how Nashville got here, everyone can agree the rise in room rates isn’t sustainable, thanks in part to new hotels under construction. But while next year’s room rates might see a bit of a dip, there are no signs of the tourist industry slowing, either in accommodations being built or dollars being spent.

“As the convention center is doing well, Nashville is certainly on the short list of top five or top 10 markets where developers want to be, so I don’t think we are going to see that slowing down, especially when the occupancy continues to be so high,” Freitag says.

“Unfortunately, as an industry we have a terrible track record of slowing at the right point and we normally overbuild. But that is just the nature of the beast.”

But it is also another way to keep the market attractive.

“When you put more hotel rooms into it, it results in price competition that is good for the consumer,” Freitag adds. “But I think as long as the convention center is lit up and doing well those hotels will have no problem.”

Spyridon feels the pressure to keep up the pace, especially as 30 percent of the entire state’s tourism revenue last year came from Davidson County alone.

“We’ll continue to try and sustain it, but reality and history says there will be another city garnering a lot of attention,” he says. “It is why we are doing more with magazines like Bon Appetit and Sports Illustrated and GQ. We are trying to stay ahead and build new audiences before that hits.”

And there will always be another city vying for those bachelorette party dollars.

“There is a fine line here between utilizing supply and demand, taking advantage of the increased visitation numbers, and at the same time keeping Nashville affordable,” Freitag says. “We are breaking records, and it is hard to grow on top of records,” Frietag says.

“For the year 2014 room rates have increased 12.8 percent. Even just 10 percent year over year over year, you’ll price yourself out of the market. Bachelorettes will be saying ‘Guess what?’ Cincinnati it is.”