May 28, 2022

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Nashville hotel business fights to regain footing in stormy travel industry

Honky-tonks are elbow-to-elbow on weekend nights again and traffic is back to being a headache.

But hotels haven’t enjoyed the same rushed return to normal business as other sectors of Nashville’s economy.

Tourism continues to thrive, with vacation travel as busy as ever. Convention and business meeting bookings, meanwhile, are slowly inching their way back.

“Downtown Nashville relies very heavily on conventions and conferences, which have been slower to return than leisure travelers,” said Chelsea McCready, senior director of hospitality analytics at CoStar Group. “Leisure travel to Nashville has been fully recovered since last spring.”

McCready noted Music City Center wins include the Restaurant Facility Management Association’s Annual Conference and the Annual Clinical Genetics Meeting later this month.

“But both the volume of bookings and attendance at most meetings remain lower than pre-pandemic levels for now,” she said. “The omicron variant caused another setback in the recovery of hotel performance in Nashville, but the recovery has resumed again as the latest wave of cases recedes.”

Four Seasons Nashville rises above the downtown skyline on Thursday, June 24, 2021, in Nashville, Tenn. The 40-story building will be split between condos and hotel rooms.

Four Seasons Nashville rises above the downtown skyline on Thursday, June 24, 2021, in Nashville, Tenn. The 40-story building will be split between condos and hotel rooms.

At the end of last year, the revenue-per-available-room rate was still down 26% over 2019 in Nashville, according to hospitality industry data firm STR. Nationwide, that compares to a range including a full return to 2019 levels in Miami, to a 64% decline in the average nightly cost of a San Francisco hotel room rental.

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Mountain and beach towns were the pandemic-era winners for tourists, and they remain popular. Big cities fared worse, overall, over the past two years.

The average cost of a downtown Nashville hotel room for one night was $131.54 in February, according to STR. That’s down from $161.54 in February 2019.

In Los Angeles, the average nightly room rate was about $150 in February, $266 in Miami and $101 in New York City, according to preliminary STR data.

‘It’s not going to be 2019’

Convention and business travel still lags significantly behind pre-pandemic levels.

Music City Center CEO Charles Starks said several large conventions canceled this year do to lingering COVID-19-related health concerns.

Starks is hopeful that 2019 profit levels will return by 2023, though data analysts at STR don’t expect the average nightly hotel room cost to return to 2019 levels until 2024.

Nashville remains a strong contender among peer cities Indianapolis, Atlanta, Orlando, New Orleans, Dallas, San Antonio and Austin, analysts said.

“When you look around the country on conventions, we’re faring pretty well on the number of shows coming through. Vegas has picked it up a lot,” Starks said. “There’s still a lot of people coming to Nashville on the transient and tourism side.”

International travel is also dragging due to complicated COVID-19 travel requirements and the possibility of being quarantined abroad.

High rates of goods and services inflation, as well as rising oil costs, will also maintain pressure on travel and hospitality industries, Starks said.

“I think 2022 is going to continue to be a big improvement over 2021, but it’s not going to be 2019,” he said. “There’s no question the shortage of labor is a continual problem.”

Sandy Mazza can be reached via email at [email protected], by calling 615-726-5962, or on Twitter @SandyMazza.

This article originally appeared on Nashville Tennessean: Nashville hotels fight to regain footing in stormy travel industry