Marcus & Millichap

South Central Hospitality Research Report

South Central Region, Second Half 2016

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Memphis, Nashville Pacing Growth in Robust South Central Region

Led by the vibrant Nashville market, hotels in the South Central region consisting of Arkansas, Kentucky and Tennessee performed well in the first half of 2016 and prospects for additional growth during the entire year persist. More than 5,000 rooms are under construction in the region with delivery dates this year and afterward, but room demand will increase at a pace greater than the U.S. rate of growth and lift annual occupancy. Increases in leisure travel and growth in business demand stemming from consistent payroll expansion raised key performance metrics in Arkansas and Kentucky in the first half of 2016.

Both states draw consistent interest from limited-service property investors, but Tennessee attracts most of the investment capital in the region. Nashville remains a market of intense interest due to its growing population and an expanding employment base. More than 3 million square feet of office space is under construction in the market, potentially providing new sources of room demand. Hotel owners in the market may increasingly elect to take advantage of minimal competitive listings and unfulfilled investor interest to test the transaction market.

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