The hotel market Downtown continues to boom, though that trend doesn’t necessarily apply to the rest of the city.
“Downtown is doing great. The market is strong. Out of the last six years, we had all but about six to eight months where business has been up over the same month of the prior year,” said Chuck Pinkowski, owner of Pinkowski & Associates hotel consulting firm.
“For the Memphis area overall, we’re starting to see a leveling off, not a decline, but the rate of growth of business is slowing down and we’re probably coming to a plateau. For Downtown Memphis, I don’t think that’s the case.”
Pinkowski cites St. Jude Children’s Research Hospital’s $1.5 billion expansion and ServiceMaster moving to Peabody Place on the north and south ends of downtown, respectively, as well as the new Central Station transit-oriented hotel project being developed by Kemmons Wilson Co.
“Those projects I think are going to have a significant positive impact on Downtown overall,” said Pinkowski.
A new La Quinta hotel is also under construction at Union Ave. and Danny Thomas.
“Other than that, there is nothing else that has started construction in Downtown, but there is a list of 15 to 16 projects that have been announced. Whether they get financed and actually open, that’s another story,” said Pinkowski.
“There’s more pipeline supply in the marketplace today than there was a year or two ago, but it’s not nearly what it was in 2007 to 2008.”
Last year, occupancy rate, average daily rate, and revenue per available room all rose slightly in the Memphis area, according to date from Smith Travel Research. The Memphis market sold its most hotel rooms ever in 2016 with 318 rooms booked per day.
Pinkowski believes the hotel industry could experience a new phenomenon over the next couple of years if the growth rate does not fall below the zero line.
“Everything is cyclical, and for the hotel industry over the past four or five cycles growth has always dipped below the zero line to a negative, and then recovery brings it back,” he explained. “We may plateau somewhere near that zero growth rate, and then start growing from there three of four years down the road.”
More than 10.5 million people visit the Mid-South each year generating an estimated $3.2 billion in expenditures. The average amount spent daily by convention delegates is $397, and corporate and leisure travelers spend $340 per day.
The industry touts more than 35,000 tourism/hospitality jobs locally, with approximately $606 million in payroll and $150 million in local/state taxes.