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VOL. 38 | NO. 6 | Friday, February 07, 2014

Millions for makeovers: Even newer downtown hotels are spending big to compete for Music City Center guests

By Hollie Deese

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The Hilton Nashville Downtown is wrapping up the first phase of its multi-million dollar renovation, with all 330 suites taken back to the walls and outfitted with all new upgrades.

On Feb. 1, the new upscale Hilton Honors Lounge opens downstairs at the hotel. Phase 2 begins next month with an overhaul of the lobby, and in April, a new restaurant concept will be added to the list.

“We are doing this renovation to keep us at the top of our game, to keep us as still a go-to hotel,” says Melanie Fly, director of marketing at Hilton Nashville Downtown and Union Station. “It is a beautiful, contemporary high-end hotel in a great location.”

Opened in October 2000, the current remodel is the first major renovation the rooms have undergone. In 2008 the atrium lobby was renovated, and in 2010 one of the open-air terraces was turned into a meeting room. But no matter the age of the hotel or timing of the last renovation, now seems to be when many of Nashville’s downtown hotels have chosen to undergo a facelift.

Renovations in lodging have been fast and furious since the Music City Center became part of the city’s landscape.

In mid-February, the Renaissance Nashville on Commerce Street – attached to the old convention center – will wrap up a $20 million renovation of its 673 guest rooms, bathrooms and suites that includes replaced tubs and shower stalls and new stone flooring in the entryways. Originally built in 1987, its most recent renovations were in 2007.

Built in 1975, Sheraton Nashville Downtown underwent a multi-million dollar renovation of its 474 guest rooms that included new beds and finishes in 2010, and was closed Jan. 9-23 to complete another round of upgrades. In July, Loews Vanderbilt finished its $17 million guest room and lobby renovation, adding Mason’s restaurant and updating bathrooms.

Hotel Indigo in the American Trust and Nashville Trust Building on Union Street went through a $5 million renovation that added 33 rooms, bumping their total up to 130. And West End’s Aloft Nashville was updated just a year ago.

Music City Center, Omni inspire

It’s hard to argue that the opening of the $585 million, 1.2-million-square-foot Music City Center in May 2013 wasn’t the main motivation for the recent flurry of upgrades, which includes $1 billion in new development in Nashville’s SoBro neighborhood alone.

Omni Nashville Hotel

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In its first quarter, the Center’s 100 events led to more than 18,000 hotel room nights booked and generated $26.4 million in economic impact.

“Obviously, preopening we killed it and are ahead of our goals for this year,” says Butch Spyridon, president and CEO of the Nashville Convention and Visitors Corporation.

Omni Nashville, the $250-million, 800-room hotel attached to the Center also has had role in the recent renovations, which Spyridon says were needed.

“Every five to seven years you need to be doing some pretty significant upgrades,” Spyridon says. “And in particular, the Sheraton, The Renaissance, Hilton and Loews, they went way beyond physical changes. Certainly all of this wouldn’t have happened in the time frame that it did without the Omni and the Center to push them.”

Omni has a room-block agreement with the city that states outside of 36 months, any citywide convention that comes to the hotel must commit 80 percent of their inventory to it. From 24-36 months out, the commitment is 50 percent of the inventory. Anything inside of 24 months they control their own inventory.

In addition to Omni, which is the second largest hotel in the state behind Opryland Resort, there have been plenty of other new developments, among them the 119-room Home2 Suites by Hilton near Vanderbilt, which opened in May 2012; and the just-opened Downtown Hyatt Place on Third Avenue, which has 255 rooms.

“We are very fortunate and excited to be a part of the area,” says Tod Roadarmel, director of Sales and marketing for Omni Nashville. Roadarmal says he welcomes more hotels to the market, which he says can only benefit the whole area.

“I would love nothing more than to see that Westin come to fruition, or the Marriott. Honestly, there is enough to go around, and in our opinion it’s about the destination.

“We are here to grab our fair share, but it’s the most important to make sure Nashville is successful,” he adds. “The mayor and the city put a lot of money into the Music City Center, and the more full-service hotels that we’re going to get, the larger the medical and dental and other conventions we are going to be able to bring in. It’s a snowball effect economically, so the more we can get the better.”

And there are more hotels coming. Among the newcomers will be SoBro’s $38 million, 11-story Hilton Garden Inn which is under construction; a proposed 280-room luxury InterContinental Hotel and Resort on West End; the LEED-certified Fairfield Inn and Suites, slotted to open in The Gulch in 2015; a 400-room, $120 million Marriott on Demonbreun; and 400-room Westin on the Roundabout.

“We have said for a while now that we need one or two 400-500 room hotels, and we’re still there,” Spyridon says. “If anything, it’s a stronger case now than it was before. The proposed Westin and Tony Giarratana’s Marriott onto Demonbreun, those would be ideal for us. They are both making progress, and they both have a reasonable shot at getting done.”

Location matters

In addition to new hotels, the renovations of the existing full-service hotels are a big plus, says Spyridon. More than just a place to sleep, these hotels offer extra meeting and event spaces plus a large number of rooms, which brings more overall business to Nashville than specialty hotels outside of downtown.

The Renaissance added 70,000 square feet of state-of-the-art meeting space and updated the current 30,000 square feet facilities it already offers. The Sheraton has more than 25,000 square feet of meeting space.

“Hotels really need to be within a 5-7 block of the center,” Spyridon says. “That’s where the pressure is. It’s about the largest room block in the least number of hotels without having to provide shuttles. That is the formula that they want, and can get, in other markets.”

But financing for that ideal hotel can be hard to come by, even though the interest and land is available. “Limited-service hotels and select-service hotels are pretty easy to get financing,” Spyridon says.

“Full-service hotels, for whatever reason, are much more difficult. The risk is probably less in Nashville than a lot of other markets, but there’s maybe been a history of hotels that go to the hotspot and overbuild.”

While Nashville is very “hot” right now, it might not always be, which makes oversaturation of the market a possible concern for the future, but not right now Spyridon says.

“From a professional standpoint, I would rather have one 400-room full-service hotel in the general downtown area than I would 1,000 rooms in the limited-service category all over the county,” he says. “That doesn’t help us at all and that puts us in overbuilding. We have got to be able to create more demand by having a room block and meeting space (so) we can attract more business than if we just have more rooms. There, we’re just picking off business from each other.”

Strategic building

Steven Andre, the General Manager at Midtown’s Hutton Hotel, is concerned about the influx of rooms. Open since 2009, Hutton is an independent luxury hotel with 247 guest rooms and 13,600 feet of function space.

Hutton Hotel

“We see all these hotels coming in, and certainly I think it worries everybody that there is more inventory,” Andre says. “Nashville is going through this huge growth phase, and part of when you go through a growth spurt there are growing pains.

“And I think those are things that the city and other people are working really hard to manage. But at the end of the day we also feel like we have our unique place in this market and that we really need to work hard and harder every year to make sure that we maintain and grow that.”

Spyridon says that if hotel growth is strategic, everyone can benefit.

“We have to be careful about overbuilding vs. right-sized building,” he says. “We don’t just need more hotel rooms. We need the right rooms in the right size hotel in the right location. The demand on the city for leisure and groups, and the competitive offering we have don’t line up. So we’re just turning down a significant amount of business right now.”

And that turned-down business could add up to big bucks for the city.

The Hutton Hotel, located on West End Avenue in Midtown, is a luxury hotel with 247 guest rooms. “We feel like we have our unique place in this market,” says Steven Andre, general manager.

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“We are a sales tax-based economy in this city and the state, so to import sales tax versus having to raise it from local citizens is a much better solution,” Spyridon say. “So the more visitors we’ve got, the more revenue the city and state have to operate fire, police, roads, schools. We see that is a pretty important role.”

Spyridon says it will be a few more months before the numbers for 2013 come out, but he anticipates visitor spending in Davidson County will be close to $5 billion. In 2012, visitors spent $4.65 billion, which was almost 30 percent of visitor spending in the state.

“Almost since the flood, the awareness of the importance of this industry to the city, and what marketing the city as a destination has done for the brand, has certainly helped economic development and business recruitment,” Spyridon says. “I think there is that untold, unsung part of it.”

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