MEMPHIS, Tenn. — The busy month of May is on the horizon for Memphis, and tourists will need places to stay during the city’s largest month for tourism.
Fortunately, real estate experts say hotel construction is booming in the Memphis area, and downtown seems to be ground zero for the activity.
Revenue for Memphis-area hotels in 2019 was the most ever, according to an annual industry report by Pinkowski and Co., which studies the lodging market. Revenue increased 6.2% to more than $550 million for hotels in the area.
Average daily demand for hotel rooms downtown grew 4.6%. Chuck Pinkowski of Pinkowski and Co. said the industry plans to keep up.
“Downtown is the center of activity,” Pinkowski said. “The convention center is there. A lot of the tourist activity is focused downtown.”
In the three surrounding counties — Shelby, Crittenden and DeSoto — there are 6,845 rooms currently either under construction or in planning, Pinkowski’s report found. Of those, 3,225 are in downtown Memphis.
Pinkowski said not all of those rooms planned will be built. In fact, the pipeline of planned hotels could only result in 50% or less of those rooms being completed.
A spokesperson for Memphis Travel said the demand for downtown lodging already exists, and more events being downtown will bring people to those new hotels.
“With a 4.6% growth in downtown demand and an increase of an additional 100 room nights sold in 2019, proves that these new hotel properties are welcome assets to a well-performing market,” the Memphis Travel spokesperson said. “This increased activity in the area will also provide more opportunities for those visiting for leisure or business to lengthen their stay and spend more time in the destination.”
Pinkowski said developments in suburban areas can often be easier for developers to complete, but downtown offers developers something the suburbs don’t have.
“The high-risk, high-reward factor is there,” he said. “The hurdles are higher downtown than they are in some suburban areas, but the rewards can be bigger.”
He said mixed-use projects like Union Row offer hotel developers an opportunity to be part of a unique community center that will give guests an experience outside of just a stay in a room.
“You’re going to be staying there because you want the experience of being immersed in that mix-use experience,” Pinkowski said. “You’re going to be in the center of the action in downtown Memphis.”
Pinkowski said with the opening of new hotels, occupancy rates downtown may drop temporarily. He said that can be a good thing for the industry, as there is a larger supply of rooms for the increasing demand of tourists to continue to increase.
Notable hotel projects already under construction downtown include 155-room aloft by Marriott at 161 Jefferson Ave., 227-room Hyatt Centric One Beale at Beale Street and Front Street, 120-room Dermon Building at Third Street and Court Avenue and 170-room Canopy by Hilton at 164 Union Ave.