Hotel Fever Hits Memphis

Despite one of Memphis’ most famous icons distinguishing himself with a little ditty called “Heartbreak Hotel,” there’s no such tragedy involved with the city’s hospitality scene. If anything, the sheer amount of proposed and under-construction projects should give plenty of credence to the idea that Memphis is a must-visit destination.

As of May, there were 55 hotel projects being discussed in the Greater Memphis metropolitan area. Every year, Henderson, Tennessee-based Smith Travel Research (STR) compiles hotel development information into a pipeline list that tracks 50,000 hotels across the country, as well as those that are under construction or in the planning process. For professional consultants like Chuck Pinkowski, that list is cross-referenced with information gleaned from local developers and financial institutions to analyze the health of the local hospitality industry.

As the founder of Pinkowski & Company, he is usually called on to provide research and data to companies and city representatives. “Our clients are primarily the owners, investors, and financial institutions that put forth the money to build new hotels,” says Pinkowski. “We help them to determine whether a place is a good location, what kind of product they should develop, how big it should be, and the brand affiliation that should be on it. Then, we do a market analysis to determine what the projected performance of that hotel would be.”

Downtown Hotel Revenue

The most recent pipeline list provided by STR details 16 projects in the works totaling 5,800 hotel rooms for Downtown Memphis, but Pinkowski says that typically only 50 percent or less of pipeline projects ever come to fruition. Five projects are currently under construction Downtown: Aloft by Marriot, Cambria Hotel & Suites, Arrive, Canopy by Hilton, and Central Station, for a total of 637 additional rooms.

The Memphis hospitality sector has seen steady growth over the past decade, but should be expected to dip over the next year due to changes to the Memphis Convention Center. While occupancy numbers may drop, Pinkowski says the big-picture outcome is much more positive. “In 2020 and 2021, you’re going to see some of these new rooms come online. Even though convention demand is going to be less than normal Downtown for a little while, you’re going to have an absolute increase in the number of rooms sold with these new hotels. The supply is going to increase and the occupancy rates may drop some, but the total room revenue is going to increase.”

Taking a look at recent revenue per available room (RevPAR) numbers, the trajectory for Downtown has indeed been on an upward trend in recent times. While 2018 only saw a 0.3 percent growth, prior years had seen larger improvements. Downtown’s RevPAR of $114.30 also far exceeded the Memphis average of $62.56 (despite the gains, Memphis still lagged behind the national average of 2.9 percent growth) The local hospitality industry hasn’t been improving its numbers by standing still.

Hotel Napoleon / photo by Karen Pulfer Focht

Boutique Unique

After a spike in popularity in the 1980s and 1990s, boutique hotels are seeing a resurgence. Usually built with a smaller number of guests in mind, these franchises are usually offshoots of larger brands that aim to provide more comprehensive services and a chic presentation to guests. The 58-room Hotel Napoleon has been thriving after its adaptive reuse of the former Press-Scimitar building on Madison Avenue, and has garnered acclaim from outlets like The New York Times and TripAdvisor. A new arrival on the scene is the Moxy Hotel, which promotes itself with porch fire pits, a bocce ball court, and an overall grand old time. And, while it may not technically be a boutique hotel, the 150-room Hilton Garden Inn, across Union Avenue from AutoZone Park, hosts The Greyhound, a gin-based craft cocktail bar replete with imagery of the eponymous canine. (It’s on the site of the old Greyhound bus station). A trolley bar is used to create all the cocktails table-side, and patrons can choose from over 50 gin varieties. Really, it’s about selling a style or experience.

Just take a look at the Instagram account for any boutique hotel brand, and you’ll see similar types of images surface: young, hip millennials posing amid a swirl of brightly colored artwork, sipping various craft cocktails, or lounging around the pool. The whole feed is just an explosive of vivacity; forget the Marlboro Man. This generation’s “cool,” at least as far as the hotel industry is concerned, is experiencing boutique hospitality.

These varieties of hotels are designed to draw different demographics, or ones who might be looking for something a little different than the conventional hotel experience. Instead of using an Airbnb, a creative boutique option might draw in those who had previously moved away from standard hotel brands. “Something like Hotel Indigo has mid-century, modern-style architecture, and the architects have done a great job of maintaining that style,” says Pinkowski. “I won’t put an age category on it, but it’s a product that appeals to those customers who might be looking for something a little more trendy or unique in its delivery.”

Too Many Cooks?

These boutique options are what Pinkowski calls “guerrilla brands.” While they might seem fresh and unique on the surface, many are already under the corporate umbrella of familiar names like Marriott. Catering to a new type of clientele is all well and good, but is the addition of so many small hotels good for Memphis, or better for the larger parent companies running the show?

Doug Browne, president of the Peabody Hotel, says that there is always a risk of over-saturation with too many smaller operations. “We have a tremendous amount of limited-service or smaller hotels,” says Browne. “Say 50 rooms or less. Sometimes they end up feeding off each other.”

The key to economic growth is to incorporate more larger hotels into the Downtown area. Browne points to the Loews Hotel as the kind of development that will turn more eyes toward Memphis. When preparing for a convention, meeting planners don’t want to spread all the attendees out over four or five hotels when other cities might offer one central location that can handle most guests. “With the Sheraton and Loews, you’ll now have upwards of 1,000 rooms connected to the Convention Center, and then a few others able to handle additional large parties.

“The Loews brand is a large company with a lot of its own clients, so that will already have more people looking at Memphis. As all the hotels bring new business to Downtown, it will create a compression in the area.”

Proposed Dream Hotel on South Main / Rendering All Rights reserved by designshop, PLLC 2019

In addition to the main convention attendees, he brings up what he calls secondary rooms. An extra 15 percent of occupants come to town because of a convention, but don’t stay at the central convention hotel. These are people who are adjacent to whatever kind of business the convention brings to town. Browne likens it to a new business opening up shop. “It’s almost like when a company like Mitsubishi moves in and builds a factory. Everybody thinks, ‘Okay, that’s the business that they’re creating.’ What they don’t realize is there’s probably 30 to 50 other smaller companies that open up all around Mitsubishi because they help sustain it. Maybe they make screws, or maybe they make widgets or other things that Mitsubishi uses on its equipment. But all of those companies open up and they hire people, and those people are paying taxes. Really, a similar thing happens with groups and conventions that come into town.”

Is Memphis Equipped for Extra Hospitality?

With so many new hotel additions in the works, is Memphis doing enough to bring in enough people to fill these rooms? The extensive Convention Center updates are certainly poised to bring in plenty of new business, but what about the rest of Downtown? Browne thinks that the city’s efforts are headed in the right direction. “City government doesn’t always get enough credit, but Jim Strickland has been doing a lot to make sure the renovation and expansion of the Convention Center is done right. Then the Greater Memphis Chamber has also worked really hard to make sure there’s enough staffing for Memphis, making sure the city is clean. Really, it’s something that the whole community has been involved with, making the city better and making people want to come to Memphis.”

If the past few years are any indication, then Memphis hospitality should continue to thrive as the Convention Center gets up and running and boutique hotels offer fun and varied experiences to guests. Whether it’s setting up shop across from AutoZone Park, leaning into the blues-infused Memphis history at the upcoming Central Station Hotel, or getting ready to seal business deals at the Loews Hotel, one of the country’s in-vogue vacation spots should have plenty of options.