Amid Nashville's hotel boom, employee pipeline is slim

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When Grand Hyatt Nashville, a 591-room hotel at the sprawling 17-acre Nashville Yards development, opens in October, it will cap five years of growth during which Nashville’s hotel market added 67 hotels and 9,600 rooms.

Despite this unprecedented growth, industry experts say Nashville’s hotel boom is far from over.

Most of the future supply growth is centralized to the southwest corner of downtown as well as to Midtown, Music Row and West End. Of the 90 hotel properties proposed or under construction, 37 hotels and more than 8,000 of their 11,500 new rooms will open in Southwest Nashville, according to data provided by the Nashville Convention and Visitors Corp.

Nashville’s hotel industry is one of the fastest-growing in the nation, and demand exists for more hotel rooms, according to Jan Freitag, senior vice president of lodging insights at STR, a global hotel analytics firm based in Hendersonville, Tennessee.

Although that demand is welcome news to hotel developers looking to break ground on new projects, Freitag said many hotels are struggling to find employees to keep up the demand.

“When I talk to hotel developers about [STR’s] Nashville data, I tell them, ‘I have no doubt they can plan the room, design the room, finance the room and fill the room,’” Freitag said. “‘But who’s going to clean the room?’”

Supply and demand

Nashville increased its inventory of hotel rooms by 7.5% between January and November of last year, according to STR, and Freitag said all signs point to continued growth in Nashville.

“Nashville’s hotel industry is firing on all cylinders,” Freitag said. “Life is either good or very good, depending on where you look.”

In the last six months, 10 hotels have opened in Southwest Nashville, including Moxy Nashville Vanderbilt, the first hotel to open in Hillsboro Village, and Graduate Nashville in Midtown.

Last year, Nashville experienced an average hotel occupancy rate of 75.1% and sold more than 1 million rooms per month for eight consecutive months, according to STR.

Freitag said Nashville is also leading the nation in room supply growth and room demand growth. By the third quarter of 2019, new hotels in the region spurred a 7.7% increase in room supply, which was met with an 8.3% increase in room demand.

For comparison, the national average for room supply and demand growth is 2%, Freitag said.

“These numbers are mind-boggling,” he said. “If demand growth is outpacing supply growth, we’re getting more new people in here faster than we’re building new rooms. That means the existing rooms are increasing their occupancy.”

Staffing shortage

According to the U.S. Bureau of Labor Statistics, 123,000 people in the Greater Nashville area are employed in the leisure and tourism industry, which includes jobs in hotels, entertainment and food service, up from 79,400 in 2009.

Along with its competitive job market, Nashville’s low unemployment rate of 2.4% also presents challenges for hotel companies trying to recruit employees, Freitag said.

“Nashville’s unemployment rate is so low, and if the city continues to open hotels, it will have to find new ways to secure employees,” Freitag said. “That’s going to be tougher and tougher going forward.”

Kadian Springs, general manager of Moxy Nashville Vanderbilt, said the hospitality labor shortage has meant hotels can no longer rely on hiring tools such as online job postings to help fill positions. Instead, she said, hiring managers must prioritize employee benefits packages to lure prospective employees.

“We’re finding that candidates are interviewing at several places because the supply is so great,” Springs said. “With the [hotel] market being the way it is, we have to find markers that make us different from other hotels in terms of our recruiting.”

With 20 hotels slated to open in 2020—including big-name brands, such as Virgin Hotels Nashville, Grand Hyatt Hotel and W Hotel—hotel managers, groups, like the NCVC, and even local universities are working to train prospective employees.

In 2016, the NCVC and the Greater Nashville Hospitality Association launched Hospitality Works, a program highlighting hospitality job openings in Nashville. The NCVC also helps facilitate networking events and training sessions for job seekers.

Beth Morrow, who serves as the director of industry relations at Lipscomb University’s new School of Hospitality and Entertainment Management, is preparing college students for careers in the Nashville hospitality industry.

“There’s an employment issue going on right now in the hospitality sector—not just in Nashville, but everywhere,” Morrow said. “Nashville is about to have a Four Seasons, and that’s a brand that’s known for its elite-level service. What we’re trying to answer at Lipscomb is, ‘What do those places need in terms of leadership over the next 10 years?’”


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