United States -  Memphis

Memphis continues to serve as a major logistics hub, with superior access to rail, river, highway, and airport cargo infrastructure. Memphis’s logistics credentials are enhanced by the presence of the global headquarters for FedEx, and the area is home to major operations for other corporate heavyweights, such as International Paper, Nike, and Hilton Hotels. Moreover, tourists continue to flock to Memphis for it rich musical heritage. However, the Memphis-area economy has struggled with fluctuating unemployment levels in recent years. Nonetheless, the relocation of ServiceMaster's global headquarters to the former Peabody Place in 2017 is expected to create approximately 650 jobs during the renovation process and relocate 1,200 employees to the downtown area. In addition, although the hotel market was negatively affected by significant reductions in passenger traffic (and related demand) at Memphis International Airport (MEM) after the 2009 merger of Delta Air Lines and Northwest Airlines and the loss of MEM’s Delta hub status in 2013, an upswing in travel was observed in 2015 and 2016, and year-to-date data for 2017 indicate continued growth. Lastly, St. Jude Children's Research Hospital, the premier center for the research and treatment of pediatric cancer and other catastrophic childhood diseases, announced a $9-billion upgrade and expansion of its existing campus in December 2016. These factors should bode well for the market going forward.

The greater Memphis area continues to experience economic strength, led by the expansion in healthcare and tourism industries. The FedEx Forum, home to both the NBA Memphis Grizzlies and the University of Memphis Tigers basketball teams, hosts a multitude of concerts and private events year-round; the arena hosted the NCAA Men's Basketball South Regional at FedEx Forum in March 2017. Furthermore, the 2015 renovations to AutoZone Park, the 2017 opening of Elvis Presley's Memphis at Graceland Campus, and planned renovations to Memphis Cook Convention Center are anticipated to bolster leisure and group demand. The ongoing expansion of St. Jude's and the relocation of corporate offices to Downtown Memphis are expected to support occupancy and ADR growth in near term.

Greater Memphis hotel supply increased by 229 rooms, approximately 1.0% in 2015, and by 556 rooms, approximately 2.5%, in 2016, inclusive of a new 450-room hotel, The Guesthouse at Graceland, which opened in October 2016. In Downtown Memphis, over 3,000 rooms are proposed for development; however, only the 104-room La Quinta Inn & Suites is under construction, scheduled to open by the end of 2017. According to city officials, the convention center facility is currently underserved by sufficient rooms necessary to support the center. In response to increased competitive pressure, a $55-million modernization of the center is scheduled to begin in the summer of 2017, and a new, 600-room convention center hotel, the largest in the pipeline, is proposed for the corner of Poplar and Front Street. According to officials, the renovation of the center is not expected to displace any notable convention groups.

The pace of transactions in the Memphis market remained modest from 2015 through 2016, with most of the activity among the nationally branded, limited- and select-service assets, occurring in the surrounding suburbs. The Marriott Memphis East and Hyatt Place Memphis Wolfchase Galleria were top single-asset sales in 2015, selling for approximately $188,000 and $120,000 per room, respectively. The Sheraton Memphis Downtown, connected to the convention center, sold for $63,000,000, or $111,667 per room, in April 2017.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Change In Value For Market:

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Memphis RevPAR Change

Memphis RevPAR

Year RevPAR
2006 $48.30
2007 $51.03
2008 $47.47
2009 $41.54
2010 $42.12
2011 $43.80
2012 $47.55
2013 $48.43
2014 $54.63
2015 $57.53
2016 $59.82
2017 (f) $61.02
2018 (f) $61.92
2019 (f) $63.14

For more information, please contact:

J. Carter Allen, MAI
callen@hvs.com
  • +1 713 252-5995 (w)
Jai Patel
jpatel@hvs.com
  • +1 615 473-2447 (w)