Reflecting on the development, sale of W Nashville

In 2010 I came to Nashville, Tennessee, to explore selling the Hilton Nashville. Fortunately, the sale stalled during negotiations, and I quickly realized this was not a market to exit – it was a market to invest in.

Contributed by Dave Tessier, Hospitality Gaming Advisors, West Palm Beach, Florida

People knew of Nashville’s vibrant culture rooted in music, but it offered so much more. Growing dynamics of dining, art, fashion, hospitality and outdoor activities converged to form a creative community that continues to attract major businesses, new residents and record-setting tourism. I used to say that Nashville was one of the best kept secrets in the lodging market.

However, one thing missing: a true, luxury lifestyle hotel where visitors could experience it all.

My approach to investing in a world-class destination came from a long and diverse career in the hospitality industry. Having the procedural discipline from my years at Marriott, Hilton and IHG merged with the creative lens of the visionaries I worked with in the past, including Ian Schrager, Sol and Butch Kerzner and Jeff Soffer. It resulted in the W Nashville.

Nashville’s high occupancy and rates combined with its low labor costs made it an easy decision to just build hotel rooms at a reasonable cost and make extraordinary profits.

So, why invest in a world-class urban destination? I recognized that one day that would change and a world-class product would own the market.

Our local partners in the Hilton Nashville, Mark Bloom and Larry Papel, controlled a prime piece of land in the heart of the Gulch, which at that time was the up-and-coming live, work and play area of Nashville. We all recognized that this was an ideal site for a lifestyle hotel.

Mark and I, along with my business partner Anna Gomez, partnered to concept a one-of-a-kind luxury lifestyle hotel that would reflect the city’s soul. We set out to redefine Nashville’s hotel landscape and I think we nailed it.

We knew that it had to be a destination within a destination, and that we needed to provide guests with a playground that would offer more than just a night’s stay. We also knew that local buy-in and engagement was critical to success. This couldn’t just be a property for Nashville visitors to enjoy; we had to immerse the local community and activate the hotel all day and night. In partnership with Magellan Development, we chose world-class designers, architects and restaurant operators in combination with talented local artists and entrepreneurs to create something authentic and true to Nashville that would be embraced by the local community and world travelers alike.

What resulted was a towering property packed with 286 rooms, 60 suites and over 26,000 square feet of outdoor space, all located in the heart of Nashville’s most desirable walkable neighborhood. Six street access venues, including two restaurants from award-winning Chef Andrew Carmellini, attracted a steady stream of locals who understood that the W Nashville was a committed neighbor. Art, craftsmanship and design were more than just details – they were a critical part of the development strategy and centered on local talent and inspiration.

Despite the setbacks with COVID, the reaction to our October 2021 opening paired with unprecedented market conditions resulted in a unique opportunity for an early and lucrative exit. We had created a crown jewel property in Nashville’s hospitality and lodging market, which continues to climb the ladder among the top cities in the U.S. Supply chain challenges, increased costs of materials, labor shortages and skyrocketing land costs meant less ground-up development for the foreseeable future.

We discreetly ran an off-market sale process approaching the most likely potential buyers. The result was a sale to Xenia Hotels & Resorts for US$950,000 per key – the largest per-room sales record for any hotel in the city’s history. I believe a transaction of this value has opened the door for further development of high-end hotels in the market, giving lenders the confidence to underwrite large-scale projects.

We are of course extremely proud of this history-making sale and the special property behind it. But that’s just part of the story. The sale of W Nashville signals something much bigger for the Music City. I believe Nashville has officially joined the ranks of the strongest hospitality and lodging markets in the country. That strength is being fueled by the generous people, dynamic culture and unique music product that can only be found in Nashville. Not only are visitors flocking to the city in record numbers, so are new residents from premium markets like New York and Los Angeles.

A strong and vibrant community requires unique and exciting offerings that will fuel their passions and keep them inspired. I expect developers who take a more thoughtful approach that honors authenticity will continue to shatter records in Nashville. If you build it right, they will come.