We kick 2025 off with an overview of the Louisville, Kentucky, hotel market. HVMG recently took over management of two hotels in the market, the Hilton Garden Inn Louisville Downtown and Home2 Suites by Hilton Louisville Downtown NuLu.
Louisville is the most populous city in the Commonwealth of
Kentucky and is most known for the Kentucky Derby and the Kentucky Bourbon
Trail. Other major demand generators for the market include the University of Louisville,
UPS, Ford Motor Company, Norton Healthcare, and University of Louisville Health
(which is undergoing a $144 million expansion).
The bourbon industry is a vital part of Louisville's economy
as it serves as a hub for bourbon production, distribution, and tourism. In
2023, the Kentucky Distillers' Association (KDA) reported a record 2.55 million
in total attendance; the report stated that bourbon tourists are trending
younger, staying longer, spending more, and 76% are visiting from out of state.
Furthermore, the KDA members are planning to invest $3.5 billion over the next
five years, with $184 million going towards expanded tourism operations.
The Kentucky Derby is now the longest continually running
sports event in America; in 2024, it celebrated its 150th
anniversary. Before the 2024 Derby, Churchill Downs celebrated the completion
of its new paddock. In July 2024, they announced a $80-90 million renovation to
the existing grandstand at the racetrack that will update ticketed seating
options and improve amenities for all guests in the grandstand area;
construction is expected to be completed by the 2025 Derby.
Year-to-Date Trends: While occupancy still has not returned
to pre-COVID levels, RevPAR exceeded 2019 in 2023, driven by strong rate growth,
supported by the PGA Championship that was held at Valhalla Golf Club in May
2024. As of November 2024, occupancy was down -1.4% and ADR was up 3.0%,
causing a 1.6% increase in RevPAR.
The upscale and upper midscale assets noted an increase in both occupancy and ADR, while the luxury, upper upscale, midscale and economy-class hotels noted occupancy declines. During the last year, approximately 300 rooms have opened in the market. Over the past three years, the Louisville market has seen an increase of 810 rooms, roughly 1.5% of the inventory, above the national average of a 1.1% increase.
Source:
CoStar
New Supply: According to CoStar, five properties (565
keys) are under construction in Louisville, representing a 2.3% inventory
growth. The new inventory includes three boutique hotels in Downtown, with the
Hotel Bourre Bonne Louisville, Curio Collection by Hilton scheduled to open in
April 2025. Furthermore, the Hampton Inn & Suites by Hilton Louisville East
Oxmoor is planned to open in March 2025.
Transactions: Given the challenging capital market
environment and conditions in the debt markets, sales continue to lag behind
historical data. In the past 12 months, only three hotels, including upper
midscale, midscale, and small economy hotels, have been transacted.
With two hotels in nearby Lexington, HVMG is excited to have
two new hotels in Downtown Louisville. Louisville benefits from a strong mix of
leisure, business, and group demand generators. With the entrance of new
businesses into the area, expansion to existing and development of new tourist
attractions, a $500 million renovation of the airport, hospital expansion, and
other special events planned for 2025, we feel optimistic about the market.
