Historical Performance (2022–2024)
Occupancy & ADR Trends: Nashville's short-term rental (STR) market rebounded strongly after the pandemic. Occupancy improved from 50% in 2022 to approximately 53% by 2023. Average daily rates (ADR) reached record highs, rising from $340 in 2022 to $350 in 2023, pushing revenue per available rental (RevPAR) to about $186 (up 6% year-over-year). The surge in "revenge travel" post-pandemic drove strong demand, sustaining growth in occupancy and ADR.
Seasonality & Events: Nashville's STR market is heavily event-driven, with peak demand from April through October. June, in particular, sees high occupancy, largely due to events like the CMA Fest, which attracts tens of thousands of visitors. Major events such as concerts, sports tournaments, and July 4th celebrations regularly push hotel and STR occupancy beyond 90%. Weekends remain strong year-round, fueled by bachelor/ette parties and music tourism.
Tourism Growth: Nashville hosted 16.2 million visitors in 2022, increasing to a record 16.8 million in 2023. Tourists spent approximately $10.5 billion in 2023, with leisure travel leading at 64% of total visitors. Business travel and conventions also contributed to demand recovery, with STR bookings reaching all-time highs.
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Economic Impact on STR Market
Inflation & Travel Costs: The broader economic climate had mixed effects on Nashville's STRs. In 2022, high inflation drove up travel costs, with airfare jumping 25% and lodging rates increasing by about 5%. Gasoline prices hit record highs, and rental car rates soared. While some travelers cut back on trips, Nashville benefited as a regional drive-to city, attracting those opting for shorter, cost-effective vacations.
Consumer Spending & Debt: By 2023, inflation cooled to about 3-4%, stabilizing consumer confidence in travel. Wage growth outpaced inflation, boosting disposable income, though rising credit card debt and interest expenses pressured household budgets. As a result, value-conscious travelers increasingly favored STRs over hotels due to cost efficiency for groups.
Interest Rates & STR Ownership: Rapid interest rate hikes between 2022 and 2023 raised mortgage costs, slowing STR investment. The average 30-year mortgage rate jumped from 4.2% to 6.5%, making new STR acquisitions and refinancing more expensive. Investor activity slowed, with new STR listings growth decreasing from 22% in 2022 to about 7% in 2024. Some hosts exited the market due to rising operating costs.
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STR Supply Trends & Market Competition
Supply Growth: By late 2024, Nashville had approximately 13,450 active STR listings, reflecting an 8% year-over-year increase. STR supply grew rapidly after COVID but has since moderated due to regulatory constraints and market saturation. Professional operators have consolidated a significant portion of the market, with about 65% of Nashville hosts managing multiple listings.
STR vs. Hotel Development: Nashville's hospitality sector is expanding, with 2,849 new hotel rooms planned by 2025, including high-end properties. While hotels increase lodging supply, they also bring more visitors, maintaining demand for STRs. However, competition will intensify, particularly in the premium segment.
Regulatory Constraints: Local policies have limited new investor-owned STRs in residential areas since 2022, restricting expansion in some neighborhoods while allowing growth in commercial zones. This has slowed STR supply growth and preserved occupancy rates for existing hosts.
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2025 Market Outlook
Occupancy & Demand: STR occupancy is expected to stabilize in the mid-50% range in 2025, supported by an estimated 17.1 million visitors. Continued growth in Nashville's event and leisure tourism sector should sustain demand, though an economic downturn could pose risks.
ADR & RevPAR Forecast: With inflation easing and competition rising, ADR growth in 2025 is expected to be modest, likely around 2-3%. RevPAR is forecast to increase slightly, reaching the high-$180s or low-$190s, reflecting stable occupancy and incremental rate gains.
Supply & Competition: While STR inventory growth is slowing, nearly 3,000 new hotel rooms will open in 2025, increasing competition. Well-positioned STRs should maintain healthy occupancy, while outdated or poorly located rentals may struggle.
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5-Year Projection (2026–2029)
Tourism Trajectory: Nashville is projected to reach 18+ million annual visitors by 2027, driven by new entertainment, convention, and sports developments. Major events like the CMA Fest and potential NFL Draft or NCAA tournaments will boost peak-season STR demand. The new Titans stadium opening in the late 2020s could position Nashville for a Super Bowl bid, further enhancing visitor growth.
STR Supply & Regulation: Nashville's STR supply growth will slow due to zoning restrictions, with new inventory concentrated in commercially zoned developments. Over time, the number of grandfathered residential STR permits will decline, tightening supply. A state-level regulatory shift could alter this trajectory, but no major changes are currently expected.
Revenue & Rates: Assuming a stable economy, ADR is projected to grow around 2% per year, reaching approximately $380 by 2029. RevPAR could increase by 3-5% annually, pushing towards $210-$230. Larger STRs catering to groups will likely see higher rates, while smaller units may face pricing pressures from hotel competition.
Macro-Economic Factors: Economic cycles, inflation trends, and tax policies will impact long-term STR performance. An economic downturn could reduce travel demand, while rising STR taxes or fees may affect profitability. Increased hotel supply could also cap STR rate growth, requiring operators to stay competitive on pricing and amenities.
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Comparative Market Analysis
Nashville outperforms comparable STR markets such as Las Vegas, Austin, and New Orleans in ADR and revenue per listing. Nashville's $350 ADR surpasses that of Austin ($290) and New Orleans ($297), reflecting strong event-driven pricing power. While occupancy rates are similar across these cities (~50-53%), Nashville's mix of large group rentals and year-round tourism sustains higher earnings. Unlike New Orleans, which has seen severe STR restrictions, Nashville's more balanced regulatory environment supports long-term stability.
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Sources
AirDNA Market Overview: Nashville occupancy, ADR, RevPAR, and listings data
Airbtics: Nashville Airbnb market data and revenue trends
Nashville Convention & Visitors Corp: Tourism statistics and major event impacts
Visit Music City: Hotel openings and tourism projections
Swift Travel Blog: Inflation & travel costs analysis
Reuters: Fuel price trends and travel demand impacts
Rocket Mortgage: Federal Reserve rate hikes and mortgage rates
Defy Mortgage Report: Nashville STR permit regulations and market effects
Google Trends: Nashville travel search interest and seasonality patterns
Skift & RentalScaleUp: U.S. STR supply and revenue trends
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