Following national trends, Knox County’s hotel market experienced a tumultuous two years as occupancy rates fell from 60.4 percent in 2007 to 50.1 percent in 2009.

Average occupancy rates nationwide fell from 63.2 percent in 2007 to 55.1 percent in 2009. At the same time the average guestroom rates dropped 5.9 percent to $97.51. Despite declining occupancy and guestroom rates, there was a 3.2 percent net increase in the number of guestrooms available in 2009.

Country Inn & Suites near Cedar Bluff

The highest occupancy rate in Knox County, 61.9 percent, was found in hotels with guestrooms priced over $120.00, while those priced $50.00 and under had the lowest with an average occupancy of 39.4 percent. In 2009, the average guestroom rate in Knoxville was $70.11. This was $6.95 less than the Tennessee average and $27.40 less than the national rate.

Even in the midst of this economic downturn, Knox County continued to register strong numbers in travel expenditures as annual figures increased 7.2 percent since 2007 to $854 million. This represents six percent of the 2008 statewide total of $14.3 billion.

Knox is one of the top five counties in Tennessee impacted by domestic travel. The county’s tourism and travel industry reported more than $293 million in total payroll accounting for approximately 10,100 jobs. Eight of Tennessee’s top 50 tourist attractions are located in the greater Knoxville region. Two Knoxville attractions, the Knoxville Zoo and the Tennessee Theatre, are included in this ranking.

Knoxville’s hotel market saw six hotels (including one existing building) added to the inventory since 2007 that added 424 guestrooms. Two of the new hotels, County Inn & Suites near Cedar Bluff and Holiday Inn Express in Farragut, were added to the West sub-market. The North sub-market added the remaining three new properties with the completion of Comfort Inn on Barnett Way, Main Stay Suites on Merchant Drive and Hampton Inn & Suites on Pratt Road. Since 2000, 1,726 guestrooms have been constructed, accounting for 19.9 percent of the countywide inventory.

The flurry of new construction completed in the past two years will likely impact demand across Knox County, keeping market indicators flat in the coming years. Only one new hotel project, Metropolitan Plaza, is currently on the drawing board.

The information for this report was gathered during the spring of 2010 and represents a snapshot of the market at that time.

The complete 2009 Hotel Market Analysis for Knoxville and Knox County can be purchased for $75 and a PDF version is available for $50. Call 215-2500 or visit the MPC office at 403 City County Building.