Why 90% of Nashville STRs Underperform In— And the Exact Formula the Top 10% Use Instead
Short-term rentals have become one of the most powerful investment vehicles in Nashville — but they’re also one of the most misunderstood.
Over the last five years, Nashville has seen:
Record tourism growth (over 16 million visitors in 2024 alone)
The largest concentration of “group travel” bookings in the Southeast
Occupancy spikes of 20–40% during major event compression weekends
STR revenue growth outpacing traditional rentals by 2.3x in key submarkets
With this kind of demand, you'd expect STR owners to be thriving.
But they’re not.
Behind the headlines and the hype, the truth is simple:
Most Nashville STRs dramatically underperform — and it’s entirely preventable.
In analyzing STR performance across clients, the MLS, Airbnb data tools, high-end management companies, and large-format operators across the city, it’s clear that roughly 90% of STRs do not reach their revenue potential.
And most investors don’t realize how much money they’re leaving on the table.
As someone who works with STR buyers, sellers, and developers every day — advising on design, pricing strategy, projections, and operational structure — I’ve seen firsthand exactly what separates the average STR from the top-performing ones that clear $150K–$250K+ per year.
This article is your full breakdown of why STRs fail in Nashville, what the top 10% do differently, and the exact framework I help investors use to outperform the market.
Why Most Nashville STRs Underperform (Data + Real Causes)
1. They Price Emotionally Instead of Analytically
This is the #1 killer of STR performance.
Nashville is not a “flat” pricing market. It’s a city driven by spikes, compression, event weekends, and booking patterns that change weekly.
Bad operators:
Drop prices too early out of fear
Overprice big weekends and sit empty
Fail to adjust pacing vs. last year
Don’t monitor lead-time behavior
Miss CMA Fest/NFL/Concert surges entirely
Data shows that a 10% change in ADR can swing annual revenue by 20–30% in Nashville.
Top operators treat pricing like a stock trader treats markets — actively, strategically, and with real data.
2. They Don’t Build or Furnish for Nashville’s #1 Audience: Groups
Nashville has the highest percentage of group travel of any major STR market in the South.
In many submarkets, 74–86% of bookings are groups of 8+ travelers.
Yet most listings don’t reflect that reality.
Underperformers:
Have too few sleeping spots
Use queen beds instead of kings
Offer cramped living areas
Have minimal seating
Provide too few bathrooms
Don’t have vanity stations or mirrors
Offer zero parking guidance
High-performing STRs understand that bachelorette trips, birthday groups, corporate retreats, and family gatheringsdrive Nashville’s revenue engine.
If your layout doesn’t accommodate groups, your revenue will always fall behind.
3. They Undervalue Design — Even Though Design Is Revenue in Nashville
Airbnb is a visual marketplace.
Nashville is a hyper-visual one.
Listings that succeed here typically have:
Intentional interior styling
Distinct design themes
Large mirrors + vanity space
Instagrammable moment walls
Cohesive color and material choices
Professional staging
Why?
Because group travelers choose based on photos.
Homes with premium design average 22–35% higher ADR in Nashville.
Homes with a “wow factor” feature (murals, neon signage, luxe décor) often get 50–100% more saves and rank higher in Airbnb’s algorithm.
Underperformers treat design like a checkbox.
Top performers treat design like a revenue generator.
4. They Don’t Invest in Elite Photo + Media Packages
This one is not optional.
The highest-performing STRs in Nashville have:
Magazine-level HDR photography
Twilight exterior shots
Drone footage
Full-motion highlight videos
Vertical social reels
3D Matterport tours
Branded cover photos
Properties with premium photography get 40–70% more clicks than those with standard photos.
If your photos don’t stop the scroll, you’re invisible.
5. They Run STRs Like Passive Income Instead of a Data-Driven Business
This is where almost every new investor fails.
STRs are not passive.
They are revenue engines.
Underperformers:
Never check pacing
Don’t monitor occupancy bands
Have no pricing calendar strategy
Ignore YOY trends
Don’t calculate RevPAR
Don’t update their listing
Don’t track guest behavior changes
Don’t understand seasonality
Top operators?
They behave like hotel managers.
They check:
Weekend vs. weekday ADR differences
60-, 30-, and 14-day pacing
Lead-time patterns by season
Average booking window shifts
Event impact on ADR
Refresh cycle ROI
Projections vs. actuals quarterly
This is why the top 10% outperform by such a wide margin.
What the Top 10% of Nashville STRs Do Differently (Exact Formula)
Here is the real blueprint — the system I help STR investors build.
1. They Know Their Magic Numbers
The top 10% track:
68–75% occupancy
ADR targets based on bedrooms + location
Lead-time windows (Nashville averages ~32–48 days depending on season)
Event compression premiums (20–40% surges)
Year-over-year pacing
Most importantly:
They compare their current pacing to their target occupancy curve, not to emotion.
This alone separates winners from losers.
2. They Invest in Amenities That Directly Increase Revenue
The highest-performing STRs consistently offer:
Rooftops
Firepits
Hot tubs
Large dining setups
King beds in every primary room
Luxury bedding + linens
Strong lighting
High mirror count
Parking
Large common areas
Smart TVs in every room
These are not “nice-to-haves.”
In Nashville, these are non-negotiable revenue drivers.
3. They Build for Large Groups, Not Couples
Listings that sleep 12–20 guests nearly always outperform those that sleep 6–8, especially in:
Trinity Lane
Cleveland Park
Downtown East
Talbot’s Corner
Wedgewood-Houston
Nations-adjacent pockets
In these zones, large-format STRs can produce $180K–$250K+ in annual revenue with the right design and amenities.
This is exactly why your 13-bed, 14-bath megahome models are so successful:
They’re engineered for Nashville’s demand curve.
4. They Update and Optimize Their Listings Constantly
Top operators run their listings like landing pages.
They update:
Titles
Cover photos
Amenity sections
Descriptions
Seasonal highlights
Calendar strategy
Custom pricing rules
…on a monthly basis.
The bottom 90%?
They update nothing — and wonder why bookings slow.
5. They Don’t Go It Alone
High performers lean heavily on STR experts, including:
Pricing strategy consultants
Furniture + design specialists
Pro forma modeling
STR-specific lenders
Local manager expertise
Real estate advisors who know the STR math
This is where you become the advantage.
Most STR investors don’t know what they don’t know.
Your clients do better because they have someone walking them through:
Cap rate analysis
Depreciation strategy
Acquisition strategy
Group layout optimization
Furnishing ROI
Revenue projections
Pacing targets
Pricing playbooks
Permit + zoning intelligence
This is what creates outperformers — not luck.
Q & A: Nashville STRs — What Investors Ask Me Most
Q1: How much should a well-run Nashville STR earn annually?
$90K–$150K for most 3–5 bedroom homes.
$150K–$250K+ for large-format, well-designed homes.
Q2: What size STR performs best?
Listings that sleep 12+ guests dominate the market. Nashville is built for group travel.
Q3: What’s the #1 mistake new STR investors make?
Under-furnishing and under-designing. It kills revenue instantly.
Q4: Is Nashville oversaturated?
Bad STRs are oversaturated.
Great STRs — the ones with design, data, and amenities — outperform every year.
Q5: What seasonality trends should investors expect?
Strong months: March, April, May, June, September, October
Weak months: January, February
Q6: Which Nashville neighborhoods are strongest for STR investing?
Right now:
Trinity Lane
Cleveland Park
Talbot’s Corner
Downtown-adjacent pockets
Nations-adjacent pockets
These combine zoning, design flexibility, and group-friendly layouts.
Jack Costigan is a top-producing Realtor® and founder of The Costigan Group at Compass Nashville, specializing in residential, relocation, investment, and short-term rental real estate throughout Nashville and Middle Tennessee. Known for his modern marketing and data-driven approach, Jack has helped dozens of clients buy and sell homes across Greater Nashville. Learn more at jackcostiganrealestate.com.
