Cronheim Hotel Capital Secures $39 Million for New AC Hotel in Downtown Knoxville

News Summary

Cronheim Hotel Capital has secured $39 million in financing for the construction of the AC Hotel Knoxville Downtown, set to feature 161 rooms and a rooftop bar. Located at the intersection of Walnut St. and Locust St., the project emphasizes sustainability with a C-PACE component. Construction is expected to be completed by winter 2026. This development is part of a broader hotel boom in Knoxville, which has added over 1,100 rooms since 2015, reflecting the area’s growing demand for accommodations.

Cronheim Hotel Capital Secures $39 Million for New AC Hotel in Downtown Knoxville

Knoxville, TN – Cronheim Hotel Capital has successfully secured $39 million in construction financing for a new AC Hotel located in downtown Knoxville. This funding marks a substantial step forward for the project, enabling the development of a modern 161-room hotel at 427 Walnut St. and 416 Locust St.

The financing structured by Cronheim is notable for its non-recourse nature, featuring a 75% loan-to-cost (LTC) ratio. A C-PACE component is included in the financial arrangement, which will help facilitate the project’s eco-friendly initiatives.

The borrower of this financing is Vector Hospitality Inc, which is spearheading the AC Hotel project. It is anticipated that the hotel will be completed by winter 2026, providing a new accommodation option for visitors to the city.

What makes this hotel particularly appealing is its rooftop bar and kitchen, offering guests stunning views of Neyland Stadium, the home ground of the University of Tennessee Volunteers. This feature is expected to attract both locals and visitors looking for a unique dining experience.

In addition to the AC Hotel project, downtown Knoxville is experiencing a wave of hotel developments. Currently, construction is also underway for an eight-story Home 2 Suites by Hilton, which will feature 130 rooms. This hotel is being built in the 1100 block of Clinch Avenue, conveniently located near World’s Fair Park.

The property for the Home 2 Suites was purchased by Sachchidanand Hotel LLC for $1.1 million back in April 2021. Once completed, the Home 2 Suites will include diverse amenities such as an outdoor patio and a rooftop lounge, catering to the growing demand for modern hotels that offer a variety of experiences.

The design for the Home 2 Suites is being handled by ELEVATE Architecture Studio, while construction work on the project is being managed by the Memphis-based firm McMurry Construction.

Knoxville has seen significant expansion in its hotel market, with the addition of 1,178 rooms across 13 new properties from 2015 to 2024. The average nightly hotel room rate has experienced a notable increase, rising from $84.84 to $126.15 during the same period. This growth reflects the ongoing demand for accommodations in the area as tourism continues to increase.

In addition to the AC Hotel and Home 2 Suites, several other hotel projects are in various stages of development in Knoxville, including a Moxy by Marriott and a Tempo by Hilton, both of which are also set to be operated by Vector Hospitality. This trend indicates a diversifying hotel market in Knoxville, with various types and amenities being introduced throughout the city.

As the hotel industry flourishes in Knoxville, these developments promise to enhance the city’s reputation as a prime destination for travelers. They are set to provide visitors with not just places to stay, but also exciting options for dining and entertainment, all contributing to the vibrant atmosphere of downtown Knoxville.

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Additional Resources

• Rebusiness Online: Cronheim Hotel Capital Secures $39 Million for New AC Hotel in Downtown Knoxville
• Knox News: Knoxville Construction Near World’s Fair Park
• Inside of Knoxville: Downtown Development Updates January 2025
• Encyclopedia Britannica: Hotel Development
• Google Search: Knoxville Hotel Construction