Along with Kyoto, Nara is a popular tourist destination providing ancient historical Japanese experience, where Nara prefecture has three World Heritage Sites; Horyu-ji Temple, Ancient Nara city area, and Sacred Kii Mountain Range. During 2017 Nara prefecture had 2,090,000 visitors from outside of Japan which was record number.

However, when it comes to lodging Nara is on the bottom. Number of hotel rooms in Nara prefecture is 9197 rooms which is lowest in all prefectures in Japan. Number of people stayed at hotels at Nara prefecture was 2,650,000 people in 2017 which is second to last in all prefectures in Japan, Tokushima prefecture was last.

Reason is quite obvious, Nara is accessible from Osaka and Kyoto by train in less than an hour. Many tourists make a day trip from Osaka or Kyoto and most tourists do not overnight at Nara. Current governor of Nara prefecture is proponent of building more hotels in Nara and make tourist stay overnight at Nara. Nara prefecture has sold a land near Heiankyo remain area (ancient Japanese capital city area) which was owned by prefecture government to a developer and next year JW Marriott Nara will open. Now there is a plan to sell land at Nara park in the city of Nara to a developer to build a hotel.

There are both sides of argument in Nara prefecture government and by local Nara residents about building hotels at tourist places which has historical significant. Proponents say Nara need to become overnight destination so that tourists will spend more money at Nara, not at Osaka and Kyoto. Opponents say Nara is easy access from Osaka and Kyoto which is not inconvenient for visitors to Nara. Save historical area and sites, don't build hotels to gain more money by sacrificing historical area. Nara prefecture is having gubernatorial election, current governor is a proponent of building hotels at Nara. Two opponents want to have more discussion before going forward with more hotels.

On my last visit to Kansai, I decided to give Nara a chance and booked into the Hotel Nikko Nara, right next to the train station. I vaguely recall picking one of their higher category rooms and it was quite decent. Nara station feels like a small town compared tot he area around Kyoto station, it was an interesting contrast. Staying in Nara made it easy to visit some of the less popular temples there and it was an interesting day.

But for someone who is making their first or only trip to Japan, there is no doubt that they should pick Kyoto over Nara for their hotel, no matter how many new hotels are built in Nara.

I like staying overnight in Nara because it feels like a small town, even though it isn't, of course. Access to Horyuji, Yoshino, and the archaeological sites around Kashihara is easier from Nara than from Kyoto, too. However, I agree that a first-time visitor is better off with a base in Kyoto or Osaka.

I wonder if the governor of Nara is thinking about new hotels because of the proposed maglev train that is supposed to reach the city in 20 years or so.

Although I agree that the better option is to stay in Osaka or Kyoto and day trip to Nara, I have on multiple occasions stayed in Nara instead of one of the others. My hotel choice was within a short walk of the station, amid a small shopping/dining area and a little longer but doable walk of the Nara Park/Todaiji area. I like staying in Nara for the quiet at night and somewhat slower pace of life. And, decent rooms are often available even when Kyoto is mostly booked up.

Well, the first (and only) time I visited Kansai, pretty much every gaijin website/forum said Nara was a day trip destination (from Osaka/Kyoto), so it never crossed my mind to even search for Nara hotels / accommodation.

Maglev plan only goes to Osaka/nara/Nagoya/Tokyo, doesn't pass by Kyoto (as of today's plan, not finalized)

​​​​​Makes even more sense to base in Osaka, though I suppose there can be slightly more demand to stopover at a 'small' city like nara

For me, Accommodation in Kyoto has always been more expensive than Osaka/Tokyo (for the same dates that I've been looking at), and lack of subway in Kyoto makes it harder to move about

Has anybody stayed at the Noborioji Hotel?

I usually stay at the Comfort Hotel, which is just outside the main entrance of Nara Station. There are a couple of yoshoku joints along the short walk between the two. The Todaiji park is about a 10-15 minute walk.

Can't offer personal knowledge regarding more up-scale lodgings but I know they exist. I don't know anything about the Noborioji Hotel except that it looks to be in a great location, between Kintetsu-Nara Station and the park.

The new hotel built inside of Nara Park, it is Shisui, a Luxury Collection Hotel, Nara opening August 29, part of Marriott hotel groups. This hotel is built and operated by Mori Trust, one of the largest development companies in Japan.

The hotel home page in Japanese (nicer pictures but no English site). English website is by Marriott.

Seems like there is still debate about if the city of Nara needs a hotel like this. Some local people are saying that city of Nara is not as busy during evenings compared with during daytime because most visitors return to Osaka/Kyoto, which many think that is pro of city of Nara.

P.S.
The restaurant portion of the building is a former Nara prefectural governor resident built in 1922. The hotel also includes a room called "Goninnsho no Ma" (御認証の間) where Showa emperor has signed Treaty of Peace with Japan which was a part of San Francisco Peace Treaty in November of 1951. As anything to do with the emperor in Japan, this room was not open to the public, but will be available for the view to hotel guests. The hotel has total of 43 guest rooms.

I am a huge, huge fan of Nara. It's very, very different from Kyoto, and in many ways the historical sites are even more awe inspiring.

Todaiji and Horyuji are MUST visits. Yakushiji, Toshodaiji, Kofukuji, Kasuga Taisha are also amazing places. I'd say even one night is insufficient - it's that incredible.

We've stayed at Hotel Setre Naramachi (modern boutique hotel with great food) and Noborioji (pricey but suites are decent, dining is very good and the location is unbeatable - close to Nara Station and Nara Park), and intend to check out Fufu Nara sometime in the future.

I am also curious about the necessity, although I assume they did the market research before the investment. Who knows, maybe the local government offered up some incentives to try and level up from being a day trip destination.

I have been in Nara in the evening including for the excellent illumination at Kasuga Taisha on Saturdays in November, the city is fine at night but not magical and certainly not a problem to return to Kyoto the same night.

If exploring wider Nara prefecture I'd sleep in Sakurai, much less posh digs but also much less time wasted in transit to Akame 48 Falls, Yoshino, Tanzan Jinja, Muroji, Hasedera, etc.

I love Nara too. I visited much of the temples and did a walk in the Primeval Forest, very inspiring. On my only visit I stayed two night there, one night at the Onyado Nono Nara, which I definitely recommend (it has an Onsen and is quite modern) https://goo.gl/maps/4io3Qz3FJnoikbM46.
Second night was at the Nara Hotel (for the simple reason the next morning I needed to take the first shuttle to KIX and there is a stop just in front), quite interesting hotel as it is very inspired by colonial architecture (it was built in 1909).