Twin Cities Hotel Boom
A strong convention business and other economic factors fuel major growth in hotel construction in advance of the 2018 Super Bowl.
The Minneapolis-St. Paul region hasn’t seen a major spike in hotel construction since the years that led up to the 2008 Republican National Convention held in St. Paul.
Big events, such as the Super Bowl, put the hospitality sector in the spotlight and provide the Twin Cities an opportunity for widespread national media attention. If Super Bowl visitors have a good time, they may return to the Twin Cities for a business convention or leisure trip.
“The Super Bowl is certainly a bonus for new hotels that will be open by that time, and it will have a tremendous economic impact across the entire hospitality sector and on our local economy in general,” says Melvin Tennant, president and CEO of Meet Minneapolis, the city’s convention and visitors’ association.
Hotels under construction “will want to be open for the Super Bowl,” says Ted Leines of Leines Hotel Advisors. “But it won’t be a make-or-break-it situation.”
Of course, that’s because it takes more than a Super Bowl to fill up rooms in hotels that are open 365 days a year. Steve Cramer, president and CEO of the Minneapolis Downtown Council, says there are 13 hotel projects in Minneapolis that were recently completed, are under construction or have solid financing. They are a combination of new construction hotels or renovations.
Cramer highlights three main factors that are driving the hotel expansion: a healthy real estate investment market, a strong convention business in the Twin Cities and increases in high-profile, large events.
The gold standard
Tennant also notes that high occupancy rates at Minneapolis hotels attracted the attention of hotel developers. “The general rule of thumb is 70 percent occupancy for a sustained period,” Tennant says. “It often triggers them to expand in the market.”
The annual hotel occupancy rate in Minneapolis in 2015 was 74 percent, which was an all-time record high. In 2016, the year-to-date occupancy through September was 74.2 percent.
“Occupancy is the gold standard,” Tennant says, and Minneapolis met the key metric by demonstrating it could fill hotel rooms on a yearly basis.
“Minneapolis is very strong among [hotel markets] in the nation,” says Tanya Pierson, managing director at HVS, a hospitality consulting firm. Pierson says occupancy rates will continue to be high as the metro area’s population grows and the Twin Cities supports a robust corporate sector and plenty of sports and cultural attractions.
Occupancy rates tend to spike during summer months and big events. The Ryder Cup began in late September this year at Hazeltine National Golf Club in Chaska. But the thousands who attended the golf tournament stayed in hotels throughout the metro.
The occupancy rate in Minneapolis was 81 percent in September, according to a Meet Minneapolis report. That month, Minneapolis had 7,874 hotel rooms.
The hospitality industry is big business. There were 31.6 million visitors to the Minneapolis-St. Paul metro area in 2015, according to a study by D.K. Shifflet & Associates Ltd of McLean, Va. The study showed that was an increase of 2 percent over the previous year, and that those visitors spent $7.5 billion in the area. The visitor count was an all-time record.
The strong local economy is getting a jolt from the hospitality industry, which employs about 33,000 people. Tennant says it amounts to about 10 percent of the local workforce.
The Minneapolis scene
Gone are the days of the simple hotel room with forgettable wall art. As the number of projects swells, hoteliers are differentiating their products to attract the next generation of travelers, adding more communal spaces, bright colors and an infusion of technology.
In October, Marriott International opened the doors to its AC Hotel Minneapolis Downtown, at 401 Hennepin Ave. Situated in the Hennepin Theatre District, it replaces a parking lot. Described as a “lifestyle hotel” with a European flavor, the 245-room hotel includes a huge meeting space, restaurant, library, a “media salon,” boardroom and fitness center. General manager Tiffany Zimmer highlights the lounge and bar, which has sparkling wine and cocktails, including a specialty cocktail called the German Fire Punch. The rooms have smart TVs that allow guests to stream media from their own devices.
Just two blocks down the street, the former Plymouth Building has been converted into an Embassy Suites by Hilton. The building’s Beaux-Arts architecture was preserved in the multimillion-dollar renovation, and the hotel’s historic details include tall entry doors, marble guestroom corridors, granite staircases and oversized guest room windows. The property is at 12 S. Sixth St. and features 290 suites. The hotel, which opened in August, is promoting its bar as an “urban speakeasy” with craft cocktails and locally sourced products.
Just two blocks from U.S. Bank Stadium, the Radisson Red opened in mid-November. The millennial-focused brand describes itself as “a city hotel for an ageless, expressive crowd connected via art, music and fashion.” The hotel encourages guests to use their app to check in and out, open their room doors and chat with other guests. The 164 rooms are boldly colored, with red and black artwork; the hotel maintains a liberal pet policy, and there’s an expansive events and game room. “Every day there is a new restaurant coming up by us,” says Radisson Red general manager Ryan Foley. Located at 609 S. Third St., the hotel features a mural painted by local artist Adam Turman in the entryway.
Millennials also are the focus of a new hotel that’s planned by Graves Hospitality. The 124-room Moxy Uptown is described by the company as a place for “fun hunters.” The developer’s aim is to take advantage of everything in Minneapolis’ youth-filled Uptown neighborhood. Instead of greeting guests at a front desk, the hotel wants visitors to check in at the bar. Similar to the Radisson Red, it will have a game room. When it opens in fall 2017, it will be Uptown’s only hotel.
“This is a new era in Minneapolis,” Graves Hospitality CEO Benjamin Graves says. “It’s one that focuses on delivering culturally enriched lifestyle experiences for guests who seek out vibrant neighborhoods.” Graves is already doubling down by planning a second Moxy at Washington and Chicago avenues near U.S. Bank Stadium in a mixed-use development.
Perhaps some of the most exciting hotel projects are coming out of Minneapolis’ North Loop. Just as the neighborhood teems with one-of-a-kind shops and some of the city’s hippest restaurants and hottest bars, developers are bringing hotels that match.
In 2008, the Iron Horse Hotel—a conversion from a warehouse and cold-storage building to a luxury hotel with a Harley Davidson motorcycle theme—opened in Milwaukee as part of an urban revitalization. Now, the company behind the highly praised Iron Horse, Aparium Hotel Group, is bringing that same unique vibe to Minneapolis with the Hewing Hotel.
The hotel, a $38 million, 124-room renovation of the Jackson Building, 300 N. Washington Ave., opened late this fall and embraces all things Minnesota, with a northwoods-meets-midcentury-modern flair. That means warm tones throughout, wood and leather furniture, taxidermy and plenty of flannel. Even the name is inspired by Minnesota’s lumber industry: Hewing is a process of squaring off round logs.
The Jackson Building was constructed in 1897 and the brick-and-timber structure was used as a warehouse for farm equipment.
Beyond the travelers staying at the Hewing, the management also is focused on attracting Twin Cities’ residents to enjoy the amenities the Hewing is offering. The hotel’s restaurant, Tullibee, named after the Tullibee whitefish, is a twist on Scandinavian food, with a seasonal and hyper-locally sourced menu. The restaurant offerings, which also are influenced by Minnesota’s lakes and woods, nod to Nordic foraging and fermentation techniques. The restaurant will occupy about half of the Hewing’s ground floor, and there is a rooftop for drinking and dining that leans more casual.
“We built this hotel for the community,” Aparium CEO Mario Tricoci says in a written statement. “Our goal is to serve as a social anchor for Minneapolis’ North Loop and as a genuine portal for travelers to experience Minnesota’s up-north sensibility.”
The term “community” is a big buzzword in the hotel industry, as developers scramble to incorporate connectedness within their hotels and to the neighborhoods in which they stand.
Hoteliers throughout the United States are shrinking the size of their rooms. Pierson says that’s a savvy move from a cost-saving perspective, but also because “you don’t spend a lot of time there anyway.” Instead, she explains, they are investing in communal spaces in their lobbies with comfortable furniture and giving an emphasis to bars and restaurants. They also are building game rooms with Ping-Pong tables, video games and projector screens. It’s all meant to bring guests together to share experiences.
The connectedness extends beyond the hotel. While many hotels long have touted their locations, the new developers are trying to link the experience of staying at a hotel with amenities available in surrounding neighborhoods. New hotel brands have splashy landing pages on their websites that market the hippest coffee shops and boutiques in Minneapolis.
Hilton’s new Canopy brand is set to open a hotel near U.S. Bank Stadium just before the Super Bowl, and takes the notion to another level. When guests check in to their room, they’ll be given a small gift that reflects Minneapolis. Each Canopy throughout the world will have a gift unique to its location.
Rebirth in St. Paul
The city of St. Paul has been transforming itself with the addition of light rail, new restaurants, new housing and a baseball park.
After a lengthy hotel drought, St. Paul also is adding new hotel rooms.
Hyatt Place St. Paul, located at 180 Kellogg Blvd. E., opened September 8, with 149 rooms. The hotel is in the recently restored Custom House, which was built in 1933. It’s located along the Mississippi River in the Lowertown section of St. Paul.
“The Twin Cities is an attractive place to work, play and live,” says Terry Mattson, president and CEO of Visit St. Paul. Mattson and other St. Paul leaders compete with many cities when they are trying to lure big events to the RiverCentre in downtown St. Paul. When they do secure those events, St. Paul has a limited supply of hotel rooms. That’s why Mattson and others are encouraged to see a breakthrough in hotel construction in the capital city.
A new Hampton Inn & Suites St. Paul Downtown opened late this fall with 160 rooms located at 200 W. Seventh St. Meanwhile, a Radisson Red is planned for the Seven Corners Gateway site. Its opening date is unknown, but the hotel will have about 150 rooms.
In addition, an Extended Stay Marriott hotel is planned for a site near United and Children’s hospitals.
St. Paul also got a major hospitality boost when its largest hotel underwent a major renovation. Mille Lacs Corporate Ventures owns the city’s high-profile hotel at 11 Kellogg Blvd. E. downtown. Now branded as the InterContinental Saint Paul Riverfront, the hotel offers 410 guest rooms. The multimillion-dollar renovation includes a new dining venue, the Citizen Supper Club. The hotel also offers 43,000 square feet of meeting space, including two grand ballrooms.
The Best Western Plus Capitol Ridge, located at 161 St. Anthony Ave., is being renovated. It has 127 guest rooms. The hotel is open during the renovation. The bar, restaurant, meeting rooms and pool upgrades will be completed by January 1. The changes to the guest rooms will be finished by the spring of 2017.
The sports effect
Many factors are fueling the hotel expansion in the Twin Cities. Perhaps the most visible is the large number of sports fans who have been streaming into the Twin Cities for marquee sports events.
In 2016, the International Champions Cup brought soccer powerhouses AC Milan and Chelsea FC to U.S. Bank Stadium. Chaska’s Hazeltine National Golf Club hosted the Ryder Cup. The X Games will make Minneapolis its home in 2017 and 2018.
And, of course, the Super Bowl will arrive in 2018, followed by the 2019 Final Four basketball tournament.
Hosting a Super Bowl typically generates a big influx of money for hotels.
The Minnesota Super Bowl Host Committee estimates the Twin Cities will obtain $407 million in economic impact from the 2018 Super Bowl. An estimated $71 million will be spent on hotel stays in the Minneapolis-St. Paul metro area, says Andrea Mokros, vice president of communications and events with the host committee.
The Super Bowl and the Final Four will have a particularly big impact on the hospitality sector, Pierson says. Not only are these huge events with thousands of attendees, but they also take place during winter months when hotel occupancy rates tend to wane.
In January and February 2016, the hotel occupancy rates in Minneapolis were 57.7 percent and 63.2 percent, well below summer rates in the low 80s.
Because there aren’t enough hotel rooms in downtown Minneapolis to accommodate the football and basketball fans, the effects of the big-time sports events are likely to be far-reaching, with visitors staying in hotels across the metro.
Andre Eggert is TCB’s online and e-newsletter editor. Marissa Groechel is TCB’s editorial intern.
Top Photo: The AC Hotel Minneapolis Downtown, 401 Hennepin Ave., was opened in October by Marriott International. It has 245 rooms.