Twin Cities Hotel Market Continues to Struggle
photo by caitlin abrams

Twin Cities Hotel Market Continues to Struggle

Rates are up, occupancy is up, but the Twin Cities remains one of the most depressed of the nation's large hotel markets.

On most days, if you peruse same-day local hotel rates, a consistent story emerges. Rates are up over a year ago, occupancy is up, and one hotel is seeing halcyon days. But the bigger picture is that, unlike the local restaurant business, which is doing record volumes with lower overhead, hotels continue to scrounge for patrons, leaving the Twin Cities at or near the most depressed of the nation’s large hotel markets. 

“Our market is lagging behind. We’re in a kind of limbo,” says Richard Dobransky, president of St. Paul-based Morrissey Hospitality, which operates the Saint Paul Hotel and a number of other properties across the Midwest. He says the Saint Paul reopened its iconic St. Paul Grill after 19 months of closure, but only four nights a week. “I can’t open for lunch if no one is downtown,” he says.

Business travel remains profoundly depressed here, worse than in other cities. “There’s no reason to travel to Ecolab, Securian, or 3M if their offices are closed,” Dobransky notes. He says 3 percent of his October volume was corporate travel; a normal October has been 35 percent. Group and convention business also sits at about a third of normal in the region. 

Small, hotel-based meetings are taking place in fields like med-tech, says Graves Hospitality CEO Ben Graves, operator of numerous local hotels, including the Intercontinental at MSP Airport. “In the past, those meetings would be downtown,” he says, “but things aren’t open and there’s fear of crime.”

The big picture is that domestic leisure travel has recovered to 2019 levels in most markets, including business markets like Chicago, says Anne Purcell, director of hospitality analytics for Costar Group, “but Minneapolis did not see as strong of a leisure lift.” Costar’s data showed summer 2021 occupancy in the Twin Cities at 55%, compared with 70% in 2019. 

Purcell says rates have recovered to often seemingly preposterous levels in many markets because “people are willing to pay top dollar to go where they want to go,” and with international travel still difficult, “a lot of U.S. destinations have basically a captive audience.” 

Dobransky notes Morrissey’s “up north” properties had a banner summer, as did Graves’ Marquette, Michigan, hotel. Graves says in the metro, there’s good business near the airport, Mall of America, and Southdale. The Westin Galleria has been the local rate leader for months on end. 

But good business is a mixed bag. “Many times, when your occupancy goes over 50 percent for a couple nights, you don’t have available staff, so hotels are limiting occupancy to what they can service,” says Graves. He notes an increasing resistance to full-time work, even at higher livable wages.

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This article appeared in print with the headline: Much Room at the Inn