Minneapolis hotel rebound is one of the best in the nation
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Twin Cities hotels saw one of the best rebounds in the country this summer, thanks in large part to a bustling downtown Minneapolis.
Why it matters: Tourism is a key piece of the neighborhood's vitality, and local hotels suffered one of the biggest downturns in the nation due to the pandemic and civil unrest.
By the numbers: Only Houston and New Orleans had better year-over-year gain in revenue per available room (RevPAR) in both July and August, according to CoStar.
- Downtown Minneapolis hotels saw RevPAR jump nearly 22% in those two months.
- The $131 million they collected this summer is 8% more than the summer of 2019, according to Meet Minneapolis.
What they're saying: Mike Noble, the third-generation owner of downtown's Normandy Inn, told Axios that 2024 is the first "decent" year since 2019.
- "My grandpa said, 'Don't worry about your ROI. Just make sure you're taking in more (money) than you're paying out.' We're finally back to where we can do that," he said.
The big picture: Sports, concerts, theater and conventions are driving hotel bookings, according to Noble and other hoteliers.
Zoom in: Jay Bhakta, whose JR Hospitality co-owns the downtown Cambria, Home2 Suites and Tru by Hilton, said his hotels are finally seeing corporate travel, which has been mostly missing since 2019.
- He expects that to continue to improve as more employers call their workers back into the office.
Reality check: Hotel property values have plummeted in the Twin Cities, where vacancies were among the highest in the country from 2020-2022.
- While summer revenue is encouraging, owners are still paying more for labor, real estate taxes and energy.
Yes, but: Bhakta is bullish on the future of the city. He doesn't see any new hotels in the pipeline in the next two to three years, and a handful have and will be converted to housing. A decline in supply should help bring room occupancies up, he said.
- He is planning to bid on downtown hotels that are on the market, with hopes of acquiring them at a discount. JR Hospitality has a dozen Minnesota hotels in its portfolio and several more in Wisconsin.
The bottom line: Bhakta said downtown's reputation took a hit in recent years, but that's changing as events bring families back to the city.
- "I think we're getting further away from the perception of downtown not being safe or fun," Bhatka said.