Ready or not, the downtown Minneapolis hotel scene will soon swell by more than 500 rooms and as many as seven new properties. Depending on whom you ask, this recent surge in new hotel projects is either the work of developers determined to satisfy a supply-hungry market, or an effort to generate demand with distinct, destination-type properties.
One thing is certain, however: The hotel market is white hot, and Minneapolis has caught fire.
“There has been a strong resurgence in the hospitality industry nationwide, and Minneapolis is certainly not an exception,” says Ralph Burnet, chair of Edina-based real estate company Coldwell Banker Burnet, whose new 60-room boutique hotel, The Chambers, is slated to open on September 10 at Ninth and Hennepin in downtown Minneapolis.
A lot of people have said they're going to build something but the proof is in the pudding.
In fact, PricewaterhouseCoopers, which tracks hospitality and other industries, forecasts that construction will begin on 119,000 new hotel rooms nationwide in 2006. That’s a 45 percent increase over 2005, and the highest level of hotel construction since 2000, according to Pricewaterhouse. Based on recent trends, Lodging Econometrics, a New Hampshire organization that tracks the hotel industry, predicts that hotel construction will reach record highs in 2007.
“The hotel market is very cyclical, just like any real estate market,” explains Collin Barr, executive vice president of the Minnesota region for Minneapolis-based developer Ryan Companies US, Inc., which is building a new Westin hotel in downtown Minneapolis. Barr says the industry generally runs in five- to eight-year cycles of growth in two key hotel-industry metrics: occupancy rates and average daily rates charged for rooms. “Right now we’re in a recovering hotel market.”
