United States -  Minneapolis - St Paul

Local employers, including 16 Fortune 500 companies, as well the Minneapolis Convention Center and the Mall of America, represent the primary sources of demand for the greater Minneapolis/St. Paul market. Hotels in this market enjoyed stable occupancy levels in the mid-60s prior to 2020. Because of this stability, ADR increased significantly following the Great Recession, largely due to corporate demand from Target, Medtronic, US Bank, Cargill, 3M, Wells Fargo, and Best Buy. Although the Minneapolis-St. Paul market was affected by the Great Recession, the impact was relatively short-lived, with occupancy declining in 2008 and 2009 and ADR falling in 2009 and 2010. Overall, RevPAR declined by nearly $14 from 2007 through 2009. Occupancy registered a historical peak in 2015 driven by the strong levels of demand associated with the Ryder Cup. Record ADR levels caused a surge in new hotel development, particularly in Minneapolis, St. Paul, and Bloomington. Absorption of new supply and induced demand from the Super Bowl in early 2018 led to a reversal of these trends and a record RevPAR level of nearly $83 by year-end 2018. Despite demand from the NCAA Final Four in 2019, occupancy and ADR levels declined because of the correction from the Super Bowl spike and the absorption of new supply, resulting in a $2 decline in RevPAR.

The effects of COVID-19 on the Minneapolis lodging market have been severe. The pandemic particularly affected Downtown Minneapolis because of its reliance on the meeting and group segment, and with international travel substantially reduced, hotels near the Minneapolis-St. Paul International Airport and the Mall of America have been severely affected. Just as the Minnesota government's stay-at-home orders began to ease, Minneapolis drew national attention for the death of George Floyd during an arrest on May 25, 2020. His death led to violence throughout the metro area and sparked social injustice protests worldwide. As a result, Minneapolis-St. Paul hotel market faced a slower recovery from the $52 loss in RevPAR recorded in 2020, with only a $16 gain in 2021. Many major employers delayed returning to offices, and Target vacated nearly one million square feet of office space in Downtown Minneapolis. However, with more than 30 citywide events scheduled for 2022, including the NCAA Women's Final Four, USA Fencing Championships, and Northern Lights Volleyball Qualifier, occupancy is expected to improve significantly, despite limited corporate demand. While the pandemic and negative publicity are anticipated to affect business in the near term, the long-term outlook is optimistic given the expected return of international tourism, commercial demand, and citywide events.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Change In Value For Market:

Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: More than -10%

For more information, please contact:

Tanya Pierson, MAI
Senior Managing Director
Valuation, Market & Feasibility Consulting
[email protected]
  • +1 303 588-6558 (w)