by Dan Rafter
Bill Morrissey has never seen a stronger hotel market in the Minneapolis/St. Paul market than the one he’s working in now.
This is good timing. St. Paul, Minn.-based Morrissey Hospitality Companies is developing a four-story Hilton Home2 Suites hotel in the suburb of Eagan, just east of the new Twin Cities Premium Outlets that opened here last summer.
Morrissey, president chief executive officer and founder of Morrissey Hospitality Companies, expects demand to be strong for the new hotel. Once it opens, it will be the first new hotel in Eagan since 2002.
“The hotel market in the Twin Cities is the strongest I’ve seen it in my entire career,” Morrissey said. “During the recession nothing new was built. The supply side, then, was kept under control. The industry can be hurt when everyone comes rushing in with new products at the same time. But our supply has been low, so we are ready for new hotels here.”
Morrissey knows of what he speaks. He’s a veteran of the hospitality industry, and his company provides development, management and consulting services in the hotel business.
So if he says the Twin Cities’ hotel sector is strong, it is.
Morrissey points to the region’s rising RevPAR numbers. For those who don’t know, RevPAR means revenue per available room, and is a key measurement of the strength of a hotel market. Owners calculate this figure by dividing a hotel’s guestroom revenue by its room count and the number of days being measured in a specific period.
In the Twin Cities region, RevPAR is on the way up, Morrissey said, growing 5 percent to 8 percent for the last four consecutive years. In Bloomington and Minneapolis, Morrissey said, the RevPAR performance has been even stronger.
Some of the reasons for this strong performance are obvious: The national economy is in recovery mode, meaning that business travel is up.
“When business improves, there’s a growth in travel,” Morrissey said. “Businesses are spending again. They are spending capital and making strategic improvements in their businesses. This causes consultants and engineers working for these businesses to go on the road. They need to stay in hotels.”
At the same time, leisure travel is on the rise, mostly because U.S. consumers are finally starting to feel better about their finances.
“Americans think they are better off than they were four years ago,” Morrissey said. “They are starting to spend again. Part of the American lifestyle is to travel. People are not taking the exotic trips they were taking before the recession. But they are getting back out there. They want to take their families out traveling again.”
The Minneapolis/St. Paul region also boasts some qualities that make it a strong hotel market. Morrissey says that tourists have discovered that the region offers plenty for them to do.
They’ve discovered, too, that the Twin Cities isn’t as expensive as some other larger metropolitan areas.
“A lot of people in the states surrounding Minneosta can’t afford to visit places like Chicago,” Morrissey said. “The Twins Cities area is still affordable and it has all the amenities travelers want. We might not have 50 museums like in Chicago, but we have plenty of cultural attractions, enough to satisfy the needs of most people for a three- or four-day trip. Why go to Chicago and deal with traffic issues when I can go to the TWin Cities?”
The hotel market here is only poised to grow, with new brands entering the region. The Radisson Blu hotel opened in Minneapolis last year. The Mall of America in Bloomington will soon have a 342-room JW Marriott hotel.
Then there’s the Hilton Home2 Suites that Morrissey Hospitality Companies is developing in Eagan. Morrissey said that his company is finishing the equity raise on the 119-room hotel and expects to break ground on the property in the spring.
The hotel is Hilton’s new extended-stay brand, one designed to appeal to Millennial travelers. It will feature a saline pool, a larger-than-usual fitness center and a bright, open lobby area.
Morrissey predicts that the new hotel will be open by May of 2016.
“And we are expecting this to be a busy hotel,” Morrissey said. “We can use more extended-stay hotels in the Twin Cities. This hotel will be a good fit for that underserved market.”