Downtown Minneapolis Needs New, Expanded Hotels to Attract Future Convention Business

The results of a newly released convention hotel feasibility study overwhelmingly demonstrate the need for a new 1200-room hotel near the Minneapolis Convention Center. In addition, the study says, expansions of existing hotels should be considered. This, to secure convention business that competitive cities are luring away from Minneapolis.

Funded by the Greater Minneapolis Convention & Visitors Association (GMCVA) and conducted by real estate and hospitality consulting firm, Chicago-based C.H. Johnson, the first phase of the study cites how downtown Minneapolis’ inadequate hotel inventory negatively affects the ability to attract future convention business, and outlines how additional hotel projects will remedy the situation. The second phase will identify funding options.

“We did this study to see where Minneapolis stacks up against competitors so we can plan for the future,” said Greg Ortale, GMCVA president and CEO. “Going into it, we felt adding a hotel was necessary, but the results of the study were stunning.”

While the entire Minneapolis-St. Paul metro area contains enough rooms to meet most meeting planners’ needs, it does not have a large enough downtown hotel package (a cluster of group hotels close to the Convention Center) to remain competitive. “Generating future convention business is like an insurance policy for the city. By adding a major new hotel, we attract additional convention business, as compared to building small hotel properties, which slices the existing market thinner,” said Ortale.

Based on the feasibility study’s findings, bottom line conclusions include:
   — Minneapolis lacks an available, sizable hotel room block close to the
      Convention Center
   — There is an imbalance of proximate hotel availability to Convention
      Center space
   — Expansion of a current hotel would help, but not solve the problem
      long-term; Minneapolis needs a new, large convention hotel
   — Minneapolis is losing convention business because of the current hotel
      situation; existing convention business is at risk of being lured by
      competitors
   — Competitive markets are upgrading and expanding hotels, and are
      undergoing hotel developments

An Average of 2800 Fewer Proximate Hotel Rooms than Competitors
The problem is not only the lack of a hotel but, in particular, not enough rooms close to the Convention Center. An adjacent room block of 3000 is needed to secure sizable conventions that the expanded Minneapolis Convention Center can accommodate with its exhibit and meeting space.

Currently, there are 20 downtown hotels containing 5101 rooms. Only 2004 of those rooms are in what is considered an optimally proximate walking distance (within four blocks or 1000 feet of the Convention Center).

On average, Minneapolis has 2800 fewer proximate rooms than its comparative set.
                       PROXIMATE      WEIGHTED
    CITY                 ROOMS     AV. DISTANCE (1)
    Denver               6167        2.5 blocks
    San Antonio          5299        2.4 blocks
    Toronto              4873        2.6 blocks
    Indianapolis         4639        1.5 blocks
    St. Louis            4204        2.4 blocks
    Seattle              4106        2.0 blocks
    Minneapolis          2004        1.3 blocks

One New Hotel, Plus Expansion Needed
A new downtown convention hotel will help make the Minneapolis meeting product “more acceptable to meeting planners … ” states the study. “Without it, the market will stagnate and existing business will move to locations across the U.S. where the convention center and hotel package is more attractive.”

The study recommends the following for a convention hotel development:
   — 1200 rooms
   — No more than 2.5 blocks from the Minneapolis Convention Center,
      ideally connected to the facility
   — Regardless of distance, connected to the Minneapolis Convention Center
      by skyway
   — 24-hour room service
   — 1000 parking spaces
   — 400-seat, three-meal restaurant; 180-seat specialty restaurant, coffee
      bar and lobby lounge
   — Health center and spa
   — Business center

The study also states the Minneapolis Convention Center facilities actually justify a total of 1850 additional proximate hotel rooms. But since a single hotel development of that size is not warranted, the level can be achieved with expansions to other proximate group hotels plus the proposed hotel development.
$8.2 Billion in Economic Impact Already Lost

November 30, 2004   Posted in: United States North