Since then, only Twin Cities hotels that have significantly discounted their rates have been able to keep their occupancy levels steady. Weekend deals abound, with many hotels cutting rates by $20 to $30 a night, he says.
Occupancy rates are 5% to 15% off what they would have been without Sept. 11, while rates are down anywhere from 15% to 30% at some hotels, he notes.
Although new hotels in the planning stages have been largely put on hold, ones with financing or already under construction are being completed, Klas says. Minneapolis has seen several hotels open this year, including three hotels by Marriott:
* A 255-room Renaissance hotel being developed by Graves Hospitality Corp as part of the new Block E complex on Hennepin is expected to open this year.
* Two more Marriott properties were developed by CSM at the Milwaukee Depot redevelopment project – a 225-room Courtyard by Marriott and a 134-room MarriottResidence, which opened last year.
There is also speculation that Opus is looking at building a 800-room luxury hotel, possibly with the Westin chain, at the former Powers department store site at 5th and Marquette, says John Johannson of Welsh Cos., an Eden Prairie, MN-based commercial real estate firm.
The industry was already slipping in the first half of the year, as the Twin Cities occupancy rate ended the first half of the year at 65.1%, down from 74.6% the year earlier, according to a survey by Minneapolis-based Marquette Advisors.
The rates ranged widely from market to market, with the Downtown markets tending to hold up better than their suburban counterparts. In St. Paul, occupancy was up to 66.2% at mid-year from 65.3%. In Minneapolis, occupancy was down to 64.2% from 72.2% over the same time period.
Rates were up 5.6% to $101.55 per night per room from the year-ago figures Twin Cities-wide.
Leading all markets was St. Paul, where rates were up 13.4% to $106.62 per night per room. In Minneapolis, rates were up 6.2% to $115.90.
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