Hotel Market Recovery – Minneapolis-St. Paul

Reeling from the impact of new supply, seasonality, civil unrest, and a global pandemic, Minneapolis-St. Paul hotels faced a staggering RevPAR drop in 2020, worse than most cities in the United States. While the greater metro-area hotel market has begun to bounce back, it is at a much a slower pace than the national rebound. What has the recovery looked like thus far? When will the market return to pre-pandemic levels?
Tanya J Pierson, MAI The recently depressed performance of the Twin Cities metro area is indicative of its reliance on corporate and group demand, which has not fully re-entered the market. As a comparison, the U.S. RevPAR dropped by 48% in 2020 during the COVID-19 pandemic, while RevPAR in Minneapolis-St. Paul fell by 64%, according to STR. In 2021, the greater Minneapolis-St. Paul market’s RevPAR rose to 55% of the pre-COVID performance, while the nation rebounded more quickly to 83% of the pre-COVID level. Within the corporate segment, demand declined significantly, as most of the region’s largest employers eliminated corporate travel in 2020. Although vaccination rates increased and COVID restrictions began to ease, many area companies continued to allow employees to work remotely or in a hybrid environment, including Target, 3M, Ecolab, General Mills, US Bank, Wells Fargo, and Xcel Energy.

Similar to other markets in the central United States, leisure demand has carried the early recovery, while corporate and group business is anticipated to rebound slowly as companies resume travel and shift back to their offices. As witnessed in late 2021 and early 2022, this demand is beginning to return to the Minneapolis-St. Paul market; however, meeting and group demand will likely be the slowest to recover.

Twin Cities Metro 2022–2024 Forecast
Source: STR (Historical Years) and HVS (Forecast)

Major factors contributing to our forecast are summarized as follows:

We are confident that Minneapolis-St. Paul will continue to strengthen in 2022 given the expected rebound of group and commercial demand and the diverse base of demand generators in the market. We continue to watch the factors affecting the market, and our regular consulting assignments in the area allow us to remain informed about the condition of the market.

For more detailed forecasts or to inquire about a specific hotel project, contact Tanya Pierson, MAI, of our Minneapolis office.

Tanya Pierson, MAI, Senior Managing Director of HVS and based in the Minneapolis office, has conducted market studies, feasibility analyses, and appraisals for over 2,000 hotels and resorts in nearly every U.S. state, as well as Canada and the Caribbean. A featured speaker and panelist at major hotel conferences, she has also lectured at the University of Denver on topical issues in the U.S. lodging market. Tanya graduated from the University of Denver with a degree in Hotel, Restaurant, and Tourism Management. She is a designated member of the Appraisal Institute (MAI). Contact Tanya at (303) 588-6558 or [email protected].


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