|By Peter Passi, Duluth News Tribune,
Minn.McClatchy-Tribune Regional News
Jun. 9, 2009--A new $9 million hotel in Mountain Iron welcomed its first guests last week.
The 79-room Holiday Inn Express and Suites, which opened June 2, is the first structure to be built as part of a planned 47-acre development.
Rockie Kavajecz, project manager for Island Invest-ment Inc., the hotel's Superior-based owner, said he was inspired to build lodging in the area largely because of his own difficulties finding accommodations during recent business trips to the area.
"I could never get a hotel room with all the traffic from mining, tourism and people visiting the Boundary Waters," he said.
Island Investment also is looking at putting up a conference center and will seek peripheral development, such as restaurants, retail and other commercial operations. These plans were developed "prior to the economy hitting the skids," Kavajecz said.
"It's going to take some time now, but I still think it can happen," he said. "They have a lot stronger retail market up there than most people realize. But to convince big box retailers to come there when they're already struggling in other markets is not easy."
To help the development advance, Iron Range Resources approved investing $700,000 in infrastructure improvements at the 47-acre site.
Kavajecz has few doubts the new hotel will succeed, setting the stage for further development.
Until a couple of years ago, Eveleth, Mountain Iron's neighbor, had been home to a much larger 150-room Holiday Inn. That hotel closed, but Kavajecz believes its failure was less a reflection of the market than the previous owner's failure to make needed capital improvements.
"Basically, a hotel has to become new every seven years in order to survive," Kavajecz said.
He should know. Kavajecz's family owns five other hotels, including three Country Inn & Suites hotels in Eau Claire, Menominee and at Spirit Mountain; plus the Hotel Chequamegon and Super 8, both in Ashland. Island Investment also has a partial ownership stake in the Canal Park Lodge in Duluth.
The family-run corporation is active outside the hospitality industry, too, as the owner/operator of the Hayward Cinema, a four-plex movie theater.
Kavajecz acknowledged that current business conditions are challenging.
"This is not a great time to open a hotel, but when we started this project, the world couldn't have looked any rosier," he said.
Kavajecz pointed to the large number of new mining developments and expansions proposed on the Range and noted that construction workers and consultants will need places to stay, assuming those projects come to fruition.
"I'm bullish on mining, even though it's down today," he said. "And that's where the ore is."
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