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Convention Hotel Feasibility Study Overwhelmingly Demonstrates Need for a New 1,200-room Hotel
near the Minneapolis Convention Center
Downtown Minneapolis' Inadequate Hotel Inventory
Negatively Affects Future Convention Business
November 30, 2004 - 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.

City Rooms Proximate Weighted Average Distance (1)
Denver  6,167  2.5 blocks
San Antonio 5,299 2.4 blocks
Toronto  4,873  2.6 blocks
Indianapolis  4,639 1.5 blocks
St. Louis  4,204  2.4 blocks
Seattle  4,106  2.0 blocks
Minneapolis  2,004  1.3 blocks
(1) Weighted average distance from the convention center
of hotels that fall within the four-block / 1000-foot radius
defined as walking distance.

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.

$821 Million in Economic Impact Already Lost

Lost convention business between 2001 and 2012 because of Minneapolis' lack of available hotel inventory totals 138 events and counting. This includes 1 million lost room nights and $110 million in lost room revenue. With a total attendance of 764,000, these groups represent $821 million (Estimated using 2004's per convention delegate spending figure of $1075, calculated by the International Association of Convention & Visitors Bureaus) in lost economic impact (total spent by attendees).

For nearly two-thirds of these groups, lack of hotel inventory was a deciding factor. The remaining one-third of the groups wouldn't even consider Minneapolis because of its limited hotel offerings. Sixty-six percent of the events that did not select Minneapolis (when it was among finalists) cited:

  • Inadequate hotel inventory 
  • Inadequate hotel availability 
  • Needed a 1000-room headquarter hotel
In a survey conducted as part of the study, 73 percent of the respondents stated they would consider holding an event at the Minneapolis Convention Center if a 1200-room hotel were built adjacent to it.

Competitive Cities Building, Expanding Hotel Inventory

The largest hotels in comparable and competitive cities contain more than 1000 rooms. Minneapolis' largest convention hotel -- the Hilton Minneapolis -- has 830 rooms.

Many of Minneapolis' competitors are adding more hotel inventory: 

  • Denver: 1100-room Hyatt under construction 
  • Houston: 1200-room Hilton open
  • Indianapolis: 1000-room hotel under consideration 
  • St. Louis: 1083-room Renaissance and Suites open 
  • Phoenix: 1000-room hotel in pre-development 
  • San Antonio: 1100-room hotel in pre-development
The most important deciding factors for meeting planners when considering a city are facilities, accommodations, transportation (accessibility and ground transport) and attractions. "Minneapolis has the whole product -- a world-class convention center, a vibrant downtown, international air service, a new light rail transit line. Everything except a compressed hotel inventory," said Ortale. "Providing a stronger hotel package than other cities, all with climate-controlled access, is critical."

The next phase of the project will start with the presentation of funding options by a financial consultant hired by the GMCVA. This will be completed by the end of 2004.



Laura McCarthy
Greater Minneapolis Convention
& Visitors Association 

Also See: Minneapolis Hotels Wait for Business Rebound; Debate 1,000+ room Convention Hotel / August 2003
A History of The Radisson Hotel - Downtown Minneapolis / Jan 1998

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