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Some Experts Not Surprised Le Meridien Didn't Last in Minneapolis,
Where Radissons, Marriotts and Hyatts are More Familiar
 to High-end Business Travelers
By Gita Sitaramiah, Pioneer Press, St. Paul, Minn.
Knight Ridder/Tribune Business News

Jul. 27, 2005 - Le Meridien Minneapolis is going local. Graves Hospitality Corp., the Minnesota-based owners of the 255-room luxury hotel, is changing the property's name to Graves 601 Hotel Minneapolis.

The move comes just a couple of years after the $68 million hotel debuted to much fanfare as a part of downtown Minneapolis's Block E's redevelopment project. The hotel's rooms, which boasted 42-inch plasma TVs and other amenities designed to appeal to visiting CEOs, typically go for about $389 a night.

"We've been working toward this day for a very long time," said Benjamin Graves, president Graves Hospitality.

The company, which owns and operates the hotel, has been working for four years toward launching a brand of hotels emphasizing "sophisticated modern luxury," Graves said. The company had an escape clause with London-based Le Meridien at 24 months, which explains the timing of the name change and launch of the new brand, he said.

Both sides portrayed the split as amicable. In a press release, Le Meridien CEO Robert Riley said: "We wish everyone in the hotel and Graves Hospitality a successful future."

Experts weren't surprised that Le Meridien didn't last in Minneapolis, where Radissons, Marriotts and Hyatts are more familiar to high-end business travelers. "I'm not sure people coming to the Twin Cities really knew what (Le Meridien) was," said Steve Sherf, senior vice president at Minneapolis-based GVA Marquette Advisors.

While Graves didn't disclose occupancy numbers at Le Meridien Minneapolis, experts say the hotel business suffered overall after 9/11, but is improving.

Greg Ortale, president of the Greater Minneapolis Convention and Visitors Association, puts the occupancy rate around 68 percent for the city's hotels through the end of June, not far below the 75 percent number hotel operators consider good.

Le Meridien Hotels and Resorts is going through other changes, as he chain is being acquired by Starwood Hotels and Resorts. Le Meridien's hotels tend to be situated in cosmopolitan international destinations like Montreal, Munich and Melbourne, but haven't had much of a presence in the United States.

Though Le Meridien did not rule out a reappearance in the Minneapolis market,a locally based touch may be more effective, some say. "I think Le Meridien had continued to lose presence in North America and particularly the United States, and combined with the plans for Graves Hospitality, this makes a lot of sense," Ortale said.

James Graves, CEO of Graves Hospitality and the father of Benjamin Graves, founded the company in 1979 as a real estate development and management company. The company founded AmericInn Lodging International, which grew to 40 branches under Graves' ownership. The company sold that chain years ago and has switched gears to the modern luxury concept.

Graves Hospitality is making ambitious plans to open five more hotels and resorts under the Graves brand in Chicago, Coronado, Calif., Manhattan and Costa Rica. Ground hasn't been broken on these projects and no opening dates are set.

Hospitality industry observers caution that creating a hotel brand from scratch is difficult. "To have an assortment of hotels that are affiliated is very tough to do and very expensive," said Kirby Payne, a consultant formerly based in Golden Valley who still manages hotels locally. "They might have a group of hotels with the Graves name on it but I have trouble seeing it as a brand."


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Copyright (c) 2005, Pioneer Press, St. Paul, Minn.

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