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Four Hotel Projects Expected to Add about 302 Rooms to the 5,100 rooms in Rochester, Minnesota,
Now Minnesota's Second Largest Hotel Market Following Minneapolis with 8,000 Rooms

By Jeff Kiger, Post-Bulletin, Rochester, Minn.McClatchy-Tribune Regional News

July 7, 2008 - Expect Rochester to be more roomy soon.

Four hotel developers have projects at various stages underway that should add about 302 more rooms to the 5,100 Rochester has today.

This is Minnesota's second largest hotel market with Minneapolis offering 8,000 rooms. Rochester, however, has a higher hotel per capita ratio.

The question is can this market support the additional rooms?

"It is a good increase, but I think we can all still thrive," Ian Freeburg, president of the Rochester Lodging Association and general manager of the SpringHill Suites Hotel.

While many other hotel projects are being discussed, four are underway.

An 84-room Comfort Suites hotel is nearing completion along St. Bridget's Road by the Shoppes on Maine development in south Rochester. Next to it, a 100-unit Candlewood Suites is in the early stages of construction.

Not too far away along U.S. 63, the parking lot of the former Mill's Fleet Farm store is being stripped away to prepare for construction of a four-story Value Place Suites extended-stay hotel with 124 rooms.

On the other side of the city, developers have approval to build a 38 unit Hampton Inn & Suites Hotel.

Beside those four active hotel projects, proposals for another four or more are being discussed.

Why all of the interest in Rochester?

"We identified Rochester as an outstanding market. We believe it is the right type of city that a Value Place could thrive in," says Michael Monteferrante of the Wichita, Kansas-based VP2, LLC development group.

He hopes to break ground on Value Place in September and have it completed by May of 2009.

For Al Whitehouse, who is senior vice president of Viking Hospitality Group developing the Hampton Inn on Bandel Road, stability is what makes the city attractive.

"Rochester is a solid hotel market with typically lower swings in market occupancies and average rates," he wrote recently in response to an e-mailed question.

Brad Jones of the Rochester Convention and Visitor Bureau says developers and banks are really doing their homework these days. Rochester's average room occupancy rate of 70 percent and average nightly room rate of $90 is looking very attractive in today's market.

"Our phone rings much more frequently with people researching hotel developments than it used to," says Jones, referring to a few years ago when Rochester hotels struggled to maintain a 60 percent occupancy rate.

Most developers cite Mayo Clinic and IBM in their reasons for building in Rochester.

"Mayo Clinic is part of the draw, but we feel there is a lot more to the community in terms of demographics," Monteferrante says. "There are hundreds of different reasons to come and visit and do business in Rochester outside of Mayo Clinic."

Value Place's focus with a rate of $209 a week is on guests that stay an average of 60 days

"We feel the location we've chosen is a great opportunity," says Monteferrante.

Freeburg of the Lodging Association says all of the interest in south Rochester makes sense.

"That area is growing and it stands to reason a hotel...or three would fit in there," he said.

The Convention and Visitors Bureau looks at the city as three market areas -- downtown, St. Marys Hospital and greater Rochester. While Jones believes the four new hotels will do well and specifically help with needs like housing visiting sports teams, the big need is downtown.

Developers Gus Chafoulias and Mark Kramer both have proposals for mixed-use buildings in downtown that would include hotel rooms.

"That kind of talk is exciting for us. We need more rooms connected to the Civic Center," he said.

How will the addition of more than 300 rooms impact Rochester's hospitality industry?

"You're probably going to see a dip in occupancy as the market adjusts, but the average rate should hold steady," Jones said.

"It is just kind of an evolution of the market."


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Copyright (c) 2008, Post-Bulletin, Rochester, Minn.

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