April 20, 2013--When downtown Milwaukee's Marriott hotel opens in July, its features will include a club lounge where members-only guests can use concierge services, sip cocktails and gaze out large windows -- where the view includes the nearby Pfister Hotel.

It's a visual reminder of the competition between the two hotels, which both seek the same higher-end business and leisure travelers, as well as weddings, business meetings and other large events.

With one block separating them, the 205-room Marriott is expected to affect the 307-room Pfister, where owner Marcus Corp. is promising to take aggressive steps to protect its market share there and at the company's two other downtown hotels: the 220-room InterContinental Milwaukee Hotel and the 730-room Hilton Milwaukee City Center.

It's a topic Chief Executive Officer Greg Marcus has addressed twice recently.

In a March 21 teleconference with industry analysts, Marcus said the downtown area's hotel room count is expected to increase about 26%, from 3,940 to 4,954, over the next few years.

Along with the Marriott, the projects cited by Marcus are the Thursday opening of the 90-room Brew House Inn & Suites; the summer 2014 opening of a 381-room hotel under construction at Potawatomi Bingo Casino; Kimpton Hotels' plans to open a 158-room hotel in the Historic Third Ward by 2015, and an unnamed 180-room hotel that would be part of the proposed Couture lakefront high-rise.

"It's hard to imagine how this market will absorb this unjustified increase in supply without some impact on existing hotels," said Marcus, who also noted the November opening of downtown's Hilton Garden Inn.

In an April 9 filing with the Securities and Exchange Commission, the company sharpened that point.

"Unless demand increases, we believe that it is likely that our Milwaukee hotels will be negatively impacted to some degree by the new supply in the coming years," the quarterly financial report said.

Gaining strength

The stiffest competition would appear to be between the Pfister, 424 E. Wisconsin Ave., and the Marriott, 323 E. Wisconsin.

"I think the Marriott, because of its proximity, is the one that will have the most impact on (Marcus)," said David Loeb, a hotel industry analyst at Baird & Co.

Marriott General Manager Jeffrey Hess said the hotel's main competitors are the Pfister, InterContinental, Hilton, Hyatt Regency Milwaukee and Doubletree Milwaukee City Center -- all featuring banquet facilities and full-service restaurants.

The Marriott's owners, an investment group led by local hotel developers Ed Carow and Mark Flaherty, wanted to be near the southwest corner of Wisconsin Ave. and Milwaukee St. because it's close to several office towers, which generate business travelers, and Maier Festival Park, the Pabst Theater, the Third Ward and other attractions that draw leisure travelers, Hess said.

Hess understands Marcus' concerns. But he said downtown's hotel market is strengthening.

Downtown's hotels ended 2012 with an occupancy rate of 65.6% and an average daily rate of $122.59, compared with 64.6% and $120.31 at the end of 2011, according to Smith Travel Research. In 2007, the last full year before the recession and global financial collapse, the occupancy rate was 63% and the average daily rate was $118.50.

"There's a lot of positive momentum," Hess said.

The hotel gives Marriott International Inc. its first full-service brand, with a banquet room and restaurant, in downtown Milwaukee, where there are three other Marriott brands: Residence Inn by Marriott, Courtyard by Marriott and the newly branded Fairfield Inn & Suites -- all west of the Milwaukee River.

Milwaukee was among the largest U.S. cities that lacked a full-service Marriott hotel, Hess said.

The hotel will open by July 13, although Hess is hoping to have rooms available by the first week of July to draw Summerfest patrons.

Street presence

While the Marriott's main entrance will be on Milwaukee St., the restaurant -- Millioke Meat Cheese Beer -- will have a separate entrance on Wisconsin Ave. That gives it a street connection to better draw customers who aren't hotel guests, Hess said.

The hotel will feature local foods and drinks, including craft beers. Its name refers to a Native American word that may have been the origin for the city's name (made famous by Alice Cooper's history lesson in the movie "Wayne's World.")

The Marriott's lobby area will be expansive and welcoming, Hess said, giving guests a place to use the hotel's free Wi-Fi to relax or work.

"The way people want to work," Hess said, "they want to be part of the city. They don't want to hide out in their rooms."

Along with the banquet room, with seating for about 320 people, and additional meeting rooms, the hotel will include a pool, fitness center and indoor valet parking. The Marriott's management firm, White Lodging Services Corp., has started taking applications for the more than 100 full-time staff it expects to employ.

The $54 million hotel combines new construction with renovated portions of the Wisconsin Ave. buildings. The historic touches include archways carved from a Cream City brick wall in the restaurant, and the original window frames in the second-floor concierge lounge overlooking Wisconsin Ave.

Meanwhile, the Pfister opened a club lounge with concierge services April 2. That's an example of what Greg Marcus told industry analysts is the company's continual reinvestment to keep its hotels competitive. Other recent projects at the Pfister include a renovation of the parking structure.

For downtown hotel guests, it adds up to more choices.

"We're just very positive about adding to a great hotel community," Hess said.

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