By Ronn Thomas and Tim Storey
Hotels throughout the region saw significant boosts in Average Daily Revenue (ADR) and Revenue Per Available Room (RevPAR) in April 2019, according to newly released data from STR Global.
Across the Twin Cities, demand increased 4.6 percent in April compared to last year, while supply increased just under 3 percent. ADR was 15.1 percent higher than April last year, at $134.86.
And when you focus on Minneapolis specifically, the gains were even stronger.
In the CBD, ADR was up more than 26 percent, at $192.56. RevPAR hit $134.47, which is up 24.2 percent from April 2018. While the Final Four only lasted a few days, the 94,000 estimated visitors for the event are a significant boost for a downtown market with about 9,000 hotel rooms in all, and likely provided much of that pricing lift. There are about 40,000 hotel rooms in the Twin Cities, according to STR data.
The Minneapolis North and Bloomington markets also likely saw some lift from the college basketball final. The former saw a significant demand increase, up 8.5 percent from last April, while occupancy ticked up 4.6 percent. Bloomington’s occupancy in April jumped 4 percent over last year.
As Minneapolis-St. Paul continues to enter the running to host other significant sporting events and conventions, it’s to be expected that hotel revenue, and usually occupancy, will see a lift as a result. In another significant example, the Super Bowl pushed occupancy over 92 percent for three days with ADR at more than $350. RevPAR increased more than 600 percent year over year during the three-day Super Bowl weekend.
How’s the market doing outside of the Final Four? Things have moderated a bit. In the Twin Cities market, occupancy is down about 3 percent, while ADR is down 7.1 percent from year-to-date numbers in 2018. Of course, much of that is due to the significant early-year bump in 2018’s numbers from the Super Bowl. Statewide, the market has also slowed a bit, with occupancy down 1.6 percent and ADR down 4.5 percent. Overall, the market continues to see increased demand thanks to economic growth throughout Minneapolis-St. Paul and the country as a whole. The market has softened a bit thanks to the increased supply brought by developers over the past several years.
But there’s reason to be optimistic heading into the summer, with the whole market posting a strong April that included Twin Cities increases in occupancy, ADR and RevPAR, as well as state-wide increases in those three categories. As consumers continue to travel, there’s every reason to believe the market has a strong summer ahead.
Cushman & Wakefield’s Minneapolis-based Hospitality Real Estate Services Team of Ronn Thomas and Tim Storey offers a full range of hotel, leisure and tourism transaction, advisory and valuation services to hoteliers, investors, governments, institutions and developers throughout the Midwest.