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Hotel-Motel

2015 Build Microtel Inn & Suites Rochester South

4165 Maine Ave SE, Rochester, MN 55904

Listing Price: Request For Offer

Number of Rooms
88
RevPAR
$30
Gross SF
40,393
Year Built
2015

Investment Overview

Marcus & Millichap is proud to have been chosen as Exclusive Broker and Advisor in regard to the marketing effort of the Microtel Inn & Suites Rochester South Mayo Clinic. The hotel is a four-story structure built in 2015 and features 88 guestrooms. In November 2023, the current owner opted to cease operations in order to sell the hotel non-operational with the intent to provide a Buyer the opportunity to acquire a property ready for them to implement their own operational and ownership strategy. It is currently encumbered by franchise but, given its recent construction and overall physical appeal, the hotel would be sure to generate interest from both the current franchisor as well as many others that a Buyer may wish to explore.

Overall, this acquisition provides an investor the opportunity to acquire a recently built hotel that had consistently generated pre-COVID room revenue between $1.6 million and $1.8 million for considerably below replacement cost. Seldom does an acquisition like this present itself in a major Upper-Midwest market. This hotel is owned by a hands-off owner and operated by a third-party management company providing potential for a more hands on owner/operator by implementing cost saving measures. Enhanced projected revenue generation and improved operating margins via a more hands on approach offers a new owner considerable upside. The hotel itself is situated on a hill overlooking a scenic pond directly off of Highway 63, the main north/south highway running through Rochester to the International airport. The hotel features all amenities that every type of today’s traveler seeks including: indoor pool and whirlpool, complimentary parking, elevator, meeting room, fitness center, guest laundry, spacious breakfast area and an overall modern and contemporary feeling. There is also an ideal room mix inclusive of a number of suites.

Well over 100,000 residents live in Rochester making it Minnesota’s third largest city. It is the county seat of Olmsted County and is home the world-renowned Mayo Clinic and its 2 million annual visitors. Mayo clinic sits at the center of Rochester’s estimated $5.6 billion Destination Medical Center (DMC) project. The property is located equal distance from Mayo Clinic and Rochester International Airport. Rochester is a highly active city with a multitude of demand generators that is located less than two hours south of Minneapolis. Aside from Mayo Clinic Rochester is home to an IBM R&D campus and a number of colleges and universities.

The Rochester submarket contains around 6,300 hotel rooms, and houses 57 of the Minnesota market's 739 hotel properties. Unlike the broader market, Rochester is characterized by hotels that tend to be larger than those found in the typical U.S. market.

With trailing 12-month occupancies at 56.2%, Rochester is exceeding the market average of 54.2% for the same period. This marks a significant turnabout, as the COVID-19 shock severely impacted this submarket. Here, monthly occupancy fell to 16.5%, and annualized occupancy dropped to 36.7% in the initial wake of the pandemic. While the submarket has improved since then, matching its past five years' high-water mark of 66.3% over a 12-month period remains elusive.

As of October, twelve-month average RevPAR in the Rochester hotel submarket was firmly in the green, and climbing at an annual rate of 11.1%. That's even stronger than the 6.7% increase observed in the broader Minnesota market.

Investment Highlights

  • 2015 Build 4-Story Midscale Hotel in a Prominent Upper-Midwest Market
  • Pre-COVID Room Revenue Figures Approaching $1.8 Million
  • Seldom Offered Opportunity to Acquire a Hotel Less Than Ten Years Old at Less Than 50% of Replacement Cost in a Major Market
  • Overall a Very Modern and Contemporary Look and Feel Throughout; Evident of a Recent Build
  • Prior to COVID Rochester was a Hospitality Market High on the Wish List for Private Capital and Institutional Investors Alike; Its Recovery was Delayed but Now Improvement Metrics Are Outpacing Those of the Greater Minnesota Market
  • Owned by Hands-Off Owner and Operated by a Third Party Management Company Offering Potential Operational Upside for an Incoming Buyer
  • Currently Non-Operational Providing Buyer a "Blank Slate" Type Acquisition Approach
  • Encumbered by Franchise, but Given its Newer Construction and Overall Physical Appeal, There are Sure to be Options From Both the Existing and Alternative Franchisors of Which a Buyer May Explore

Exclusively Listed By

  • Jon Ruzicka

    First Vice President Investments

    (952) 852-9767

    Email Jon

    License(s): MN: 40583288, IA: B63379000, ND: 10032, WI: 76173-94, SD: 17724, NE: 20200223

    Minneapolis

  • Jake M. Erickson

    Senior Associate

    (952) 852-9721

    Email Jake

    License(s): MN: 40486025, IA: S66396000, WI: 89877-94

    Minneapolis

  • Jared Plamann

    Senior Associate

    (952) 852-9745

    Email Jared

    License(s): MN: 40605209, WI: 89876-94

    Minneapolis

  • Joseph Ferguson

    Associate

    (952) 852-9769

    Email Joseph

    License(s): MN: 40737246

    Minneapolis

Hotel-Motel

2015 Build Microtel Inn & Suites Rochester South

Listing Price: Request For Offer

Number of Rooms
88
RevPAR
$30
Gross SF
40,393
Year Built
2015

Investment Highlights

  • 2015 Build 4-Story Midscale Hotel in a Prominent Upper-Midwest Market
  • Pre-COVID Room Revenue Figures Approaching $1.8 Million
  • Seldom Offered Opportunity to Acquire a Hotel Less Than Ten Years Old at Less Than 50% of Replacement Cost in a Major Market
  • Overall a Very Modern and Contemporary Look and Feel Throughout; Evident of a Recent Build
  • Prior to COVID Rochester was a Hospitality Market High on the Wish List for Private Capital and Institutional Investors Alike; Its Recovery was Delayed but Now Improvement Metrics Are Outpacing Those of the Greater Minnesota Market
  • Owned by Hands-Off Owner and Operated by a Third Party Management Company Offering Potential Operational Upside for an Incoming Buyer
  • Currently Non-Operational Providing Buyer a "Blank Slate" Type Acquisition Approach
  • Encumbered by Franchise, but Given its Newer Construction and Overall Physical Appeal, There are Sure to be Options From Both the Existing and Alternative Franchisors of Which a Buyer May Explore

Investment Overview

Marcus & Millichap is proud to have been chosen as Exclusive Broker and Advisor in regard to the marketing effort of the Microtel Inn & Suites Rochester South Mayo Clinic. The hotel is a four-story structure built in 2015 and features 88 guestrooms. In November 2023, the current owner opted to cease operations in order to sell the hotel non-operational with the intent to provide a Buyer the opportunity to acquire a property ready for them to implement their own operational and ownership strategy. It is currently encumbered by franchise but, given its recent construction and overall physical appeal, the hotel would be sure to generate interest from both the current franchisor as well as many others that a Buyer may wish to explore. Overall, this acquisition provides an investor the opportunity to acquire a recently built hotel that had consistently generated pre-COVID room revenue between $1.6 million and $1.8 million for considerably below replacement cost. Seldom does an acquisition like this present itself in a major Upper-Midwest market. This hotel is owned by a hands-off owner and operated by a third-party management company providing potential for a more hands on owner/operator by implementing cost saving measures. Enhanced projected revenue generation and improved operating margins via a more hands on approach offers a new owner considerable upside. The hotel itself is situated on a hill overlooking a scenic pond directly off of Highway 63, the main north/south highway running through Rochester to the International airport. The hotel features all amenities that every type of today’s traveler seeks including: indoor pool and whirlpool, complimentary parking, elevator, meeting room, fitness center, guest laundry, spacious breakfast area and an overall modern and contemporary feeling. There is also an ideal room mix inclusive of a number of suites. Well over 100,000 residents live in Rochester making it Minnesota’s third largest city. It is the county seat of Olmsted County and is home the world-renowned Mayo Clinic and its 2 million annual visitors. Mayo clinic sits at the center of Rochester’s estimated $5.6 billion Destination Medical Center (DMC) project. The property is located equal distance from Mayo Clinic and Rochester International Airport. Rochester is a highly active city with a multitude of demand generators that is located less than two hours south of Minneapolis. Aside from Mayo Clinic Rochester is home to an IBM R&D campus and a number of colleges and universities. The Rochester submarket contains around 6,300 hotel rooms, and houses 57 of the Minnesota market's 739 hotel properties. Unlike the broader market, Rochester is characterized by hotels that tend to be larger than those found in the typical U.S. market. With trailing 12-month occupancies at 56.2%, Rochester is exceeding the market average of 54.2% for the same period. This marks a significant turnabout, as the COVID-19 shock severely impacted this submarket. Here, monthly occupancy fell to 16.5%, and annualized occupancy dropped to 36.7% in the initial wake of the pandemic. While the submarket has improved since then, matching its past five years' high-water mark of 66.3% over a 12-month period remains elusive. As of October, twelve-month average RevPAR in the Rochester hotel submarket was firmly in the green, and climbing at an annual rate of 11.1%. That's even stronger than the 6.7% increase observed in the broader Minnesota market.

Exclusively Listed By

  • Jon Ruzicka

    First Vice President Investments

    (952) 852-9767

    Email Jon

    License(s): MN: 40583288, IA: B63379000, ND: 10032, WI: 76173-94, SD: 17724, NE: 20200223

    Minneapolis

  • Jake M. Erickson

    Senior Associate

    (952) 852-9721

    Email Jake

    License(s): MN: 40486025, IA: S66396000, WI: 89877-94

    Minneapolis

  • Jared Plamann

    Senior Associate

    (952) 852-9745

    Email Jared

    License(s): MN: 40605209, WI: 89876-94

    Minneapolis

  • Joseph Ferguson

    Associate

    (952) 852-9769

    Email Joseph

    License(s): MN: 40737246

    Minneapolis

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