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Market Report

Minneapolis-St. Paul Hospitality Market Report

2023 Investment Forecast

Metro Awaits Greater Business Travel, Prompting
Investors to Focus on Long-Term Strategies

Convention slate a potential boost for hotel demand. The number of occupied room nights in the Twin Cities will improve for the third consecutive year, albeit at a slower pace than the prior 24 months. Even so, hotel metrics will not return to pre-pandemic levels during 2023 as metro occupancy and RevPAR continue to trail their 2019 recordings, despite positive momentum. Only three other major markets are further behind in their sector recovery. A slow rebound in business travel has been a notable weight on CBD fundamentals. An elevated count of conventions this year, however, could help improve demand downtown. Nevertheless, occupancy here will hold more than 1,900 basis points below the 2019 figure. That margin is much smaller in the outlying suburbs, where natural attractions and lower costs appeal to budget-constrained travelers. Amid consumers’ tightening discretionary spending and preferences for lower-cost options, the limited service segment entered the year having fully recovered from pandemic losses.
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