Going into 2023, there’s considerable uncertainty around the operation of the largest hotel in the state of Minnesota—which also happens to be the headquarters property for most of the conventions and trade shows that use the Minneapolis Convention Center.
On January 13, an auction will take place to sell the Hilton Minneapolis, an 826-room property with 90,000 square feet of meeting space. Its two owners, Haberhill and Walton Street Partners LLC, were recently declared to be in default of the property’s mortgage by a Hennepin County judge, after mortgage-modification discussions failed.
According to this article by Axios, Douglas Greene, managing director of Haberhill, cited Minnesota's “unnecessary” pandemic-related business closures for the hotel's financial situation, noting that the hotel was profitable prior to the pandemic. In 2019, the Hilton had a 74 percent annual occupancy rate and operating income of $19 million on $61 million in revenue, according to data from analytics firm Trepp cited by Axios.
Over the past year, the city’s hotel occupancy has been recovering, though it only stood at 55 percent during the traditionally meetings-heavy month of October versus 75 percent in October 2019, according to hospitality-research firm STR.
The property’s management contract with Hilton expires at the end of 2026, and hotel brands generally expect owners to make upgrades to properties within a certain time frame. Greene noted that Haberhill was prepared to invest about $20 million in guest-room renovations right around the time the pandemic struck; that plan was shelved.
Even with the recent developments, “nobody is concerned we're going to lose the biggest hotel in the state of Minnesota," said Michael Rainville of the Minneapolis City Council in the Axios article. As for the other Minneapolis hotel owned by Haberhill—the 644-room Hyatt Regency Minneapolis, the second-largest in the city—there has been no indication of financial difficulty. In fact, Rainville said that with the hospitality industry making a comeback, talks that began nearly 10 years ago about building a new large downtown hotel are resuming and “sites are being looked at.”
