Conventions business is huge in Milwaukee, and the market is about to see a boom from the upcoming Democratic National Convention. But can the city sustain new supply beyond the event?
MILWAUKEE—Milwaukee offers a stable market for hoteliers due to its booming economy and diverse demand drivers—chief among them conventions—according to sources.
And with the 2020 Democratic National Convention on the horizon, hotels are poised to experience a boom. But even beyond boosted performance from the event, sources said the city has much to offer.
As of year-to-date October, Milwaukee’s central business district has seen growth in all three key performance metrics, according to STR, the parent company of Hotel News Now. Occupancy has increased 9.5% to 75.1%, while average daily rate is up 2.3% to $146.89. Meanwhile, revenue per available room has increased 11.9% to $110.26. Roomnight demand is up 11.3%, while supply is up 1.7%.
“Milwaukee has experienced impressive growth in the last decade, with the downtown area and the Historic Third Ward, in particular, setting the pace for the region,” said Samir Patel, senior development manager at Hawkeye Hotels, which is developing a trio of hotels—its first three in Milwaukee—within one block in the downtown area. The hotels, which will be housed within two buildings, are being built in partnership with Minnesota-based JR Hospitality. One building will contain the 115-room Home2 Suites and 100-room Tru brands, while the other will be a 116-room Holiday Inn Express.
Patel said the hotels will benefit from a strong local economy, with surrounding specialty shops, restaurants and art galleries. Additionally, he said the market benefits from strong finance, energy and manufacturing sectors.
Erin Levzow, VP of marketing at Milwaukee-based Marcus Hotels & Resorts, said conventions business is a huge draw for the market. In July, Milwaukee will play host to the 2020 Democratic National Convention. But even without the DNC, Levzow said that typically business travelers make up about two-thirds of the market’s roomnights. In Milwaukee, Marcus has a total of 1,255 rooms at three hotels, The Pfister Hotel, Hilton Milwaukee City Center and newest property Saint Kate – The Arts Hotel.
“Events such as the annual Northwestern Mutual Agents convention draw travelers from across the country; and individual and group business is typically solid, with leading companies such as Johnson Controls, Baird and Northwestern Mutual headquartered here,” she said. “A number of local and national companies are moving downtown from the suburbs, which also helps us, along with the city’s growing number of young entrepreneurial businesses.”
Michael Falkenstein, GM of Hotel Metro, which is managed by Coury Hospitality, said Milwaukee is truly a city of festivals, especially in the summer. For example, Milwaukee hosts the annual, 11-day Summerfest music festival that brings about 900,000 people to the city.
While those types of demand drivers help to bring leisure business to the market, Falkenstein agreed that Milwaukee is a great conventions market. His hotel sees about a 50/50 mix from business and leisure guests. However, the hotel is currently under renovation that will take the 20-year-old property from an independent to a soft-branded hotel, joining Marriott’s Autograph Collection. After the renovation is complete, Falkenstein expects the hotel to garner more business travelers, with the segment’s mix shifting to about 75% to 80%.
Sources said that experience hosting year-round conventions business means they are all set to handle the upcoming DNC.
“We are already very well-prepared, because we have been hosting global leaders, U.S. presidents, national and local dignitaries, entertainers and other celebrities for decades,” Levzow said, who added that all three of Marcus’ hotels are already sold out for the DNC.
But even so, an event as large as the DNC takes preparation—and lots of it. Levzow said associates at the hotels are going through additional DNC-specific training so that they will be ready for the huge influx of people within the hotel and the surrounding areas.
Falkenstein, whose hotel is also fully booked, said planning has been underway for some time, including figuring out the logistics of ramped-up security and inbound travel as well as needs of the delegates, in addition to bolstering ordering for the hotel’s food-and-beverage outlet.
“The biggest change (to operations), with that many people and the city being that active, is that F&B always becomes a place to be in the downtime. That will be the biggest inflow and outflow for us,” Falkenstein said. “But the best-laid plans start baking and are put in place well ahead of time, so we are ready.”
Absorbing supply post-event
But, as with any large national event, hotels tend to be built to accommodate the demand. When the event is over, the question then becomes whether the market can sustain the new supply. According to STR, Milwaukee’s central business district counts seven projects with 625 rooms in its pipeline.
Falkenstein said that while 600-plus rooms might sound like a huge number, he’s not worried the market won’t be able to sustain the new supply.
“Yes, sometimes average rates are affected, but the key is to stay relevant in the market,” he said, adding that if current hotels want to keep pace, it might be time to consider a renovation or repositioning.
Levzow agreed, but she lists increased supply as one of the company’s biggest challenges to overcome. Much like Falkenstein, Levzow said that differentiation and relevancy will help hotels to stay above the competition. For example, the Saint Kate offers an arts-focused experience; The Pfister houses a large Victorian art collection and an artist-in-residence program; and the Hilton Milwaukee’s concierge dog, Millie, has been a draw for guests.
Still, Marcus executives look beyond the DNC with optimism.
“One of the things we learned from talking with convention bureaus in cities that have held prior conventions is that they typically see a boost in convention business in the years following as a result of the national and international exposure to the city,” Levzow said. “That’s encouraging, and we hope we experience that increase in Milwaukee as well. We are already seeing interest from conventions for upcoming dates a few years out, and we are excited about that.”
Hawkeye’s three hotels won’t be open in time for the DNC, but rather in the third quarter of 2020. However, Patel said the market is strong enough to support the additions.
“Generally, more hotels induce demand in the market, specifically group demand,” Patel said. “Milwaukee is in the midst of an economic and social boom. As the city continues to establish itself as the Great Lakes capital, we see business, leisure and convention demand continue to grow.”