🔒 2023 Mid-12 months Financial Forecast: Milwaukee resort trade sluggish to get well from pandemic, regardless of improve in tourism

Three years after the COVID-19 pandemic crushed the resort trade, leading to effectively over $100 billion in misplaced income, issues are trying higher — nationally, that’s.

In Milwaukee, that’s not precisely the case.

“Milwaukee is hurting,” mentioned Greg Hanis, resort trade analyst and president of New Berlin-based Hospitality Entrepreneurs Worldwide Inc.

Whereas a rise in tourism has given the downtown resort market a lift, the lack of enterprise vacationers has weighed closely on the town’s resort properties.

Lodge occupancy in downtown Milwaukee was round 66% for the primary 4 months of 2019, in comparison with 50.7% for a similar timeframe this yr, in accordance with knowledge from Tennessee-based STR, a hospitality knowledge and analytics firm.

That’s behind the place the trade is nationally, in accordance with Hanis.

However this comes as Milwaukee and Wisconsin noticed a report yr of tourism in 2022, having a $6 billion affect on the higher Milwaukee economic system, in accordance with the state Division of Tourism. Additional, the town lately celebrated the opening of The Commerce, the primary full-service resort to open in additional than 4 years in downtown Milwaukee, with two different motels proposed within the space as effectively.

“I at all times price the resort builders as both seeing the glass half full or half empty,” Hanis mentioned. “Proper now, resort builders see the glass two-thirds full.”

Issues are trending in the correct route. The downtown resort market closed out 2022 with a mean of 56% occupancy for the yr, significantly better than the 32% occupancy in 2020 when the pandemic devastated the trade. Common room charges in 2022 had been up from 2019 by about $10, in accordance with STR.

“The hoteliers have been a bit bit extra aggressive with their price, in order that they’ve been growing the speed to make up a number of the distinction,” mentioned Hanis, noting that inflation can be a part of the formulation.

The speed improve has paid off. Income within the downtown Milwaukee resort market has additionally almost returned to pre-pandemic ranges, with April’s year-to-date income solely about $300,000 shy of April 2019.

Nonetheless, it’s a slower restoration than the resort trade has seen nationally. A part of the issue is who’s coming to Milwaukee and who isn’t.

There are three main markets for motels: the social/leisure traveler, or vacationers; the company/business traveler, or enterprise traveler; and the group market, made up of the previous two classes reserving rooms on a bigger scale.

A report 111 million visits to Wisconsin in 2022 signifies that vacationers have returned. Nevertheless, it’s not assured that these vacationers will maintain coming again because the novelty of post-pandemic journey wears off, and inflation might discourage some from reserving holidays sooner or later, Hanis mentioned.

A key characteristic of the post-pandemic resort trade is the absent enterprise traveler, Hanis famous, which is maintaining resort occupancy from reaching pre-pandemic ranges.

Enterprise vacationers, whom motels depend on to fill rooms throughout the week and, in Milwaukee, throughout the winter months, had been forecasted to return final fall, however that didn’t occur, Hanis mentioned. Slightly, the group market has come again stronger than the company/business market has because of a return of conventions and festivals in 2022 and 2023.

With the 2024 Republican Nationwide Conference going down in Milwaukee subsequent July — bringing an estimated 45,000 guests, almost $200 million financial affect and important media publicity to the town — Milwaukee motels will see a surge in group market vacationers subsequent yr.

In Milwaukee, the conference market hasn’t been as robust as in different cities attributable to restricted nonstop flights from main metros and an absence of huge motels.

The biggest resort property downtown is the Hilton Milwaukee Metropolis Middle with 729 visitor rooms and suites, adopted by the Hyatt Regency with 481 rooms, Potawatomi On line casino Lodge with 381 and The Pfister Lodge with 307. After that, downtown solely has smaller motels with 250 rooms or much less.

“For main conventions, these aren’t enticing motels,” Hanis mentioned.

However these are the forms of motels that Milwaukee is seeing extra of. In Could, the 205-room Commerce resort opened within the Deer District; The Tempo resort is proposed within the Westown neighborhood, with 161 rooms, and a 3rd resort, with 130 rooms, has been proposed close to Brady Road.

“Proper now, the demand isn’t there (for extra motels in or close to downtown Milwaukee),” Hanis mentioned, given the numbers.

New motels, although, might alter the place folks keep once they go to the town.

“These new motels are going to strip demand away from current motels,” Hanis mentioned. “The prevailing motels which can be the primary bread and butter of Milwaukee are going to be sitting there and going, ‘Oh man, what do I do? Do I decrease my charges? What do I do to try to appeal to folks again?’”

Among the metropolis’s current motels have already felt some turbulence popping out of the pandemic. The Iron Horse Lodge, certainly one of Milwaukee’s few impartial, regionally owned motels filed for chapter in June 2022, citing the affect of COVID-19. The Hampton Inn & Suites within the coronary heart of downtown abruptly shut its doorways in early Could, saying it was closing for renovations however hasn’t offered any timeline or particulars on the challenge.

“New motels are nice, they add pleasure to the realm, however for current resort operators there’s nonetheless some frustration with getting again to 2019 ranges,” Hanis mentioned. “2019 is the benchmark. We’ll know once we’ve recovered once we come again to 2019 ranges.”