Marcus & Millichap has published its Minneapolis-St. Paul Metro Area Hospitality Investment Forecast Report for 2025.
“Despite below pre-pandemic occupancy levels, the Twin Cities hospitality sector is showing signs of a steady, demand-driven rebound supported by limited new supply and record ADR,” Todd Lindblom, first vice president and regional manager, said in a statement.
Marcus & Millichap’s 2025 Minneapolis-St. Paul Metro Area Hospitality Investment Forecast Report provides investors with insight and analysis on the current state of the Minneapolis-St. Paul hospitality market sector, including:
- Fewer than 250 rooms were under construction at the start of 2025, marking the lowest hotel development pipeline since 2010 and indicating strong demand for existing inventory.
- Metro-wide occupancy is projected to rise for the sixth consecutive year, reaching 59.4 percent — above the past decade’s average but still trailing pre-pandemic norms.
- The average daily rate is forecasted to hit a record high of $136.18, led by upper-upscale hotels with the highest expected occupancy rate of 62.3 percent.
- RevPAR is expected to increase moderately to $80.92, marking its highest level since 2019, with downtown Minneapolis leading the gains.
- Investment sentiment remains optimistic, with average room prices climbing 20 percent year-over-year and a 10.4 percent cap rate positioning the metro as attractive to yield-driven investors despite uncertainty.
“This year’s constrained development pipeline, coupled with improving fundamentals and new urban projects like Upper Harbor Terminal, positions the Twin Cities market for cautious yet promising growth,” added Lindblom.