Charles Bailey began converting a historic office building in downtown Milwaukee into a hotel in February. He assumed the receding COVID-19 pandemic would lead more people to travel.
Three months later, with the start of the summer vacation on the traditional Memorial Day weekend, Bailey is looking forward to both the opening of his Kinn MKE Guesthouse with 32 rooms in the fall and further bookings in his Kinn Guesthouse with 8 rooms in Bay View.
“I think people are pent up and just want to come around to do things,” Bailey told the Journal Sentinel.
The Chin MKE Guesthouse at 600 N. Broadway is one of several Milwaukee hotel developments under construction or in the planning phase as hotels recover from a disastrous 2020.
“People love to travel,” said Greg Hanis, a hotel industry consultant.
However, Hanis said several new hotels in downtown Milwaukee could divert customers from those injured by the pandemic.
“The new hotel announcements are encouraging, but the existing hotels need time to make up for their losses from the past year and a half,” said Hanis, who runs New Berlin-based Hospitality Marketers International Inc.
Broad impact on travel
The pandemic has been tough on hotels and other travel-focused businesses.
According to the American Hotel and Lodging Association, U.S. hotels lost 672,316 jobs in 2020 due to COVID-19.
That includes a loss of 11,176 jobs at Wisconsin hotels, the association said.
Hotels in the Milwaukee area reported an occupancy rate of 36.4% and an average daily room rate of $ 86.10 for 2020, according to STR Inc., a data provider to the Hendersonville, Tennessee hotel industry.
This corresponds to an occupancy rate of 64.6% and an average daily room rate of USD 112.66 in 2019.
Those sharp declines in 2020 resulted in temporary hotel closings and hundreds of jobs lost across southeastern Wisconsin.
Marcus Hotels & Resorts Inc., one of the largest local operators, laid off over 400 employees on a permanent basis in July in three hotels in Milwaukee, two resorts on Lake Geneva and one hotel in Madison.
There have been layoffs at high profile properties like the Hyatt Regency Milwaukee, which has 112 jobs. the Kimpton Journeyman Hotel in Milwaukee’s historic third division with 97 seats, the Sheraton Milwaukee Brookfield Hotel with 101 seats, and the Delavan Lake Lawn Resort with 305 seats, according to notices filed with the State Department of Workforce Development.
In addition, two downtown Milwaukee hotels owned by Jackson Street Holdings LLC subsidiaries, the Marriott and the Westin, have laid off 39 permanent employees, according to state announcements.
Marcus Corp., Marcus Hotels and Marcus Theaters Corp. operates, lost $ 124.8 million on sales of $ 237.7 million in 2020, according to the publicly traded company.
That compares with net income of $ 42 million and revenue of $ 820.9 million in 2019.
Lower occupancy rates remain
Occupancy and room rates for Milwaukee hotels continued through April 2021, according to STR.
However, the hotel industry is expecting a recovery this year as more people get vaccinated and return to both leisure and business trips.
Marcus Corp. reported a loss of $ 28.1 million for the first quarter of 2021 in May.
“While the pandemic continues to affect both business and group travel, our first quarter results exceeded expectations,” said Michael Evans, President of Marcus Hotels & Resorts.
“Demand continues to be driven by drive-to-leisure consumers looking for ways to get away, change their landscape and do something new,” Evans said in a statement on the company’s first quarter earnings report .
“And while business travel is likely to remain limited in the near future, advances in vaccination and improving conditions in our markets bodes well for this segment of the market to grow gradually over the coming months,” he said.
Marcus Hotels also reported that group bookings were increasing for later in 2021 and through 2022. This includes rebooking events that were canceled during the pandemic.
Hanis had similar observations.
“I expect Milwaukee will have a strong summer travel season,” he said.
Business trips are starting to return
Along with increased demand from leisure travelers, Hanis said, business travel is slowly returning.
“This segment should show strength by autumn,” said Hanis. “This will spread through 2022.”
Group travel is also showing signs of a comeback, he said.
Most of the local hotels that closed for months during the pandemic have reopened.
The Marriott is an exception.
Depending on market conditions, Jackson Street Holdings is hoping to reopen the Marriott in early July, said Mark Flaherty, managing partner.
With better times expected, developers are planning new high-end hotels in downtown Milwaukee.
These include The Trade Milwaukee, a Marriott Autograph hotel owned by Madison-based North Central Group LLC in the Deer District at 420 W. Juneau Ave. developed.
Construction of the nine-story hotel with 205 rooms is scheduled to begin in autumn. The Trade is slated to open in early 2023. It was approved by the city.
The 102-room Third Ward Hotel, a Marriott Tribute Portfolio Hotel, is planned for 125 N. Water St., Milwaukee, in the historic Third Ward.
The development consists of renovating the five-story former Harri Hoffmann Co. building and building a 10-story extension with a roof terrace on an adjacent vacant lot.
According to developer Wimmer Communities LLC, the hotel is slated to open in 2023. It was conceptually approved by the Historic Third Ward Architectural Review Board.
Both The Trade and Hotel Third Ward are slated to open about a year before the completion of the downtown convention facility, the Wisconsin Center, which will double in size.
The $ 420 million project is expected to attract more conventions and other events, and increase demand for hotel rooms.
Other downtown hotel proposals include a six-story hotel with around 160 rooms as part of a mixed-use development by McClendon Capital Group LLC for a location on North Water Street in the Park East Strip. An eight-story 155-room Tempo by Hilton hovered on the northwest corner of Old World Third Street and West Kilbourn Avenue, turning a former warehouse into a 50-room Wyndham Group boutique hotel at 419 W. Vliet St.
The Vliet Street project, to be featured by Wyndham through the trademark collection, received city approval in 2019.
However, those plans were pushed into the background due to the COVID-19 pandemic and the fact that the developers had completed two more hotel projects in Racine and Madison, said Karl Rajani, one of the developers.
Rajani and his partner Patrick Prabhu are seeking state and federal heritage tax credits to fund the renovation of the 1888 building on Vliet Street, according to the Wisconsin Historical Society.
This process “may take a while,” and renovations won’t start this year, Rajani said.
Several projects are running
In the meantime, other hotel projects are ongoing in the Milwaukee area, including the renovation of historic buildings.
In Oak Creek, Wisconsin Dells-based Stand Rock Hospitality Group LLC plans to begin construction of a 121-room Homewood Suites by Hilton next to the Ikea store in June, city administrator Andrew Vickers said.
This project was delayed by the pandemic.
In addition, a 122-room WoodSpring Suites extended stay hotel is to be built on the southeast corner of West Bradley Road and North 124th Street in the far northwest of Milwaukee.
On the west side of Milwaukee, a historic former school will be located on W. Wisconsin Ave. 2708 converted to the 23-room Grand Avenue Suites (formerly known as Ambassador Suites).
The delayed project is progressing and renovations are expected to begin soon, developer Rick Wiegand told Journal Sentinel.
The extended-stay Grand Avenue Suites are slated to open by June 2022, Wiegand said.
Work continues to convert a historic, former downtown office building at 790 N. Jackson St. into the Adams Hotel with around a dozen rooms.
Developer Joel Lee said the hotel’s opening date has not yet been set.
The Chin MKE Guesthouse is due to open in November, said operator Charles Bailey.
The renovation of the North Broadway building, built in 1868, includes the addition of a fifth floor.
The hotel has a restaurant on the first floor, a communal kitchen and conference / dining rooms on each floor, as well as a roof terrace.
The idea is to create a common community among the guests – a trademark of Bailey’s Kinn Guesthouse with eight rooms on S. Kinnickinnic Ave. 2535.
Bailey is seeing an increase in bookings for the Kinn Guesthouse, including in September.
This month, the reformatted Summer Festival as well as the rescheduled Ryder Cup golf game will take place in Whistling Straits near Sheboygan.
He is also looking forward to 2022 for both hotels.
“We’re seeing a lot of interest for the next year,” said Bailey.
Tom Daykin can be emailed to email@example.com and followed on Instagram, Twitter and Facebook.
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