Like most everywhere else, downtown Milwaukee’s hotels had a rough go of it in 2020 — a year plagued by a global pandemic that for a time virtually shut down the market.
But industry leaders say there are indicators that things will improve this year and beyond.
Colin Walsh, general manager of the 481-room downtown Hyatt Regency Milwaukee hotel and president of the Greater Milwaukee Hotel & Lodging Association, recalled that things took a turn for the worse on March 13, 2020. It was Friday the 13th.
While many in the industry lost their jobs in the wake of the pandemic, he said there’s hope now that more people will regain employment due to numerous positive developments. They include the COVID-19 vaccine rollout, the hoped-for return of festivals and spectators at sporting events and the further easing of restrictions on group gatherings by the city.
“It really was about survival in 2020,” Walsh said. “And as we start looking ahead to 2021, we start to see signs of life.”
A review of market data, provided by Hendersonville, Tennessee-based STR Inc., shows downtown hotel occupancy was down 55% year-over-year in 2020. The worst month for occupancy was April, when it performed 83.4% worse than the same month in 2019. And that’s despite a 30.7% drop in supply from the prior year as some hotels were closed temporarily.
“It was a dismal year,” said Greg Hanis, hotel industry analyst and president of New Berlin-based Hospitality Marketers International Inc.
But some positive trends arose as the year dragged on, Hanis said.
Occupancy numbers generally improved with each passing month after hitting a low point in April. By December, there was a slight gain in hotel room supply compared to the same month of 2019. The 0.4% bump comes in part from the opening of three new hotels, totaling 331 rooms, southwest of East Michigan and North Jefferson streets.
And demand for the downtown hotel market, though consistently down year-over-year, generally improved as the year went on. There was a drop-off come winter, but that’s expected given the shift in seasons.
“There are some signs of positive performance, but you have to kind of read between the lines to see them,” Hanis said.
Walsh said his hotel is seeing growth in interest from guests and event planners in booking rooms.
Leisure travelers in particular are starting to book rooms, he said.
“I think folks are starting to feel a little more confident in the situation as the (COVID-19) cases drop, and thankfully they have dropped,” Walsh said.
City health officials recently started allowing up to 250 people in conference spaces and potentially more if hotels have an approved safety plan. Walsh said the Hyatt expects to start benefiting from larger groups in the summer and fall months.
But it will likely be a while before the market sees the massive convention crowds again. Walsh said meeting planners will likely stick to a hybrid model for some time, in which some convention-goers gather in the same location while others tune in virtually.
Hotel developers are clearly in good spirits as well, given the number of new hotels at various stages of development in downtown and the adjacent Historic Third Ward.
They include a 230-room Marriott Autograph Collection hotel in the Bucks’ Deer District; 155-room Tempo by Hilton hotel at the nearby Journal Square block; 32-room Kinn MKE Guesthouse at 600 N. Broadway; The Adams Hotel at 790 N. Jackson St., which will contain 11 rooms in its first phase, according to city records; and the Hotel Third Ward, a 102-room Marriott Tribute Portfolio brand hotel that would be part historic renovation of the Hoffco building and part new construction, located at 125 N. Water St.
Developers justify these projects saying that by the time they’re built, the market should have at least partially recovered. But the sheer number of ongoing projects in the downtown area has Hanis scratching his head.
“As an industry consultant, who (has done) for nearly 40 years market feasibility research for new hotels, I have to ask why and what (the developers) are seeing,” Hanis said. “In general, they say that by the time they open, the COVID pandemic should be behind us and people will be traveling again. But this may be very premature.”