Duluth, MN hotel market report, Q2 2026

Duluth is a seasonal leisure destination on the western shore of Lake Superior, with a growing healthcare base underneath it. Over the last twelve months its hotels ran 57.5% occupancy, a $169.20 ADR and $97.36 RevPAR. All three are slightly below the year before, a softening that mirrors Minnesota's hotel market as a whole rather than anything specific to Duluth.

Executive summary

Duluth has 49 operating hotels and 3,677 rooms in CoStar's property export; CoStar's analytics report tracks 46 hotels and 3,670 rooms under its own selection rules. The market's trailing figures sit just under the prior year: occupancy 57.5% (was 58.1%), ADR $169.20 (was $171.14) and RevPAR $97.36 (was $99.03).

The demand base is diverse. Essentia Health's $915 million St. Mary's Medical Center, open since July 2023, has made Duluth a regional healthcare hub and added corporate and patient-family travel to the leisure core. The University of Minnesota Duluth's nearly 9,300 students and Lake Superior College keep an education segment steady. Grandma's Marathon (a $39.4 million economic impact in 2024), the Duluth Entertainment Convention Center's year-round programming and the Great Lakes Aquarium's record 235,000 visitors in 2025 show the strength of leisure and events.

The pipeline is lean. One 34-room boutique hotel is under construction and two branded hotels (Home2 Suites by Hilton, 95 rooms; WoodSpring Suites, 122 rooms) are proposed: about 6.8% of existing supply. The market prices at a 10.2% cap rate and $68,800 a room.

The market

Duluth sits at the western tip of Lake Superior in northeastern Minnesota, about 154 miles north of the Twin Cities. It is the seat of St. Louis County and home to the largest natural harbor on the Great Lakes, and it anchors the commerce, healthcare, education and culture of Minnesota's Arrowhead region. The city has about 88,000 residents; the Duluth-Superior metro has about 282,000 across northeastern Minnesota and northwestern Wisconsin.

Iron ore shipping through the Port of Duluth-Superior, the largest Great Lakes port by annual tonnage, shaped the economy for a century. The port still matters, but the economy has diversified over the past two decades:

• Healthcare is now the dominant employer, with Essentia Health and Aspirus Health (formerly St. Luke's) each running a major system.
• Manufacturing is led by Cirrus Aircraft's headquarters and Innovation Center.
• Utilities and education: Minnesota Power (ALLETE) and the University of Minnesota Duluth add stable employment and research.

Median household income is $68,807 and the population grows about 0.4% a year: a stable, modestly growing community. The scenery, outdoor recreation and event calendar support a year-round but highly seasonal tourism economy, the foundation of hotel demand.

New supply

Duluth's pipeline is constrained: one hotel under construction and two proposed. The 251 pipeline rooms are about 6.8% of existing supply, a measured ratio that supports occupancy stability in the near to medium term.

Under construction

The Lakeview Guesthouse, a 34-room independent boutique hotel, is the only hotel under construction. CoStar had no developer or opening date for it as of Q2 2026. At its size and without a flag, it is unlikely to move occupancy or ADR at the branded midscale level.

Proposed

Two branded hotels are proposed. Home2 Suites by Hilton Duluth Lakewalk North Shore (95 rooms) would be Hilton's first extended-stay hotel on the Lakewalk corridor. WoodSpring Suites Duluth (122 rooms), Choice Hotels' economy extended-stay brand, would serve longer stays at an economy price. Neither had reached permitting or site work as of the report date.

Demand drivers

Duluth's hotel demand blends leisure and tourism, healthcare, corporate and industrial travel, the universities and events. Leisure is the largest segment, but healthcare and corporate demand give the year-round base that sets Duluth apart from purely resort markets.

Leisure and tourism

Tourism is the largest single driver, about 30% of hotel room nights. Canal Park, the Aerial Lift Bridge, the Lake Superior shoreline and the North Shore scenic corridor draw visitors from across the Upper Midwest all year, and Spirit Mountain adds winter leisure. The Great Lakes Aquarium set a 20-year attendance record of about 235,000 visitors in 2025, an estimated $43 million a year in economic impact, with 70% of visitors traveling more than 100 miles.

Healthcare

Healthcare is the second-largest segment, about 25% of room nights. Essentia Health's $915 million St. Mary's Medical Center (opened July 2023) made Duluth a healthcare destination for the Arrowhead and the western Lake Superior region. Aspirus Health (formerly St. Luke's) completed a merger in February 2024 and committed to a $300 million multi-year investment program. The UMN Duluth Medical School is expanding to a full four-year MD program from fall 2025.

Corporate and industrial

Corporate and industrial travel is about 20% of room nights. Anchors include Cirrus Aircraft (headquarters and a 189,000-square-foot Innovation Center), Minnesota Power/ALLETE (regional utility headquarters), Enbridge Energy and BNSF Railway. The Port of Duluth-Superior supports more than 7,000 jobs and $1.3 billion of regional economic activity, driving supply-chain and logistics travel.

University and education

The University of Minnesota Duluth enrolls about 9,300 students (2025), bringing parent weekends, graduation, NCAA Division I hockey and academic conferences. Lake Superior College adds about 3,400 students. University travel is about 10% of room nights.

Events and sports

Events and sports are about 10% of room nights. Grandma's Marathon (June) had a $39.4 million economic impact in 2024, with 18,000 starters, 89% of them visitors, spending an average $176.70 a person a day. The Bayfront Blues Festival (August, about 20,000 attendees) and the DECC's year-round programming add event demand through the year.

Performance

Every figure here is from CoStar's April 2026 Search Analytics report for the Duluth hotel market. RevPAR of $97.36 sits near the low end of its 10-year typical range. ADR of $169.20 is slightly below the prior period but still at a historic high in dollars, a sign that operators have held their rates.

Duluth has one of the most pronounced seasonal patterns in the Upper Midwest. Occupancy peaks in July and August at about 80-82%, driven by Lake Superior leisure travel, Grandma's Marathon in June and the summer festival calendar. It bottoms out from December through February in the mid-30s. The Bayfront Blues Festival in August and fall color in October support the shoulder seasons.

Duluth vs. Minneapolis and Rochester

Duluth is compared here with Minneapolis (a filtered CoStar subset of 55 hotels and 11,469 rooms, not the full metro) and Rochester (55 hotels, 6,212 rooms) for statewide context. Minneapolis is far larger and more diverse; Rochester leans almost entirely on Mayo Clinic, which gives it higher and less seasonal occupancy. Duluth's $169 ADR is well above Rochester's $129, the rate premium of a leisure destination.

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Brands and franchise presence

The market has 49 open hotels and 3,677 rooms in CoStar's property export. It splits between a large independent segment (26 hotels, 1,190 rooms, 32.4% of inventory) and a branded tier under six franchise parents. The independents cluster in Canal Park and along the waterfront, where boutique and lifestyle hotels earn a leisure rate premium. The branded midscale and upper midscale hotels serve corporate, healthcare and value-minded leisure guests.

Full service and upper upscale

Upscale and upscale extended stay

Upper midscale and select service

Midscale

Economy

Independent and boutique: 26 hotels, 1,190 rooms, 32.4% of inventory

The independents run from an upscale waterfront resort (Pier B, 140 rooms) to a three-room micro boutique (The Njord), concentrated in Canal Park, the waterfront and the North Shore corridor.

Franchise parents

Choice Hotels is the most represented parent, with 6 hotels and 711 rooms after its 2022 purchase of the Radisson Americas portfolio (which added the 268-room Radisson Hotel Duluth and the 83-room Country Inn & Suites). Wyndham ties it at 6 hotels with 457 rooms: AmericInn, Baymont, two Days Inns, La Quinta and Super 8. Marriott has 5 hotels (505 rooms), including the market's only upper upscale flag (Sheraton), two Fairfields, Residence Inn and TownePlace Suites. IHG has 2 hotels (418 rooms), anchored by the 338-room Holiday Inn, the largest branded hotel in the market. Hilton has 3 (295 rooms): two Hamptons and a Tru. G6 Hospitality runs the one Motel 6 (101 rooms).

Franchise gaps: parents not in the market

Brands missing within the parents already here

Risks and headwinds

None of these risks threatens the market in the near term, but each deserves attention given relatively tight margins at today's RevPAR.

Seasonality and demand concentration

Occupancy swings from about 82% in peak summer to 35-38% in midwinter, one of the widest seasonal ranges of any Upper Midwest hotel market. That makes revenue management harder and caps full-year occupancy compared with year-round markets like Rochester. Any disruption to the summer leisure calendar has an outsized effect on annual RevPAR.

Port and industrial demand softening

Port of Duluth-Superior tonnage fell -6.8% in 2024 and an estimated -14% in 2025, with iron ore especially weak. The 2025 season saw the fewest ocean-going vessels since the St. Lawrence Seaway opened in 1959. Port travel is not a primary driver, but it adds corporate and extended-stay weekday occupancy, and a sustained downturn could pressure the midscale and extended-stay tier.

Interest rates and financing

Financing conditions keep transactions slow: only 5 hotel sales totaling $14.4 million in the trailing twelve months. Elevated cap rates (10.2% Duluth, 10.4% Rochester, 9.7% Minneapolis) reflect investor caution across the hotel sector. Construction cost inflation and limited debt hold back new development, which supports existing values but may delay pipeline projects.

Extended-stay supply

Both proposed hotels are extended-stay. If Home2 Suites (95 rooms) and WoodSpring Suites (122 rooms) advance together, the extended-stay segment served today by TownePlace Suites, Residence Inn and Force on Fifth Avenue could see real new supply pressure. Extended-stay demand from healthcare project teams, Blatnik Bridge crews and Cirrus Aircraft is durable but finite.

Event dependency

A large share of high-compression nights falls on a few recurring events, above all Grandma's Marathon (June) and the Bayfront Blues Festival (August). A cancellation or schedule change could remove a meaningful piece of annual RevPAR.

Outlook and opportunities

Expect stable, modest RevPAR growth, supported by healthcare and infrastructure investment and held back by seasonality. The $1.8 billion Blatnik Bridge replacement, expected to start construction in fall 2026, is the biggest demand catalyst on the horizon: an estimated 1.5 to 1.75 million labor hours over a multi-year build, driving sustained extended-stay and midscale demand.

Near term (12-18 months)

Occupancy should stay in the 56-59% range on a trailing 12-month basis as leisure demand holds but does not accelerate. ADR should stay above $165, supported by rate discipline and limited new supply. Blatnik Bridge pre-construction will start adding extended-stay and select-service demand, especially for construction managers and subcontractors.

Medium term (2-4 years)

The bridge's active construction, the UMN Duluth Medical School expansion, Aspirus Health's $300 million program and the ramp-up of Cirrus Aircraft's Innovation Center set Duluth up for a corporate and project-driven lift from 2027 on. In the base case RevPAR recovers toward $100-$105 by 2028-2029, with upside tied to the speed and scale of bridge construction.

Key opportunities

• Conversions in the Canal Park corridor. Several older independent waterfront hotels are candidates for a soft-brand conversion (Curio Collection or Tapestry Collection by Hilton, Ascend Collection by Choice), reaching loyalty-program demand while keeping the independent character that drives leisure rate premiums.
• Extended-stay development. Blatnik Bridge construction will bring 1,100+ construction jobs and multi-year extended-stay demand the current market is under-equipped to serve. Being first matters given a 5+ year build starting fall 2026.
• Value acquisition. At $68,800 a room and a 10.2% cap rate, Duluth is far cheaper than Minneapolis ($159,000 a room, 9.7% cap) for comparable RevPAR. For yield-focused investors, that is a compelling risk-adjusted opportunity in the Upper Midwest hotel sector.
• Healthcare-anchored repositioning. Hotels near Essentia Health's St. Mary's campus and the DECC can capture the corporate and medical travel from the healthcare build-out. Targeted sales to the healthcare segment could lift weekday occupancy in the midscale tier.

Download the underwriting model to run your own numbers on a Duluth hotel.

Key takeaways

1. A stable core market with near-peak ADR. The 12-month ADR of $169.20 is near its 10-year high, a sign of rate discipline across the branded midscale and upper midscale tier. The slight year-over-year declines in occupancy, ADR and RevPAR match a broad regional softening, not a Duluth-specific demand problem.
2. Healthcare is the long-term structural driver. Essentia Health's $915 million St. Mary's Medical Center, Aspirus Health's $300 million investment and UMN Duluth's medical school expansion are making Duluth one of the most significant healthcare hubs between the Twin Cities and Marquette: durable, non-seasonal demand that will increasingly offset leisure seasonality.
3. The Blatnik Bridge is the biggest near-term catalyst. The $1.8 billion replacement, the largest public works project in Minnesota history, is expected to start in fall 2026 with a five-plus year timeline and 1.5 to 1.75 million labor hours. Hotels set up for long stays benefit most, and the window to build or reposition extended-stay product ahead of it is closing.
4. A lean pipeline supports near-term occupancy. With only 34 rooms under construction and 217 proposed (both extended-stay), Duluth faces little new competition over the next 12-18 months.
5. A compelling value entry point. At $68,800 a room and a 10.2% cap rate, Duluth trades at a deep discount to Minneapolis ($159,000 a room, 9.7% cap) for comparable RevPAR. Its leisure and healthcare demand, lean pipeline and the Blatnik Bridge make a compelling risk-adjusted opportunity in the Upper Midwest hotel sector.

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Sources and method. Performance figures (occupancy, ADR, RevPAR, inventory, pipeline, cap rate, sale price per room) are from CoStar's Search Analytics report for the Duluth market (Report #205885561), dated April 4, 2026. Peer figures for Minneapolis and Rochester are from CoStar reports of the same date. Hotel inventory, brands and room counts are from the CoStar property export as of April 4, 2026, exact CoStar room counts with no estimates. Demand drivers, employer headcounts and development details come from public sources, including company press releases, the Duluth Economic Development Authority, UMN enrollment data, Port of Duluth-Superior annual reports, UMN Extension economic impact studies and local news. Developments are tracked in the Marcus & Millichap Upper Midwest Development Tracker. Chart values from the report's trend and monthly charts are read from the charts, as noted.

Prepared by Reed Gizinski, Marcus & Millichap, for information only. It does not constitute investment advice, and it is not an appraisal.