Sioux Falls, SD hotel market report, Q1 2026

Sioux Falls is holding rate well above its ten-year norm while occupancy settles back from its post-pandemic highs. Over the twelve months to April 2026 the market ran 59.7% occupancy, a $124.14 ADR and $74.15 RevPAR. Occupancy fell from 63.8% a year earlier, ADR rose +1.2% and RevPAR slipped -5.0%, still at the top of its usual range. It also outperforms both of its regional peers on every measure.

Executive summary

Sioux Falls is a well-established regional hub, anchored by two of the Upper Midwest's largest healthcare systems, a growing financial services sector and a strong events base centered on the Denny Sanford PREMIER Center. As of April 2026 CoStar tracks 65 hotels with 5,754 rooms in the market; its performance figures are calculated on an analytic pool of 6,041 rooms at hotels that report.

The trailing figures show a healthy market in mid-cycle consolidation. Occupancy eased as demand growth leveled off after the post-pandemic recovery peak. ADR held firm at $124.14, showing strong rate integrity even as occupancy normalized, and it now sits above its ten-year typical ceiling of $116.22, a sign of pricing power built through the recovery. RevPAR settled at $74.15, down from $78.00 a year earlier but still in the upper part of its ten-year range.

The pipeline adds 443 rooms across four projects: one under construction (Everhome Suites, 117 rooms), two in final planning (an AC Hotel with 126 rooms and an Aloft with 95) and one proposed, about 7.7% of existing inventory. New supply needs watching, but a varied demand base of healthcare, finance, events and growing manufacturing supports continued absorption.

The market

Where it sits

Sioux Falls is South Dakota's largest city, in the southeastern corner of the state where the Big Sioux River meets Skunk Creek. It is about 196 miles southwest of Minneapolis, 184 miles north of Omaha and 58 miles from Brookings, home of South Dakota State University. That makes it the commercial and healthcare hub for a wide area covering much of South Dakota, southwestern Minnesota, northwestern Iowa and northeastern Nebraska.

People and incomes

The city has grown to about 224,676 people (2026 estimate), one of the fastest-growing mid-sized cities in the Upper Midwest, and the metro holds about 308,000. The city grew about +12% from 2020 to 2024, far ahead of South Dakota's +4%. In-migration from rural communities and other states has been steady, drawn by a strong job market, lower costs than larger metros and quality of life. Median household income is about $75,970, and per capita income $51,894.

Top employers

The economy rests on healthcare, financial services and food processing. The two big health systems together employ nearly 20,000 people and draw patients from a five-state region. Citi and Wells Fargo both run large back-office and operations centers here, drawn by South Dakota's favorable rules for credit card operations. Smithfield Foods, preparing a landmark $1.3 billion facility, deepens the manufacturing base further.

New supply

The pipeline reflects measured, well-placed growth after heavy deliveries in 2023 and 2024. Four projects with 443 rooms are in three stages of development, about 7.7% of existing inventory. Every one targets the upscale or select-service segments and fills a brand gap in the market.

Under construction

Everhome Suites Sioux Falls: 117 rooms, Choice Hotels, midscale extended stay, expected to open in late 2026. Everhome is Choice's extended-stay brand for stays of five nights or more, with full kitchens and apartment-style amenities. It is well placed for the healthcare-driven extended-stay demand from Sanford Health and Avera Health and for corporate visitors to the Citi and Wells Fargo centers. At 117 rooms it adds about 2.0% to inventory.

Final planning

Two hotels are in final planning, with permitting or site work underway.

• AC Hotel Sioux Falls North: 126 rooms, Marriott, upscale, projected to open in 2026 or 2027. A European-inspired lifestyle brand aimed at younger business travelers. Its planned site near downtown positions it to capture corporate travel from the growing financial services corridor and the redeveloping Steel District. At 126 rooms it would be one of the larger new additions in the upper midscale and upscale segments.
• Aloft Sioux Falls: 95 rooms, Marriott, upscale, at Lake Lorraine, projected to open in 2027. Aloft targets design-minded, tech-savvy travelers. Its planned waterfront site at Lake Lorraine, a mixed-use development that is becoming a real dining and leisure destination in the southwest corridor, sets it apart, and it would benefit from the retail and entertainment growing around Dave & Buster's and the planned waterfront hotel complex.

Proposed

Home2 Suites by Hilton Sioux Falls South: 105 rooms, Hilton, upper midscale extended stay, proposed. A second extended-stay entry in the pipeline, aimed at the south corridor near the Sanford Sports Complex. If approved and built, it would add Hilton extended stay in the south part of the market, alongside the existing Home2 Suites near Sanford Medical Center.

Demand drivers

Sioux Falls has one of the most diversified and resilient demand bases of any secondary market in the Upper Midwest. Unlike many cities its size that lean on one industry, it draws hotel demand from at least five distinct segments, healthcare, corporate and financial services, leisure, events and sports, and government and education, which protects it from a downturn in any one of them.

Healthcare and medical, about 32% of demand

Healthcare is the dominant driver, and it is growing. Sanford Health runs the Sanford USD Medical Center, a 545-bed regional flagship ranked the top hospital in South Dakota by U.S. News & World Report for 2025-2026, along with specialty clinics and the expanding USD Sanford School of Medicine, which is moving its campus to Sioux Falls. Sanford employs about 11,000 to 12,000 people in the region. Avera Health, the second system, employs about 7,500 to 8,500 and is partway through a landmark $245 million expansion of Avera McKennan Hospital, adding 158 beds and 350,000 square feet; the first patients in the new tower are expected in early 2027. Together the two systems draw patients, families, visiting medical professionals and healthcare vendors from a five-state area, generating steady transient and extended-stay demand all year.

Corporate and financial services, about 25%

South Dakota's regulatory climate, among the most favorable in the U.S. for credit card operations, has brought two financial services anchors. Citibank runs a 150,000-square-foot, four-story regional headquarters at 5800 S Corporate Place with about 1,300 employees across 22 business functions. Wells Fargo has 1,500 to 2,000 employees in the city, with an expansion underway at 69th and Western. Both generate steady corporate travel, conferences and extended stays. The wider corporate base, including Hy-Vee, growing technology companies and professional services firms, adds to it.

Leisure and tourism, about 18%

Falls Park, the city's signature attraction, draws hundreds of thousands of visitors a year and adds real weekend leisure demand. The developing Lake Lorraine waterfront district is becoming a second leisure destination, anchored by Dave & Buster's and a growing mix of dining and entertainment. Tourism produced $300 to $400 million in economic impact in earlier years, though 2025 was about -10% softer, put down to consumer caution and less international travel. Downtown development, especially the Canopy by Hilton and the Steel District, is creating a more cohesive hospitality experience that should draw more leisure travelers.

Events and sports, about 12%

The Denny Sanford PREMIER Center, which holds 12,000 for concerts and 10,000 for sports and fits 180 trade show booths, anchors event demand. Recent highlights include the 2025 U.S. Olympic and Paralympic Team Trials for Curling (November 7 to 16, 2025), the annual Summit League basketball tournaments (over 63,000 attendees), the Harlem Globetrotters and a full year-round concert calendar. The arena creates concentrated sell-out nights throughout the year.

Government and education, about 7%

State government brings a modest but steady base of travelers, including legislative business and agency visits. The University of Sioux Falls enrolled a record class in 2025 and brings family visits and graduation weekends. South Dakota State University in Brookings, 58 miles away, adds demand around major athletic and academic events.

Known developments

Performance

These figures come from CoStar's April 9, 2026 market report for Sioux Falls. They are calculated on CoStar's analytic pool of 6,041 reporting rooms, which is larger than the 5,754 inventory rooms because CoStar counts participating and tracked hotels differently; every statement about market size uses the 5,754.

Against the last ten years, occupancy is inside its usual band but below average, while rate and RevPAR sit above theirs.

Occupancy of 59.7% is within the market's typical ten-year band of 55.41% to 65.16% but below its ten-year average of 63.37%, reflecting the settling after the recovery highs of 64% to 65% in 2022 and 2023. ADR of $124.14 is well above the typical ceiling of $116.22, a testament to the rate discipline built during the recovery. RevPAR of $74.15 is just above its typical upper bound of $73.93, so the market is performing at or near its historical best in revenue per room despite the occupancy headwind.

Seasonality

Sioux Falls has a clear but manageable seasonal pattern, typical of Upper Midwest secondary markets. Occupancy peaks in June through August at 70% to 73%, on leisure travel, Falls Park visits, outdoor events and busier corporate activity. The off-season low in January and February settles at 45% to 49%, carried mainly by healthcare, extended-stay and corporate demand. ADR moves far less than occupancy: the summer high of about $148 a night is only about a 35% premium over the winter floor of about $110. Occupancy in the first two months of 2026 tracked roughly in line with 2025, while ADR in January 2026 was slightly lower than a year earlier, consistent with the softer trailing figures.

Peer markets

Sioux Falls outperforms both peers on all three measures. Its occupancy runs 2.5 points above Fargo's and 3.3 points above Sioux City's; its ADR is $5.27 above Fargo's and $14.97 above Sioux City's. On RevPAR it earns $6.14 more per available room than Fargo and $12.62 more than Sioux City, on deeper demand and stronger rate integrity. The lead reflects a larger healthcare anchor, a deeper corporate base and more developed event venues.

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Brands and franchise parents

This list comes from CoStar's full property export for Sioux Falls, which covers every hotel CoStar monitors whether or not it reports to STR: the market's 65 open hotels with 5,754 rooms.

Wyndham has a large presence by hotel count across its economy and midscale brands (Days Inn, Super 8, Microtel, Baymont, Ramada, AmericInn, La Quinta). Marriott is close behind across its upper midscale and upscale brands (Courtyard, SpringHill, Residence Inn, Fairfield, TownePlace and Sheraton), with an AC Hotel and an Aloft in the pipeline. Hilton spans economy to upper upscale, led by the marquee Canopy by Hilton downtown. Choice covers the midscale range and now adds the Everhome Suites under construction. Independents are a large group but lean toward smaller economy and motel-style hotels.

The brands missing from Sioux Falls

The franchise landscape is broad, but several brands and parent companies are absent, which leaves room for development and conversions.

Risks and headwinds

Occupancy settling and softer demand

The most immediate challenge is occupancy continuing to settle from its post-pandemic peak. At 59.7%, trailing occupancy is below the ten-year average of 63.37% and 5 to 6 points below the 2022 and 2023 peak, down from 63.8% a year earlier. The decline reflects pent-up demand running its course and a return to pre-COVID patterns, so operators need to set revenue expectations accordingly. Softer leisure demand, with Falls Park visits -9% in June and -6% in July 2025, adds to the challenge in the shoulder and off-peak months.

Pipeline pressure

If all 443 pipeline rooms are built, they add about 7.7% to inventory, a meaningful addition for a secondary market. The concentration of upscale and extended-stay rooms could pressure existing upper midscale and upscale hotels if demand does not keep pace. The proposed Riverline District convention center, if approved, could change the demand picture enough to justify the new rooms, but its timing is uncertain.

The economy and travel sentiment

National economic uncertainty, including tariff-related caution on business investment and softer consumers, is a risk to corporate and leisure demand in 2026. Less international travel, cited as one cause of South Dakota's 2025 tourism decline, may keep holding back regional visits. Any weakness in financial services or healthcare employment would hit Sioux Falls harder than most, given how much demand comes from those two sectors.

Holding rate

ADR of $124.14 is above its ten-year typical ceiling of $116.22. That reflects real pricing power, but it also creates exposure if occupancy keeps softening: operators may cut rates to win occupancy, especially in the midscale and economy segments, where rates are most likely to compress. New upscale supply (the AC Hotel, the Aloft and the recently opened Canopy) could also shift rate expectations in the full-service and upscale segments.

The Smithfield transition

The planned closure and redevelopment of Smithfield's downtown plant is a long-term positive through the Sanford District redevelopment, but it creates an interim period of labor transition that could reduce corporate demand from a historically large employer. The new Smithfield plant in Foundation Park is not expected to start production until 2028, leaving a gap of several years in which some of that employer's corporate travel may fall off.

Outlook

2026

Expect a year of measured stability, with occupancy likely settling at 60% to 62% as demand normalizes and the newly opened Canopy by Hilton (216 rooms, December 2024) is absorbed. ADR should hold near $124 to $127, supported by strong healthcare demand and the corporate base. RevPAR is projected at $74 to $79 for 2026, a modest improvement on the current trailing figure as the summer peak arrives. The Everhome Suites will add extended-stay rooms later in 2026, but its appeal to healthcare and corporate long-stay guests should let it fill without much pressure on hotels in other segments.

2027 and 2028

The medium-term outlook is constructive, with several large catalysts due in this window. Avera McKennan's $245 million expansion, finished in 2027, adds 158 beds and will bring noticeably more patient-related visitors. CJ Schwan's food plant reaching full operation in 2027 adds a new employer for corporate travel. Smithfield's groundbreaking in the first half of 2027 and the buildout of Foundation Park as a manufacturing corridor will start generating construction-crew demand, which benefits midscale and economy hotels most. If the proposed Riverline District convention center is approved, it would be a transformational demand generator, possibly opening around 2029 or 2030.

Opportunities

• Value-add purchases in midscale. Older independents and some economy-branded hotels may trade at attractive cap rates compared with the market average of 10.4%.
• Extended stay. The segment is undersupplied for the healthcare and corporate demand here; the coming Everhome Suites and the proposed Home2 Suites show the chains see the gap. Converting struggling independents to extended-stay brands such as WoodSpring, Everhome, My Place or HomeTowne Studios is a lower-cost way to reposition.
• Downtown. The downtown corridor, energized by the Canopy by Hilton, the Steel District and the planned Sanford District, is a growing lifestyle hospitality scene that could support boutique or independent hotels aimed at both leisure and corporate travelers.

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Key takeaways

1. Healthcare sets a structural floor. Sanford Health and Avera Health employ nearly 20,000 people together and draw patients from a five-state region. The Avera McKennan expansion ($245 million, 158 new beds, done in 2027) will deepen that demand. Healthcare demand is counter-cyclical, which gives real stability against a broader slowdown.
2. ADR beats its ten-year norm. At $124.14, trailing ADR sits above the market's ten-year typical ceiling of $116.22, a structural shift in rate expectations from the recovery. Holding that discipline will matter as occupancy settles, and the varied demand base supports it.
3. Sioux Falls leads its peers on every measure. Against Sioux City and Fargo it posts higher occupancy, ADR and RevPAR, with a RevPAR lead of $6.14 over Fargo and $12.62 over Sioux City, making it the strongest performer in its regional tier.
4. A $1.3 billion plant changes the long-term story. Smithfield's planned processing plant, the most technologically advanced in its network, will generate significant hotel demand during construction and operation from 2027 through 2028. With CJ Schwan's plant next door and the Sanford District redevelopment of Smithfield's downtown campus, it signals a multi-year wave of industrial investment that widens the corporate base beyond finance and healthcare.
5. A measured pipeline, and a convention center to watch. 443 rooms is manageable for a 5,754-room market, and the incoming brands (Everhome, AC Hotel, Aloft) fill real gaps. The proposed Riverline District convention center could do more than anything else to raise the market's demand ceiling, so watch its approval closely.

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Sources and method. Occupancy, ADR and RevPAR come only from CoStar's market analytics report for Sioux Falls, April 9, 2026. The hotel list comes from CoStar's property export for Sioux Falls. Peer data comes from CoStar reports for Sioux City, Iowa and Fargo, North Dakota, of the same date. Employer data comes from the Sioux Falls Development Foundation, company reports and public filings. Development data comes from SiouxFalls.Business, the Sioux Falls Development Foundation and the Upper Midwest Development Tracker (Marcus & Millichap). Demand segment shares are Marcus & Millichap research estimates and are directional. Prepared by Reed Gizinski, Hotel Data Tracking, Marcus & Millichap, April 2026.

This report is for information only. It is not an appraisal or a valuation and is not investment advice. Figures come from third-party sources believed reliable but not independently verified.