Research Market report
Twin Cities, MN hotel market report, Q2 2026
- Minneapolis
- St. Paul
- Twin Cities metro
- Hennepin County
- Ramsey County
Twin Cities midscale-upscale hotels: 60.1% occupancy, a $123.60 ADR, RevPAR +3.0% to $74.23, nothing under construction and a 3.6% pipeline.
Minneapolis-St. Paul is the largest and most diversified hotel market in the Upper Midwest. This report covers its midscale and upscale segment, the select-service and upper midscale core where most hotel investment happens: 240 hotels and 28,806 rooms across the metro. Over the last twelve months the segment ran 60.1% occupancy, a $123.60 ADR and $74.23 RevPAR, with RevPAR +3.0%, driven almost entirely by occupancy.
The market is the Minneapolis-St. Paul metro; its six largest counties are shaded. Boundaries, roads and water: U.S. Census Bureau (TIGER/Line).
Executive summary
Occupancy, 12 months
60.1%
+2.7% YoY
ADR, 12 months
$123.60
+0.3% YoY
RevPAR, 12 months
$74.23
+3.0% YoY
Pipeline
~1,047 rooms
3.6% of supply
The Twin Cities rests on a metro population of about 3.7 million and one of the highest concentrations of Fortune 500 headquarters in the country. In the midscale and upscale segment CoStar tracks 240 existing hotels and 28,806 rooms, with performance measured on a 29,710-room reporting pool.
The segment's steady post-pandemic climb continues. Trailing 12-month occupancy reached 60.1% (+2.7% on the year), ADR held at $123.60 (+0.3%) and RevPAR rose to $74.23 (+3.0%). RevPAR growth this cycle comes almost entirely from occupancy, not rate. ADR now sits at the very top of its 10-year range, so there is little pricing headroom, while occupancy is still a little below its pre-pandemic ceiling and has room to run.
Supply discipline defines the market today. No rooms are under construction in the segment, and the forward pipeline of about 1,047 rooms in nine proposed and final-planning projects is only about 3.6% of existing inventory. That is a favorable backdrop for existing owners and supports continued RevPAR resilience.
| Existing hotels | 240 |
|---|---|
| Inventory rooms | 28,806 (+0.1% YoY) |
| Reporting pool (analytic rooms) | 29,710 |
| Under construction | 0 rooms, 0 hotels |
| Delivered, last 12 months | 98 rooms, 1 hotel |
| Market sale price per room | $96.3K |
| Market cap rate | 10.9% |
The market
The Minneapolis-St. Paul-Bloomington metro is the 16th-largest in the U.S. and by far the leading economic center of the Upper Midwest. The two urban cores, Minneapolis and St. Paul, and a deep ring of affluent suburbs (Bloomington, Edina, Eden Prairie, Minnetonka, Plymouth, Maple Grove and Woodbury) hold more than 3.7 million people, with a median household income near $92,000, well above the national average.
The economy is unusually diversified across healthcare, finance and insurance, retail, food and agribusiness, medical technology and professional services. The metro hosts 17 Fortune 500 headquarters, one of the highest per-capita concentrations in the country: Target, UnitedHealth Group, U.S. Bancorp, 3M, Best Buy, General Mills, Ecolab, Ameriprise Financial, Land O'Lakes and C.H. Robinson among them. That breadth insulates hotel demand from single-industry shocks and supports a large, year-round business transient base. Minneapolis-St. Paul International Airport (MSP), a major Delta hub with more than 35 million passengers a year, adds connecting and origin-destination demand.
| Metric | Value | Notes |
|---|---|---|
| Metro population | ~3.7 million | 16th-largest U.S. metro; Upper Midwest leader |
| Median household income | ~$92,000 | Well above the U.S. median |
| Fortune 500 headquarters | 17 | Among the top per-capita concentrations nationally |
| MSP airport passengers | 35M+ a year | Major Delta hub; 3.6M international |
| Segment inventory | 28,806 rooms | 240 midscale-to-upscale hotels |
| Segment RevPAR, 12 months | $74.23 | +3.0% YoY |
Target is the region's largest private employer, followed by the big integrated health systems (M Health Fairview, Allina Health and HealthPartners) and UnitedHealth Group's Optum operations in Minnetonka. Several of the largest corporate employers cut headcount over the past year (Target, UnitedHealth and 3M all reduced total employment), a demand risk worth watching even though the overall base stays deep.
New supply
The segment is in an unusually supply-disciplined phase. No rooms are under construction anywhere in it, and only one hotel (98 rooms) opened in the last twelve months. The forward pipeline is nine proposed or final-planning projects, about 1,047 rooms: just 3.6% of existing inventory and weighted toward suburban select service.
Under construction
No midscale or upscale hotels are under construction in the Twin Cities. For existing owners that is a meaningful positive: no new competing rooms will enter the segment on a committed, near-term basis.
Final planning
Three projects totaling 380 rooms have reached final planning, in the affluent southwest suburbs and at the western edge of the metro: the 145-room Residence Inn by Marriott Eden Prairie, the 140-room independent Eden Prairie Center Hotel, and the 95-room TownePlace Suites by Marriott in Hudson, on the Wisconsin side of the metro.
Proposed
Six more projects totaling 667 rooms are proposed: the 165-room 20 Washington Avenue boutique conversion in downtown Minneapolis (a repositioning of the Yamasaki-designed Northwestern National Life building), a 125-room Fairfield Inn and a 114-room TownePlace Suites in Edina, a 90-room Fairfield Inn in Lake Elmo, an independent 90-room hotel in Cottage Grove, and an 83-room Home2 Suites by Hilton in Hudson. Marriott select-service flags dominate the proposed set.
| Total pipeline | ~1,047 rooms in 9 projects |
|---|---|
| Pipeline as a share of inventory | ~3.6% |
| Under construction | 0 rooms |
| Concentration | Suburban Marriott select service (Edina, Eden Prairie); one downtown boutique conversion |
Demand drivers
Twin Cities demand is broad and less seasonal than most Upper Midwest markets, thanks to its corporate depth and year-round event calendar. Business transient demand from the Fortune 500 base is the largest contributor, with a strong leisure engine centered on the Mall of America, a large group and convention segment, and airport volume from MSP.
Corporate and business transient
With 17 Fortune 500 headquarters and thousands of mid-market firms, corporate travel is the backbone of the segment. Suburban corporate campuses (Medtronic, UnitedHealth/Optum and others across Minnetonka, Plymouth and Eden Prairie) drive strong weekday select-service occupancy in the ring suburbs, while downtown Minneapolis and St. Paul draw headquarters and professional-services travel.
Leisure and tourism
The Mall of America in Bloomington, the largest shopping and entertainment complex in the U.S. with more than 40 million visitors a year, is a demand generator without peer in the region and supports a dense cluster of hotels near the airport and the mall. A packed 2026 calendar at the mall (Panda Fest, the Oddities and Curiosities Expo, Totally Rad Vintage Fest and the Royal Canadian Circus) reinforces year-round leisure compression, and long-discussed projects such as the Mystery Cove indoor waterpark could add materially to leisure demand if built.
Group, convention and events
The Minneapolis Convention Center and St. Paul's RiverCentre anchor group demand, and a February 2026 destination master plan calls for modernizing the convention center. U.S. Bank Stadium keeps a very high-impact calendar, including SummerSlam (Aug 1-2, 2026) and major stadium concerts, while the confirmed 2026 World Junior Hockey Championship and Special Olympics USA Games should bring multi-week compression downtown and in Bloomington.
Airport and healthcare
MSP's Delta hub, with record international traffic in 2025 (3.6 million passengers and 35 international destinations), feeds a large airport-area hotel cluster. Healthcare demand from M Health Fairview, Allina, HealthPartners and Medtronic, plus the Mayo Clinic in nearby Rochester, adds a steady, recession-resistant layer of patient, family and traveling-clinician stays.
| Project | Status | Impact | Notes |
|---|---|---|---|
| U.S. Bank Stadium 2026 calendar | Ongoing | Very high | SummerSlam, major concerts; $2.77B cumulative impact |
| Mall of America expansion | Planning | High | New atrium, food court, 50-75 retail tenants |
| MSP Terminal 2 North expansion | Under construction | High | $263M gate and concession expansion through 2027 |
| World Junior Hockey and Special Olympics | Confirmed | High | Multi-week downtown and Bloomington compression |
| The MIX innovation campus | Planning | High | Mortenson entitlements; groundbreaking 2026 near the U of M |
| Bloomington semiconductor expansion | Under construction | High | $525M multi-phase facility expansion |
| Highland Bridge (Ford site) | Under construction | Medium | $1B+ mixed-use; next phases in 2026 |
| Convention center modernization | Planning | High | February 2026 destination master plan |
Performance
Every figure here is from CoStar for the 12 months ending May 2026 (report generated July 2026). Occupancy, ADR and RevPAR are measured on CoStar's 29,710-room reporting pool, slightly different from the segment's 28,806-room inventory because the pool includes reporting hotels just outside the strict inventory count.
| Midscale to upscale | 3 months | Year to date | 12 months | Prior 12 months |
|---|---|---|---|---|
| Occupancy | 58.0% | 55.7% | 60.1% | 58.5% |
| ADR | $122.28 | $120.45 | $123.60 | $123.24 |
| RevPAR | $70.92 | $67.12 | $74.23 | $72.07 |
| Occupancy | Typical range 47.3% - 67.2% (average 57.2%); today's 60.1% is within the range and above the average, with room to run toward the pre-COVID ceiling |
|---|---|
| ADR | Typical range $100.91 - $123.81 (average $112.37); today's $123.60 is at the top of the range, near the 10-year high, with little pricing headroom |
| RevPAR | Typical range $50.20 - $79.17 (average $65.22); today's $74.23 is in the upper part of the range, well above average |
| Market sale price per room | $95.2K vs. $92.3K the prior period (+3.1%); CoStar's snapshot shows $96.3K |
| Segment cap rate | 10.9% |
Values read from the chart; 2026 is CoStar's exact trailing 12-month figure and years before 2021 are estimated from CoStar's 10-year ranges.
Source: CoStar, July 2026
| Occupancy | ADR | RevPAR | |
|---|---|---|---|
| 2016 | 63.0% | $105 | $66 |
| 2017 | 64.5% | $108 | $70 |
| 2018 | 66.0% | $111 | $73 |
| 2019 | 67.0% | $113 | $76 |
| 2020 | 32.0% | $85 | $27 |
| 2021 | 47.0% | $100 | $47 |
| 2022 | 55.0% | $112 | $62 |
| 2023 | 57.0% | $118 | $67 |
| 2024 | 58.0% | $121 | $70 |
| 2025 | 58.5% | $123 | $72 |
| 2026 | 60.1% | $124 | $74 |
Seasonality is the market's most predictable feature. The deep winter trough, visible in year-to-date occupancy of 55.7% held down by the slow January-February season, gives way to strong summer compression, with peak occupancy well into the 70s. That is why the trailing 12-month figure (60.1%), not the year-to-date one, is the right measure of the market's true operating level.
Twin Cities vs. Chicago and Milwaukee
Against its two most relevant regional peers in the same segment, the Twin Cities sits between them. Chicago's far larger and more urban midscale-to-upscale segment earns much higher occupancy and rate (68.1% / $139.85 / $95.22), while Milwaukee runs a shade behind the Twin Cities (58.6% / $124.39 / $72.95). Scale, corporate depth and rate discipline make the Twin Cities the clear number-two hotel market in the region, behind Chicago.
| Market | Occupancy | ADR | RevPAR |
|---|---|---|---|
| Twin Cities, MN | 60.1% | $123.60 | $74.23 |
| Chicago, IL | 68.1% | $139.85 | $95.22 |
| Milwaukee, WI | 58.6% | $124.39 | $72.95 |
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Brands and franchise presence
This draws on CoStar's full property universe for the segment: all 240 open midscale and upscale hotels in the metro. By tier the market leans to upper midscale (104 hotels) and upscale (69), with a smaller midscale base (49) and 18 independents. It is a mature, brand-dominated market with the big franchise families deeply entrenched.
| Tier | Representative brands | Approx. hotels |
|---|---|---|
| Upscale | Courtyard, Residence Inn, Hilton Garden Inn, SpringHill Suites, DoubleTree, Hyatt Place, Aloft/AC | 69 |
| Upper midscale | Hampton, Holiday Inn Express, Home2 Suites, Fairfield Inn, Country Inn & Suites, Comfort | 104 |
| Midscale | AmericInn, Quality Inn, Baymont, Best Western, GrandStay | 49 |
| Independent | Unaffiliated and boutique hotels | 18 |
Marriott (52 hotels) and Hilton (50) together hold about 42% of the segment's hotels and the largest share of rooms; Hilton alone has about 7,200 rooms. Choice (35), Wyndham (30) and IHG (29) form a strong second tier, and the rest is split among Best Western, Extended Stay America, Hyatt and a long tail of smaller flags and independents. The dominance of Marriott and Hilton select service is the defining structural feature of this market.
| Parent | Hotels | Est. rooms | Share |
|---|---|---|---|
| Marriott International | 52 | 6,759 | 21.7% |
| Hilton Worldwide | 50 | 7,192 | 20.8% |
| Choice Hotels | 35 | 3,473 | 14.6% |
| Wyndham Hotels & Resorts | 30 | 2,710 | 12.5% |
| IHG Hotels & Resorts | 29 | 3,723 | 12.1% |
| Independent | 18 | 1,533 | 7.5% |
| Others (BWH, ESA, Hyatt, Drury, Sonesta and more) | 26 | ~2,900 | 10.8% |
Franchise gaps: where the white space is
Every major franchise family is here, so the useful white space is at the brand and product level: the lifestyle and soft-brand categories that cluster downtown and are thin in the affluent suburbs where select-service demand is strongest.
| Category | Best-fit brands | Why |
|---|---|---|
| Lifestyle and soft brand | Moxy, AC, Aloft, Tribute (Marriott); Canopy, Tempo, Motto (Hilton) | Concentrated downtown; missing from suburban lifestyle areas |
| Boutique and independent collections | Hotel Indigo, Vignette (IHG); Curio, Tapestry (Hilton) | Only 18 independents; conversion upside |
| Upper upscale extended stay | Element (Marriott); Homewood or Home2 (Hilton) in the suburbs | Corporate-campus demand underserved |
| Parent | Brands here | Notable brands not here |
|---|---|---|
| Marriott | Courtyard, Fairfield, Residence Inn, TownePlace, SpringHill | Moxy, AC, Aloft, Element, Tribute (in the suburbs) |
| Hilton | Hampton, Home2, Hilton Garden Inn, DoubleTree | Canopy, Tempo, Motto, Tapestry |
| IHG | Holiday Inn, Holiday Inn Express, Candlewood, Staybridge | Hotel Indigo, Vignette, atwell suites |
Risks and headwinds
ADR ceiling and rate fatigue
The clearest performance risk is that ADR is already pressed against the top of its 10-year range at $123.60, with only +0.3% rate growth on the year. RevPAR gains are being carried almost entirely by occupancy. If the occupancy recovery stalls, there is little rate cushion, and the market becomes more exposed to any softening in demand.
Downtown Minneapolis commercial softness
Downtown Minneapolis is still working through high office vacancy and a slower-than-average return of daily business travel, plus lingering concerns about safety. Suburban select service performs well, but the urban core remains the segment's softest area and a drag on the blended market.
Corporate employment contraction
Several of the metro's largest employers cut headcount over the past year, Target, UnitedHealth and 3M among them. Corporate transient is the largest demand segment, so sustained white-collar retrenchment across the Fortune 500 base would directly pressure weekday occupancy.
Seasonality and weather
The deep first-quarter trough (year-to-date occupancy of 55.7%) reflects harsh winters that squeeze first-quarter cash flow and raise weather risk. Owners must underwrite to a pronounced seasonal curve, not a flat annual average.
Capital markets and cap rates
At 10.9%, the segment cap rate is high, reflecting higher financing costs and investor caution around select-service hotels. Per-room pricing has firmed (+3.1% to $95.2K), but high rates and an 8.3-month average marketing time point to a market where well-priced, well-located hotels trade and stretched pricing does not.
| Risk | Severity | Likelihood | Horizon |
|---|---|---|---|
| ADR ceiling and rate fatigue | Medium | High | Near term |
| Downtown commercial softness | Medium | High | Near to medium term |
| Corporate employment contraction | High | Medium | Medium term |
| Winter seasonality and weather | Low | High | Recurring |
| High cap rates and financing | Medium | Medium | Near term |
Outlook and opportunities
Near term (6-12 months)
The base case is continued modest RevPAR growth led by occupancy. With no rooms under construction and only a thin proposed pipeline, existing owners face no meaningful new competition in the near term. Occupancy should keep grinding toward the low 60s as business travel recovers, while ADR likely holds roughly flat at the top of its historical range. A strong 2026 event calendar (U.S. Bank Stadium, World Junior Hockey, the Special Olympics USA Games and a full Mall of America slate) adds compression upside.
Medium term (1-3 years)
The medium term looks constructive for existing owners. Supply discipline, record MSP international traffic, convention center modernization plans and major demand-driving projects (the Mall of America expansion, The MIX innovation campus, the Bloomington semiconductor investment) all support a gradual return toward the pre-pandemic occupancy ceiling. The main swing factors are the health of the corporate employment base and the pace of downtown's recovery.
| Scenario, 12 months forward | Occupancy | ADR | RevPAR | Key assumption |
|---|---|---|---|---|
| Base | 61.0% | $124.50 | $75.95 | Steady transient recovery; flat rate |
| Upside | 63.0% | $127.00 | $80.01 | Strong events and a downtown rebound |
| Downside | 58.0% | $122.00 | $70.76 | Corporate layoffs deepen; demand softens |
Key opportunities
- A supply-constrained entry point. With no new construction and a pipeline of just 3.6% of inventory, existing, well-located select-service hotels should hold their pricing power: an attractive backdrop for acquisitions.
- Suburban value-add. The affluent southwest and western suburbs (Edina, Eden Prairie, Minnetonka, Maple Grove) combine strong corporate demand with limited new supply, ideal for value-add plays on 45-90 room midscale and upper midscale hotels.
- Lifestyle and soft-brand white space. Suburban lifestyle and soft-brand conversions (Moxy, AC, Tribute, Canopy, Tapestry) are largely unbuilt outside downtown, offering repositioning upside.
- Event-driven compression. The 2026 calendar creates predictable high-rate windows that well-run hotels can capture with disciplined revenue management.
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Key takeaways
- A recovery led by occupancy, not rate. 12-month RevPAR rose +3.0% to $74.23 on a +2.7% occupancy gain, while ADR was essentially flat at $123.60. The market is filling rooms, not raising rates.
- ADR is at its ceiling; occupancy has room to run. Rate sits at the top of its 10-year band while occupancy (60.1%) is still below its pre-COVID peak, so future RevPAR upside depends on continued occupancy recovery.
- Supply discipline is the owner's friend. No rooms under construction and a pipeline of just 3.6% of inventory set up a favorable competitive position for existing hotels.
- The number-two regional market behind Chicago. The Twin Cities out-earns Milwaukee and trails only Chicago in the regional midscale-to-upscale peer set, backed by unmatched corporate depth in the Upper Midwest.
- Watch the corporate base and downtown. Fortune 500 headcount cuts and downtown Minneapolis softness are the risks most able to derail the occupancy-led recovery.
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Sources and method. Performance figures (occupancy, ADR, RevPAR), inventory, pipeline and transaction data are from CoStar market reports for the Twin Cities, Chicago and Milwaukee midscale-to-upscale segments, for the 12 months ending May 2026, generated July 2026. The property universe and franchise breakdown come from the CoStar property export. Trend values before 2021 are estimated from CoStar's 10-year ranges. Demand-segment shares and top-employer headcounts are Marcus & Millichap and third-party estimates. Developments and demand drivers come from the Upper Midwest Development Tracker and public reporting. Chart values from the report's trend and monthly charts are read from the charts, as noted.
Prepared by Reed Gizinski, Hotel Data Tracking and Marcus & Millichap, for information only. It is not an appraisal or a valuation and is not investment advice.