Hotels are making a comeback on Lake Minnetonka

The grand hotels that once dotted Lake Minnetonka are making a mini-comeback.

For more than 15 years, several developers have dreamed of resurrecting the era of hotels on one of Minnesota's most famous and busiest lakes. Now, two highly anticipated boutique hotels in Excelsior and Wayzata are slated to finally become a reality this summer.

"Lake Minnetonka was all about hotels. Now we're going to be the first back," said Steve Bohl, the developer of Wayzata's hotel. "It just brings a legacy back in the market."

Starting in the 1880s, hotels lined the lake, drawing wealthy residents to escape the heat. At its peak, about 40 hotels were on the lake, from the Hotel St. Louis in Deephaven to James J. Hill's Hotel Lafayette in Minnetonka Beach. But by the early 1900s, many of the hotels shut down, either from slowed business or fires; the last was torn down in 1964.

Now, the closest hotels are in neighboring suburbs far from the lake. But reviving hotels on Lake Minnetonka isn't just a throwback to another era; it's a way for Excelsior and Wayzata to drum up tourism and cash, paying for city projects such as a parking ramp and park renovations.

Still, it hasn't been an easy sell.

Over the years, plans to build a hotel near the lake fizzled under financial constraints. In Mound, a city study a couple of years ago recommended the city not pursue a hotel, saying it wouldn't work economically. And in Excelsior, some residents have questioned whether a hotel could stay afloat in slow winter months on the lake.

"It's interesting none of the Lake Minnetonka cities have a hotel on Lake Minnetonka when there used to be so many of them," Excelsior City Manager Kristi Luger said. "I've learned hotels are just a whole different breed of commercial entity. They maybe add a whole level of complexity."

In Mound, the city has shifted to restaurants, retail and entertainment as a way to draw visitors instead of a hotel.

"It was a whole different time [in the 1880s]; people were staying there and vacationing," Mayor Mark Wegscheid said. "Now, we don't have that same kind of draw."

That's in part why a hotel in Excelsior has been controversial over the years. In the early 1990s, a proposal faced questions over finances and whether a hotel could stay open outside popular summer months, Luger said.

Now, developer Charlie James, who's owned a grassy lot about 200 feet from the shore since 1976, has faced similar questions over the years as he's tried to build a landmark hotel. The city's Heritage Preservation Commission voted to block the project for its size and scale, but the City Council overturned the decision in 2013, saying it would boost tourism and revenue.

He's reworked plans when bids came in over budget and a hospitality company backed out. And since the designs got approved, the city's final approval has been delayed several times over needed figures. Now, the City Council has a June 1 deadline for the final application.

"All that's left to get this in the ground is to get the finances straightened out," architect Neil Weber said.

He added that he plans to meet with the city to see if there are other ways the hotel can be built without compromising the designs since a recent valuation of the land came in too low, making the cost to build the hotel too high.

"We think a project like this, to be successful, needs to be architecturally significant," he said.

The 58-room hotel would have a ballroom, restaurant and spa all with detailing reminiscent of the old hotels. Unlike Wayzata's hotel, which would be some 300 yards from the lakeshore, Excelsior's would be the first actually on the lake, Weber said.

"It's a huge economic boost for the city," he said, adding he expects a final decision to be made this summer.

A lodging tax could fund city street beautification projects and tax-increment financing could fund projects to improve the city's port and the Commons park.

In Wayzata, a hotel hasn't stirred the same conflict in the community, but it is part of the major redevelopment project, Promenade of Wayzata, which was controversial. The project, which demolished the old Bay Center Mall, includes senior housing, retail, offices and condos — the city's largest redevelopment project.

The Landing hotel, which is slated to go to the City Council for final approval June 2, is going in on the fifth, final block of the 14.5-acre project. The 89-room hotel will also have a restaurant, spa and retail. If approved, construction is slated to start in August, with the hotel opening by early 2017.

The city says a 3 percent lodging tax would drum up $90,000 a year that the city could use to launch a tourism website and boost marketing like other metro cities such as Stillwater, Edina and Bloomington have. Tax-increment financing from the entire project could help fund the city's first public parking ramp.

Bohl admits the hotel may not have been successful before the Promenade of Wayzata project, adding retail and housing. "It really created that capacity … the need finally met the opportunity," he said.

The hotel is estimated to draw 22,000 to 25,000 visitors each year, and Bohl already has gotten inquiries for weddings and meetings.

"Lake Minnetonka's history from the very beginning has been the tourism industry," said Scott McGinnis, a Lake Minnetonka historian. "But there's a reason those hotels aren't here. … The tourism industry has changed. I don't know if it would work, but it would be neat to see."

Kelly Smith • 612-673-4141