New hotels spring up near Mayo Clinic in Rochester

Developers are building and planning a slew of hotels in Rochester — eager to provide pillows for the patients and their families that Mayo Clinic envisions with its expansion.

"We've got developers coming out of the woodwork," said Mayor Ardell Brede. "Not only locally, but statewide, nationally and even internationally."

The building boom will add 979 hotel rooms to Rochester's current market of 5,400 by the end of 2015, said Brad Jones, executive director of the city's Convention and Visitors Bureau. He counts seven new hotels that are either under construction or going through the permit process.

"That's what we're looking at in terms of short-term growth," Jones said. "I've heard of several other projects that are on the drawing board."

Some will add high-end, full-service options to a market that historically has focused on limited-service hotels, Jones said. Think trendy restaurants, posh lounges and tech-equipped meeting spaces.

That's key to attract the patients targeted for the so-called Destination Medical Center, officials say, and to help Rochester compete with bigger cities with comparable medical centers, such as Baltimore, home to Johns Hopkins. Officials expect that the two-decade, multibillion project — paid for with a mix of public and private funds — will make over downtown Rochester as Mayo upgrades and expands its campus.

Homewood Suites is putting up a six-story, 108-room hotel across from Mayo Clinic's St. Marys Campus. An international investment company bought a downtown bank that it plans to replace with a high-end hotel. Rochester-based Titan Development and Investments is designing a $50 to $80 million, 25-story downtown development called Broadway at Center that will include a retail, restaurants, apartments and a 187-room, four-star hotel.

"Anybody visiting the clinic, just 10 percent of their time is with their doctor," said John Beltz, vice president at Titan. "The rest of the time they're in the community.

"We have to provide the class of retail, entertainment and accommodation that they expect."

Titan is also planning a mixed-use complex downtown with Class A office space, a restaurant and a rooftop lounge. On Friday, the company announced that project would be called H3: The Plaza on Historic 3rd and would reach six stories.

Initially, Titan expected to build a three-story building. But demand for professional space, partly because of the property's proximity to Mayo, was huge, Beltz said. "So we scaled the building," he said, which is 100 percent pre-leased. "The interest is there now, but the vision has always been here."

About 62.3 percent of Rochester's hotel rooms were full in 2013 — an occupancy rate slightly below other cities in the state, including Minneapolis, Bloomington and Duluth, according to a recent Hospitality Minnesota report. But Rochester's rate grew 7.8 percent from 2012 to 2013 — the biggest jump in the state.

Developers are buying up properties in the downtown district that qualifies for infrastructure upgrades paid for through taxpayer dollars. But several hotels are popping up in the city's outer reaches, too, Brede said. Meanwhile, some long-standing hotels are renovating their rooms, restaurants and lobbies.

"In one sense, even some of the existing hotels are being upgraded to a level that's at or near five-star, as well," Brede said. "It's exciting."

Jenna Ross • 612-673-7168 Twitter: @ByJenna