Plan for 1,000-room downtown Mpls. hotel surfaces again

Every few years, talk surfaces about building a giant hotel next to the Minneapolis Convention Center -- and this year is no exception.

Hennepin County has hired a local firm, Nelson, Tietz & Hoye Inc., to study the feasibility of building a 1,000-room hotel on the 2.6-acre site that is now home to the Century Plaza office building at 330 S. 12th St. If built, the hotel would usurp the nearby Hilton Minneapolis, which has 821 rooms, as the largest hotel in the downtown core.

The county-owned Century Plaza building, where about 600 people work in various human services functions, is across from the Convention Center and has long been eyed as a possible site for a hotel. Previous studies have estimated that such a project's cost could top $300 million.

"The study will help us determine the best use of the property, and offer us some guidance for the site," said Hennepin County Administrator Richard Johnson.

For the time being, the study will solely assess redeveloping the 2.6-acre parcel into a hotel. "That, at least on the face of it, appears to be the best use of it," Johnson said. The county allocated $48,000 for the study.

"It appears to be an excellent location for a convention hotel, if there's a demand for it," said Russ Nelson, principal and president of Minneapolis-based Nelson, Tietz & Hoye.

Can it be financed?

But Kirby Payne, a consultant with Rhode Island-based HVS Hotel Management, said an uncertain economy still makes it difficult for developers to line up financing for new hotel projects. He also noted that major hotel brands with the financial wherewithal to participate in such a large project -- including Hyatt, Hilton, Marriott and Radisson -- already are well represented in the downtown market. "It wouldn't be an easy deal to do," he said.

Two brands that are not represented are Intercontinental and Omni.

Preliminary information from the Hennepin County study should be available by the end of the year, with a final report coming next summer. The county is in the midst of relocating the human services functions to various facilities in communities across the Twin Cities, and the plan is to vacate the building by mid- to late 2014.

Nelson, Tietz & Hoye conducted a similar study in 2007, which followed a separate study in 2004.

Rental income has been flat at the Convention Center itself, due to a nationwide glut of convention space. However, revenue for the center rose to $83 million in 2011 from $70 million in 2009.

About 26.8 million people visited the Twin Cities last year, according to an industry study by D.K. Shifflet Associates, behind Chicago at 42.4 million, but ahead of St. Louis, Indianapolis, Kansas City and Denver, which are considered peer competition for conventions.

The Convention Center has recently undergone a $10 million face-lift that included a new roof, heating and cooling systems, lighting and bathrooms.

Staff writer Neal St. Anthony contributed to this report. Janet Moore • 612-673-7752