Hotel Market in Michigan and Metro Detroit Shows Occupancy and Daily Room Rate Growth

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Michigan and metro Detroit’s hotel markets saw gains in occupancy and average daily rates in 2016 over the previous year, even as more rooms were added, according to an annual lodging report released today by Hospitality Advisors Inc. in Ann Arbor.

For southeast Michigan, which includes Ann Arbor, average occupancy last year was 58.8 percent, up from 58.0 percent in 2015, while average daily rates climbed to $114 as compared to $111 in 2015. Across the state, last year’s occupancy level was 59.4 percent, up from 56.9 percent in 2015.

“Year-end 2016 for the state continued to show increases in the majority markets as Michigan continues to strengthen economically,” says Chuck Skelton, president of Hospitality Advisors, which conducted its annual survey with the Michigan Hotel, Motel, and Resort Association.

“Commercially-oriented markets benefited from continued improvement in corporate business while leisure/tourism continued to benefit from summer weather which was more summer-like than recent years.  According to our survey, demand in southeast Michigan grew by approximately 1.5 percent overall, while average daily rates grew by 2.2 percent. Additionally, statewide, demand grew by 4.4 percent and average rates grew approximately 5.4 percent overall.”

Five markets in the state had occupancy levels above 60 percent, including Ann Arbor (66.9%), Detroit (62.4%), Downriver (60.0%), Grand Rapids/Holland (64.4%), and Lansing/Jackson (63.5%). Northern Michigan, meanwhile, was flat at 57.4 percent occupancy, according to the survey.

For downtown Detroit, Skelton says the “market is seeing an influx of new boutique and independent hotels, with many being retrofitted into existing, unique buildings. This brings a fresh addition to the hotel supply, and the night life and eating spots that are popping up are giving downtown more character and life.

“The Cobo Convention Center, in its renovated version, is getting rave reviews and will attract business that it previously could never have dreamed of attracting. Coupled with the sports teams, bars, restaurant activity, and newly arrived businesses and residents, Detroit is reclaiming some of its glory from the 1940s and 1950s when it was truly a world class city and an engine for the Midwest.”

Downtown Detroit recently saw the opening of the 100-room Foundation Hotel, located across Washington Blvd. from Cobo Center. In November, the 106-room Siren Hotel is slated to open in the former Wurlitzer Building on Broadway Street, near the Detroit Opera House.

One other recent major hotel opening was the Best Western Premier Hotel in Southfield, the first of its kind in Michigan, which has completed its first phase of construction. The $12-million renovation of the 16-story circular tower — originally a Holiday Inn when it opened in the 1980s — was undertaken by New Zealand-based Kiwi Hospitality Detroit, which acquired the property in 2015.

The hotel offers 206 rooms, the Nomad Grill operated by Detroit-based, The Epicurean Group, a business center, a fitness center, 20,000 square feet of conference and meeting space, a spa and sauna, and free parking and wireless internet services. The hotel is located at 26555 Telegraph Rd., just south of I-696.

The next phase of construction includes the renovation of an adjoining building at the west end of the 7.3-acre site into a 54-suite Best Western Executive Residency, which is scheduled to open by the end of the year. It will be followed by the construction of a five-story, 100-room La Quinta Inns and Suites, which is scheduled to open in 2019.

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