As luxury hotel opens at Vikings training site, industry grapples with pandemic downturn

Nothing about the new hotel in Eagan is run of the mill.

The 14-story hotel, towers over Viking Lakes, a mixed-use development that’s anchored by the Minnesota Vikings headquarters and indoor and outdoor practice facilities.

The $140 million four-star hotel, which is under the luxury Omni Hotel & Resorts brand, has a design and theme that draw upon Nordic architectural traditions and culture.

Then, there’s the glaring reality that the full-service hotel is opening at a time when the hospitality industry remains beaten down by the coronavirus pandemic. Full-service hotels have been especially clobbered, with occupancy rates in the single digits.

Brent Glashan, general manager of the 320-room Omni Viking Lakes Hotel, said staff originally anticipated occupancy to be around 70 percent this fall. Now, they’re shooting for 20 to 25 percent, he said, and pricing the rooms accordingly.

“It’s going to take time,” Glashan said. “We’re not naïve about that. But it would’ve have been easy to say, ‘Forget it. Let’s wait a year to open.’ But I don’t think anybody involved, including our partners, wanted to do that. We just want to get open and be something positive and exciting.”

MILESTONE AT FORMER NORTHWEST AIRLINES CAMPUS

The ownership group is a local one made up of MV Eagan Ventures, a real estate arm of Vikings owners Zygi, Mark and Leonard Wilf; St. Paul-based Ecolab; Ma Mi Ma Real Estate Holdings, run by Mark, Mitch and Marty Davis of Cambria, a Minnesota-based countertop company; and Viking Lakes Hotel Physician Partners, which is made up of a private group of Twin Cities Orthopedics physicians.

The hotel’s opening marks a major milestone for MV Eagan Ventures’ plan for their nearly 200 acres south of Interstate 494 and east of Dodd Road. The Viking Lakes development, at the former Northwest Airlines corporate campus, was unveiled in March 2018 with Twin Cities Orthopedics Performance Center, the 277,000-square-foot practice facility and team headquarters.

Mike Hubnik, director of sales and marketing for Omni Viking Lakes Hotel, said the hotel will begin housing Vikings players and staff starting with this season’s final five home games. Then, it’s on to hosting its first training camp next summer.

For players, the hotel will be a far cry from staying in the dorm rooms at Minnesota State Mankato, where the team held training camp for 52 years before moving to Eagan.

Last week, Hubnik gave media tours of the spacious rooms and suites and two-story hospitality lounges that are nearly 1,500-square feet with floor-to-ceiling windows and decked out with couches, TVs, a fireplace and kitchen for players, team staff, groups and meeting planners to use.

“We’re so excited for training camp, because we were so bummed out that nobody could show up this year,” he said. “We wouldn’t have been open anyway, but next year I’m hoping we can knock it out of the park.”

EAGAN BECOMING HOTEL HOT SPOT

Eagan, buoyed by the metro area’s only retail outlet mall and the Vikings’ move from its headquarters in Eden Prairie and camp in Mankato, is fast becoming a hot spot for hotel development.

Omni Viking Lakes Hotel represents the fourth hotel built in Eagan since 2016; the east-metro suburb hadn’t had a new one since 2002. With a Fairfield Inn & Suites opening early next year in the shadows of the outlet mall and next to the Home2 Suites by Hilton, Eagan will offer 2,317 rooms collectively across 20 properties.

But the pandemic has dropped occupancy rates by 26 percent. Last year, occupancy at the 18 hotels hovered around 67 percent, according to a marketplace analysis by Smith Travel Research. This year it has fallen to 41 percent.

“Obviously, just like everyone else, we’re having a less than stellar year,” said Brent Cory, president and CEO of the Eagan Convention & Visitors Bureau.

It’s not necessarily Omni’s luxury rooms that gets Cory looking forward to a rosy future — it’s the more than 35,000 square feet of indoor and outdoor meeting and pre-function space, which Cory said will enable his staff to pitch larger conferences, conventions, special events, sports tournaments and eSports opportunities.

“That is definitely going to help take things to the next level with conventions and higher-level meetings,” he said. “We just don’t have the capabilities to host anything of that nature right now. So, needless to say, we’re very excited about the opportunities that are on the horizon.”

In addition, Cory said, those opportunities will help fill the other Eagan hotels while generating new business for restaurants and attractions.

Then there’s training camp, which was shut down to fans this past summer because of the pandemic but in 2019 generated an estimated $5.7 million economic impact for Eagan.

“I truly believe all ships are going to rise,” Cory said. “We’re banking on the fact, in addition to training camp, we’re going to get so many opportunities that are going to take advantage of TCO Stadium and some other Vikings amenities that we just never would have gotten.”

PANDEMIC CLOBBERS HOTEL INDUSTRY

The pandemic has turned the hotel market upside down, said Ted Leines, founder of Eden Prairie-based hotel brokerage and consultancy Leines Hotel Advisors.

As a general rule, in economic downturns, white-collar business travelers typically still provide a fair amount of demand and the leisure and economy-scale hotels get clobbered, he said. This time around, with no travel and meetings, the hotels that serve white-collar workers are the ones most impacted.

Data from CBRE and Kalibri Labs shows the gloom hotels are experiencing and points to a slow rebound.

In the Twin Cities market, CBRE predicts revenue per available room will fall 65 percent to $29 through the second half of 2020, while bouncing back to $45 in 2021, an increase of 55 percent.

Occupancy, which was 68 percent in 2019, is expected to finish at 32 percent in 2020, jumping to 47 percent in 2021, 58 percent in 2022 and 66 percent in 2023.

But recovery will vary by chain-scale, according to the forecast. Occupied room nights for hotels in the upper- to mid-scale segment are projected to return to 2019 levels in 2022, while luxury and upper-upscale demand will lag until 2024.

Leines predicts a number of hotels are not going to make it, although he adds the length of the pandemic and what happens with a vaccine will be determining factors. Although the federal relief package bought time for hotels and their lenders, “they’re no longer going to hold their breath,” he said.

“We’re starting to hear feedback from lenders and from hotel owners that are saying, ‘I have to get out from whatever,'” Leines said. “So, yes, it’s going to be very rough and there’s going to be a lot of blood in the water through 2021. I think this is going to go on for a while.”

HOTEL HAS NORDIC FEEL

At the Omni Viking Lakes Hotel, the architecture and interior design are the work of Minneapolis-based ESG Architecture & Design.

“It’s very much embedded in that Scandinavian, North Country feel,” said Hubnik, the hotel’s director of sales and marketing.

And the names draw back to Viking lore. They include the 7,500-square-foot ballroom, Valhalla; Kyndred Hearth, a restaurant with a menu created by James Beard award-winning local chef Ann Kim; a second-floor bar and lounge, Ember & Ice; and a lobby bar named Keras, which Hubnik explains is an ancient Greek term for a drinking horn.

“A signature drink will be a mock glass that looks like a horn,” Hubnik said.

The hotel’s lobby has a retail outlet, an espresso bar and a “grab-and-go” market with baked goods made on site. The second floor includes an expansive fitness center and a full-service spa with multiple treatment rooms, a sauna and steam room.

Glashan, the general manager, said that with business travel and meetings on hold, it will be especially essential to target and cater to regional clientele — such as families looking for staycations and even locals. Eagan residents will get a discounted rate, he said.

As for room rates, they start at $600 a night for a presidential suite and range between $139 and $189 for a standard king, with the high end on a Saturday before a Vikings game.

“For this market, for a brand-new product, I think we are pricing ourselves for what we believe we’re worth,” Hubnik said, “but also being mindful of the times.”

Source: TwinCities.com