Why Minneapolis Hilton's foreclosure may be more about the owners past than downtown's future
MINNEAPOLIS -- Is the Twin Cities' largest hotel on your Christmas wish list? It can be, if you have the cash.
The 826-room Hilton Minneapolis hotel will be sold to the highest cash bidder at a public auction next month after a Hennepin County judge ordered the property into foreclosure.
The property's owners, Chicago-based Walton Street Capital and California-based Haberhill, owe more than $200 million, according to court documents.
The Hilton stayed open throughout the COVID-19 pandemic, though court filings show the property owners missed their first mortgage payment on a $180,000,000 loan in April 2020.
Wells Fargo, the loan's underwriter, as well as a separate servicing company, filed suit in October 2020.
Despite the financial uncertainty, the hotel continues to operate as a major feeder to Minneapolis' downtown economic ecosystem.
"I think it's very typical and it happens all the time in our industry," said Liz Rammer, president and CEO of Hospitality Minnesota. "[Hotels] change hands overnight, sometimes very publicly, sometimes very quietly. But this is one of those times when, because it's the largest hotel property of its kind in the state, it seems like it's a bigger deal."
The auction will take place on Jan. 13 at the Hennepin County Sheriff's Office. Hilton's website continues to offer bookings as far ahead as August 2023.
"Commercial real estate, it's a complex ownership model oftentimes," Rammer said. "Nothing has been announced in terms of changes at the property level, and it's business as usual, as far as we know."
Rammer said it is possible, even if unlikely, for the "flag" of a hotel to change from one chain to another, but that shouldn't put employees or operations at risk. She pointed to the recent transition of the longtime Radisson Hotel on 7th Street near Dayton's to a Royal Sonesta.
"When I first went there, there was a woman who greeted me who had been there for 27 years. So long-time staff members are still in place, but a different brand."
Downtown hotels, events enjoying resurgence
While the Hilton's current owners may be in financial distress, downtown hotels and event centers are enjoying a resurgence of activity since the pandemic.
"These hotels aren't gonna be shuttered," said Steve Cramer, president of the Downtown Minneapolis Council. "They're gonna continue to operate at a high level and increasing level. And somebody's gonna get a good deal out of this kind of financial disruption that's occurred because of COVID."
According to the Minneapolis Convention & Visitors Association, the city will have hosted 31 "large events" by the end of 2022. A large event is defined as an event that draws at least 751 peak room nights or more. That's well on-par with the pre-COVID average of 33 per year, and a huge increase from the five events in 2020 and nine in 2021.
In 2023, there are 25 confirmed large events and nine tentatively booked that could be finalized soon.
When it comes to hotel nights, 2022 is projected to have 200,302 room nights booked from large events - almost double that of 2021. Next year's projections, again, are expected to eclipse what was the pre-COVID average.
"Occupancy is trending in the right direction," Cramer said. "It's gonna continue with events and conventions. Hotels will continue to operate at a high level."
A spokesperson for Hilton Minneapolis gave this statement Wednesday to WCCO:
Hilton Minneapolis is operational, and has been open since joining Hilton's portfolio in 1992. Hilton continues to operate the property under its management agreement. Following a series of guest enhancements made throughout the year, we remain fully committed to welcoming guests and hosting events with the quality service and hospitality experience they have come to enjoy.
