IEDC Agenda - 09/05/2023AGENDA
INDUSTRIAL & ECONOMIC DEVELOPMENT COMMITTEE (IEDC)
Tuesday, September 5, 2023
7:00 a.m. at Monticello Community Center
Members: Chairperson Sarah Kortmansky, Vice Chairperson Luke Dahlheimer, Tracy Hinz, Liz Calpas,
Eric Olson, Joni Pawelk, Darek Vetsch, Kevin Steffensmeier, Wayne Elam, Andrew
Tapper, Randy Skarphol, Rob Stark, Tony Velishek, Jared Merchant, Corry Ritter, Liz
Kokesh
Liaisons: Rachel Leonard, Angela Schumann, Jim Thares, Marcy Anderson, Jolene Foss, Dave
Tombers, Tim Zipoy
1. General Business
A. Call to Order
B. August 1, 2023, meeting minutes
C. Consideration of Adding Items to the Agenda
2. Regular Agenda
A. Table Topic — 2023 Hotel & Hospitality Study Update Preview —Jim Thares and Hayden
Stensgard
3. Liaison Updates
A. Economic Development
• Business Roundtable Event Update — Steering Committee Members
• Manufacturer's Appreciation Breakfast Event Update — City Staff
• Prospects and Projects Update
• Planning Commission
B. City Council Update
C. Wright County Economic Development Partnership (WCEDP) Update
D. Chamber of Commerce Update
4. Other Business
A. Next Meeting Reminder— Date: September 26, 2023
5. Adjournment (8:00 a.m.)
INDUSTRIAL & ECONOMIC DEVELOPMENT COMMITTEE (IEDC)
DRAFT MINUTES
Tuesday, August 1, 2023
7:00 a.m. at Monticello Community Center
Members Present: Chairperson Sarah Kortmansky, Vice Chairperson Luke Dahlheimer, Liz
Calpas, Wayne Elam, Tracy Hinz, Joni Pawelk, Randy Skarphol, Rob Stark,
Andrew Tapper, Darek Vetsch, Tony Velishek, Jared Merchant
Members Absent: Kevin Steffensmeier, Corey Ritter
Liaisons Present: Rachel Leonard, Jim Thares, Marcy Anderson, Jolene Foss, Tim
Zipoy
1. Call to Order
Chairperson Sarah Kortmansky called the regular meeting of the Monticello IEDC to
order at 7:01 a.m.
Approve Minutes:
LIZ CALPAS MOVED TO APPROVE THE JUNE 6, 2023, REGULAR MEETING MINUTES.
RANDY SKARPHOL SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY.
Consideration of Adding Items to the Agenda
An Update from the county commissioner, Vetsch was added.
2. Regular Agenda
A. Consideration of A000intine Liz Kokesh as a member of the IEDC
MOVED TO ACCEPT THE APPOINTMENT OF LIZ KOKESH AS A MEMBER OF THE
IEDC. JONI PAWELK SECONDED THE MOTION. MOTION CARRIED
UNANIMOUSLY.
Jim Thares reminded the Committee the appointment will be presented to the
City Council to be approved.
B. Table Topic — 2023 Legislative Session Authorized Economic Development
Funding — MN -DEED Business Assistance Programs
Jim Thares, Economic Development Manager, gave a condensed overview of
new funding assistance programs administered by MN -DEED authorized by the
Minnesota legislature during the 2023 legislative session.
Deed received $1.8 million this year. In the past 7 years, a cumulative amount of
$1.2 million has been provided to MN -DEED. A total of $800 million is available
in the general fund for jobs, taxes, and cannabis, $443 million for capital
investment which includes broadband, $50 million for a closing fund which
allows DEED and the Governor with the ability to put forward proposals to
competitively fund development projects. This is the first time Minnesota has
had this type of funding tool which is similar to that of many other states. An
additional $400 million was allocated to the Minnesota Forward Fund including
$50 million for matching funding by Federal programs; $100 million to various
DOD programs, as well as match dollars for bio industrial proposals and $250 for
CHIPS matching funds.
In addition, the two key mainstay programs, MIF and JCF, were fully funded at
$20 million ($10 million to each program). These are the two programs that the
City of Monticello has been to tap into for several recent projects over the past
few years (Bondhus expansion, UMC expansion and Wiha Tools expansion). The
Jobs bill provides for a one-time investment of $10 million, $7 million for the
McKnight foundation, $6 million for Canstartup loans — including Cannabis
business, $2 million for the Emerging Entrepreneur Fund, and $3 million for
MCCD. MIF & JCF job and wage thresholds were also reduced making the
funding more functional and accessible.
The Jobs bill provides a one-time investment of $10 million for an Expanding
Opportunity Fund with $7 million for the McKnight Foundations for their
revolving loan funds, $6 million of Canstartuploans —financing for Cannabis
businesses, $2 million for the Emerging Entrepreneur Fund, $3 million for
Community Wealth Building Program (MCCD),
The Tax bill funded the Angel Tax Credit at $10 million in FY24-25 but not
ongoing and the Film Board Tax Credit was funded at $18.6 million in FY24-25
and $25.7 million in FY26-27.
The City of Monticello received $500,000 in 2021 from the Community Energy
Transition (CET) Program which is for cities to transition away from reliance on
their power plants. The City is currently discussing a second application with the
new funding in the CET program.
The Jobs bill also provided $15 million in the FY24-25 biennium and $3 million in
the FY26-27 biennium to support childcare economic development in Greater
Minnesota. It also created an Office of Child Care and Community Partnerships at
the Department of Employment and Economic Development, funded at $1
million in each biennium, and provides $7 million to the McKnight Foundations
(Initiative Foundation) for their Child Care programming. A total of $1.5million
was authorized to support immigrant and refugee integration, reduce barriers to
employment, and improve connections between employers and jobseekers.
The Jobs bill also makes a one-time $10million investment to modernize the
digital tools that support workforce development initiatives across Minnesota.
The legislature changed the law to remove this limitation during summer breaks
to make these K-12 school workers eligible to collect UI benefits (bus drivers,
non -instructional staff).
Expectations on DEED staff as well as its partners and projects/initiatives being
funded for the various economic development opportunities are very high due
to the unprecedented level of funding, though it understood that it will take
DEED a bit to get better organized to begin disbursing the new funding.
Update From County Commissioner, Darek Vetsch
Commission Vetsch shared an update on a draft Wright County Cannabis
Moratorium. The Commissioners will be asked at the regular meeting on August
1, 2023, to schedule a Public Hearing on Tuesday, August 22, 2023, to present a
draft ordinance restricting the use of cannabis in public places and vehicles in
Wright County. This is a public health ordinance and would be enforced county
wide.
3. Reports
a. Economic Development
L IEDC Event Updates
1. Business Round Table
Jim Thares provided an update of the sub -committees' planning
efforts. The event is scheduled for September 14, 2023, from
3:00-5:00 p.m. The location is Nordic Brewery. This event is
informal with representatives from the Initiative Foundation,
MNDEED, WCEDP, and Mr. Thares as Economic Development
Manager will be there to answer questions and present Financial
Options for Small Businesses.
A "Save the Date" postcard and an email has been sent. Another
would be sent later in the month.
Mr. Thares is asking for assistance in getting the word out and is
asking for all IEDC members to consider attending if their
schedules allow.
2. Manufacturer's Appreciation Breakfast
An internal committee has met and are scheduling a caterer,
florist, and creating a "Save the Date" postcard.
i. 2"1 Quarter Building Permits
2nd quarter construction of new single homes dropped significantly
from 2nd quarter 2022, however, Commercial - Industrial New -
Remodel — Addition ytd has increased by over $2 million.
ii. Project Update
Mr. Thares presented updates on several projects.
• Block 52 Mixed Use Commercial -Residential Redevelopment —
Finish work is beginning on the interior of the building. The
project is moving relatively fast and the projected may be ready to
open in early 2024 as opposed to a previous projected date of
May 2024.
The Business Subsidy component of the Purchase and TIF
Development Contract requires 45 new FTE jobs to be created by
the development (by the new businesses that are located in the
building).
• Wiha Tools Warehouse Facility Development —The building walls
and roof have been completed. Plumbing and utility connects, and
floor preparations is currently under construction.
Wiha is committed to an additional 59 FTE new jobs over the next
5 years.
• Scooters Coffee Shop - Broke ground on May 25th
• Deephaven 3rd — West Metro Optomology will be relocating from
its long-time home at 504 Pine Street.
• Sunny Days Therapy — Construction of the Sunny Day's is in the
final phase.
• Headwaters Villa Twin homes —10 units are planned to be
completed by late July with balance of the 50 units would be
placed and finished throughout the remainder of 2023.
• Headwaters Apartments — The 102 -unit apartment building for
ages 55 + is expected to begin in the fall of 2023 and progress
through the entirety of 2024.
• Monticello Lakes Apartments — Is a 200 -unit apartment
development at the Pointes At Cedar (PAC) and is expected to
begin construction mid -summer.
• Take -5 car wash is scheduled to open this month.
• Another multi -family unit proposal is in concept stage.
• Additional commercial development is being proposed at various
sites.
iii. Prospects List
1. Mr. Thares highlighted the prospect list. During the past month five
hotel developers contacted the city regarding potential hotel
developments concepts. The 2020 Hotel Study results showed
Monticello needs hotel space of at least a hundred rooms.
2. One new prospect on the list Project Flower M&M —Conceptual
manufacturing
3. Continue to receive prospects from DEED for large projects.
iv. Plannine Commission
A. Mr. Thares reviewed the Planning Commission 08/01/2023 Agenda. Prior to the
meeting there is a special joint workshop City Council/Planning Commission, a
concept review of a mixed-use property. The regular meeting includes 3 Public
Hearings: a request of an amendment to the Haven Ridge 2nd Addition to the PUD
design standards, an amendment to the Zoning Ordinance related to commercial
animal kennels as a principal use, an amendment to the Zoning Ordinance approved
language within Ordinance No. 799 as related to R-1, Single -Family Residential
District
b. City Council
Rachel Leonard, City Administrator, highlighted a few items the council and staff
have been working on. A Downtown public street improvement project bid
opening has been approved, Budget Workshops are being held to give direction
to staff for the 2024 budget. A preliminary levy will be approved in September.
It should be noted that two active TIF Districts will be decertified with the taxes
from those properties being fully available to fund general government
functions.
c. Wright County Economic Development Partnership (WCEDP)
Jolene Foss, Wright County Economic Development Partnership Executive
Director, highlighted upcoming events:
• WCEDP 30th Anniversary—August 22, 4-7 p.m. —Buffalo Rodeo
Grounds
• WCEDP Golf Open — September 13th, 10:00 a.m. Albion Ridge
• A follow up to a May 2023 BRE visit with Cargill is focused exploring
addressing the demands of childcare.
• Working on the 2024 Wright County Strategic Planning
• An Economic Conference is scheduled for September
d. Chamber of Commerce
Marcy Anderson, Chamber of Commerce Director gave an update for the
Chamber.
The membership and attendance to events is back to pre -pandemic numbers.
The Riverfest is considering resources for volunteers including non-profit
organizations and students.
4. Next Meeting Reminder — Date: September 5, 2023
5. Adjournment (7:85 a.m.)
THE REGULAR MEETING OF THE MONTICELLO IEDC. MEETING WAS ADJOURNED BY
CONSENSUS.
Industrial Economic Development Agenda: 9/5/2023
2A. Table Topic — 2023 Hotel Study Preview
Prepared by:
Meeting Date:
® Regular Agenda Item
Administrative Assistant
8/1/2023
Reviewed by:
Approved by:
N/A
Economic Development Director
REFERENCE AND BACKGROUND
Presentation by Jim Thares, Economic Development Manager, and Hayden Stensgard,
Community Economic Development Coordinator, City of Monticello.
Hospitality
CONSULTING GROUP
HOTEL MARKET STUDY
MONTICELLO, MINNESOTA
August 2023
r
y
Prepared for:
City of Monticello
5315 Eureka Road • Excelsior, MN 55331
(612) 867-1649
Hospitality
CONSULTING GROUP
Mr. Jim Thares
Economic Development Manager
City of Monticello
505 Walnut Street
Minneapolis, MN 55362
Dear Mr. Thares:
The Hospitality Consulting Group is pleased to present the accompanying report
entitled: "Hotel Market Study - Monticello, Minnesota" which has been prepared in
accordance with our engagement letter dated June 12, 2023. This report follows our
earlier market study report issued in March 2014, and a partial update conducted in
May 2020.
Incorporated within this report are discussions of the local and area market conditions,
characteristics of competitive hotels, analysis of the potential lodging demand available
to a new hotel, facility recommendations, estimates of utilization for the recommended
facilities, financial projections for the recommended hotel's first five years of operation,
and an analysis of the project's economic feasibility.
Our conclusions are based on information developed from research of the market,
discussions with local government officials, representatives of the business
community, and on our knowledge of the industry. The sources of information and
bases of the estimates and assumptions are stated in the body of the report.
We have no responsibility to update this report for events and circumstances that occur
after the conclusion of our field work, which is concurrent with the report date shown
below. However, we are available to discuss the necessity for revision in view of
changes in the economic and market factors affecting the project.
5315 Eureka Road • Excelsior, MN 55331
(612) 867-1649
City of Monticello
Page 2
Our report is intended solely for the information of the City of Monticello for use in
attracting a hotel developer or furthering its redevelopment efforts. It may also be used
to obtain funding for the hotel. Otherwise, neither the report nor its contents, nor any
reference to our Firm may be referred to or quoted in any registration statement, sales
brochure, prospectus, loan, appraisal or other financial document without our prior
written consent.
August 17, 2023
HOSPITALITY CONSULTING GROUP, INC.
5315 Eureka Road • Excelsior, MN 55331
(612) 867-1649
HOTEL MARKET STUDY UPDATE
MONTICELLO, MINNESOTA
Letter of Transmittal
CONTENTS
PAGE
1. INTRODUCTION 1
BACKGROUND.................................................................................................................................................. 1
SCOPEOF STUDY............................................................................................................................................ 1
2. EXECUTIVE SUMMARY 3
3. REGIONAL CHARACTERIST CS 11
INTRODUCTION.............................................................................................................................................. 12
LOCATION........................................................................................................................................................... 12
DEMOGRAPHICS............................................................................................................................................. 13
BUILDINGPERMITS..................................................................................................................................... 16
EMPLOYMENT................................................................................................................................................. 17
SURROUNDINGCOMMUNITIES............................................................................................................ 20
TRANSPORTATION....................................................................................................................................... 23
RESTAURANTS................................................................................................................................................ 25
TOURISM............................................................................................................................................................. 26
4. AREA HOTEL SUPPLY 29
HOTELSUPPLY................................................................................................................................................ 29
ROOM RATE STRUCTURE......................................................................................................................... 37
MEETINGFACILITIES.................................................................................................................................. 38
S. AREA HOTEL DEMAND 40
HOTEL INDUSTRY TRENDS..................................................................................................................... 40
HOTELDEMAND............................................................................................................................................ 41
HOTEL MARKET PERFORMANCE........................................................................................................ 44
HOTEL DEMAND PROJECTIONS........................................................................................................... 48
HOTEL MARKET STUDY UPDATE
MONTICELLO, MINNESOTA
CONTENTS (Continued)
PAGE
6. RECOMMENDED FACILITIES 51
HOTEL FACILITY RECOMMENDATIONS...................................................................... 0........ 51
7. SITE REVIEW Ik4
54
CRITERIA............................................................................................................................................................. 54
SUMMARY EVALUATION.......................................................................................................................... 55
8. UTILIZATION PROJECTIONS
59
UTILIZATION ASSUMPTIONS................................................................................................................. 59
PROJECTED OCCUPANCY.......................................................................................................................... 60
PROJECTED AVERAGE RATE.................................................................................................................. 64
PROJECTED ROOM REVENUE................................................................................................................ 66
9. FINANCIAL PROJECTIONS
RVA
NOTES TO FINANCIAL PROJECTIONS............................................................................................... 67
ECONOMIC FEASIBILITY ANALYSIS................................................................................................... 70
ADDENDUM: CONSULTANT'S QUALIFICATIONS
Hotel Market Study - Monticello, MN Introduction
SECTION 1: INTRODUCTION
BACKGROUND
Monticello, Minnesota is a prosperous community located along Interstate 94,
midway between Minneapolis and St. Cloud. It functions as a sub -regional
center for shopping, business, and healthcare services between St. Cloud and
Maple Grove. Monticello's downtown was originally developed along Broadway
parallel to the Mississippi River. However, more recent retail developments
along the interstate have made this area the focal point for economic activity.
The City of Monticello is encouraging the development of a new hotel to
supplement its aging hotel supply. Accordingly, four potential hotel sites have
been identified, all located near the interstate, that have attracted interest from
hotel developers. The purpose of this study is to provide a current assessment
of Monticello's potential hotel market
Hospitality Advisors has extensive experience working with hotel
developments throughout the United States. We were retained to research the
market support for a new hotel and to recommend the size and scope of
facilities appropriate for this market. The scope of our work in conjunction with
this engagement is summarized below.
SCOPE OF STUDY
Our research into the market support for a new hotel included the following:
• Determination of the primary market area and evaluation of pertinent
demographic and economic information;
• Identification of sources of lodging demand;
• Identification and evaluation of competitive lodging facilities;
Hospitality Consulting Group
Hotel Market Study - Monticello, MN Introduction
• Recommendation of the type and size of hotel and amenities that will
perform best in the Monticello market;
Projection of the lodging demand that the recommended hotel could
reasonably expect to capture; and
• Projection of the average daily rate and resulting room revenue that
the hotel could reasonably expect to achieve.
In performing this study, we obtained performance data for the competitive
hotels, researched current room rates at area hotels, obtained and analyzed
relevant demographic and economic data, prepared a penetration analysis for
the recommended hotel, and prepared projections of revenue and operating
expenses for the hotel's first five years of operation.
2 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
SECTION 2: EXECUTIVE SUMMARY
This section describes, in brief, the findings and conclusions derived from our
study of the market for a new hotel in Monticello, Minnesota. This overview
includes our review of the market area and the competitive environment, our
review of the recommended hotel facilities, and financial projections expected
for the hotel. The estimates and the information presented in this section are
meant as a summary of, not a substitute for, the body of the report which
contains additional information and detail critical to a full understanding of the
basis for the estimates made and the context within which they were formed.
The key findings of our market study are summarized below:
MARKET CHARACTERISTICS
Monticello has a strong economy. Its population, and the population of its
immediate market area, increased by 13 percent over the last decade. Although
Monticello's median household income is below that of Wright County in which
it is located, the county's median income is 29 percent higher than the state-
wide level. It is a retail center for a large area that extends out approximately
10 miles. Education, Healthcare and Social Assistance makes up the largest
employment category, followed by Manufacturing.
Recent developments in the community include a relatively large number of
single and multifamily housing units. The City is also in the process of develop-
ing a large complex of athletic fields that will allow it to capitalize on the
growing sports tourism trend.
Monticello enjoys a prominent location along Interstate 94 and the
Mississippi River and is midway between Minneapolis and St. Cloud. Two
exits on the interstate provide excellent access to the community's retail and
service establishments for the more than 44,000 vehicles that pass by the
city each day. Highway 25 provides the only river crossing within 13 to 15
miles in either direction.
Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
HOTEL SUPPLY
There are three franchised hotels and one older motel in Monticello. The Best
Western Chelsea Plus is an older but well-maintained upper midscale property.
The other two franchised hotels, a Days Inn and a Super 8, are economy motels
and therefore would not be directly competitive with a new upper midscale
property. The fourth hotel, the AmericInn Motel is an older independent econ-
omy property and thus not competitive with a new hotel.
Interviews with the large Monticello employers disclosed that some commer-
cial lodging demand is displaced to hotels in Albertville, Rogers, and even Maple
Grove. We identified four hotels located along the I-94 corridor that would be
directly competitive with a new upper midscale hotel in Monticello: the Best
Western Prime Chelsea Inn in Monticello; the Country Inn & Suites in Albert-
ville; and the Hampton Inn & Suites and Holiday Inn & Suites in Rogers.
Due to the greater distance, hotels in Maple Grove would be secondarily com-
petitive. We identified eight hotels considered to be secondarily competitive
with a new upper midscale hotel in Monticello.
Room rates at the upper midscale hotels in the primary competitive supply
range from $130 to $166 before discounts. Room rates at the upper midscale
and upscale properties in the secondary supply range from $137 to $319, be-
fore discounts.
MEETING SPACE
Meeting facilities allow a hotel to attract additional demand related to area
meetings, merchandise and hobby shows, as well as social functions. Monticello
has two large venues with capacity of up to 300 persons; one is located in the
Community Center and the other is in a bowling alley. Two of the hotels have
meeting rooms: the Best Western has a 1,200 -square foot function room and
the Super 8 has a 1,500 -square foot room.
Several local events have outgrown the available meeting space so are forced to
hold their functions in the community center gym. She also mentioned that sev-
eral larger groups have been turned away from Monticello due to insufficient
meeting space.
4 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
While a large event center at a new hotel would draw new events to the com-
munity, such a facility would not be economically viable without significant fi-
nancial assistance, given the elevated construction costs and interest rates that
presently exist. Due to the large ballroom space in the community center, a
similar large ballroom at the hotel would likely be under-utilized. We feel that
a divisible meeting room of 800 to 1,200 square feet would be appropriate for a
new Monticello hotel.
HOTEL DEMAND
The lodging industry was devasted by the Covid-19 pandemic when travel
was severely restricted and many businesses shut down. Industry wide
RevPAR (revenue per available room) was reported to have declined by 50
percent in 2020. Since that low, the industry has steadily been returning back
to normal. Through the first half of 2023, industry wide RevPAR was re-
ported to be nearly 2 percent higher than the same pre-Covid period in 2019
(in adjusted dollars). The competitive supply along the I-94 corridor experi-
enced an annual occupancy of 65 percent in 2022, which was 10 points higher
than the statewide average.
In order to assess the recent trends in the Monticello lodging market, we
obtained detailed performance data for the four hotels in the competitive
supply. This data shows that the competitive set of four hotels achieved an
overall annual occupancy of 64.7 percent in 2022, the highest level achieved in
the last eight years. Generally, a hotel targets a 60% to 70% occupancy to be
successful.
The amount of hotel demand accommodated by the four competitive hotels
has increased over the last two years documenting the recovery from the ex-
treme impact from Covid-19 felt largely in 2020. The number of occupied
roomnights in 2022 exceeded the 2021 level by nearly 15 percent and was
1.6 percent higher than even the pre-covid demand in 2019.
Monthly performance data over the last three years for the competitive set
shows that lodging activity peaks in the summer, exceeding 70 percent in the
months of April through September, typical of an interstate location. The fact
that the summer increase is not that large relative to the rest of the year
indicates there is a strong commercial component to the lodging demand
which occurs throughout the year. Turnaways from the market occur during
athletic tournaments and generally on weekends throughout the summer and
5 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
fall.
The ADR for the competitive supply increased by a remarkable16 percent in-
crease in 2022 followed by an 11 percent increase in 2022. Year-to-date
through May, the ADR for the competitive set is up over 8 percent.
A new hotel in Monticello would seek to capture the upscale lodging demand
that is leaving the community to stay at higher quality hotels in neighboring
cities.
The patronage that will be available to a new hotel consists of commercial
visitors conducting business in the area, travelers on the interstate, people
attending social functions and visitors to area residents, and people attending
meetings and other group functions.
The mix of the lodging demand accommodated by the competitive set is estimated
to consist of the following:
ESTIMATED MARKET MIX (2022)
Market Occupied % of
Segment Roomnights Total
Commercial
34,000
47%
Leisure
31,100
43%
Group
7,200
10%
Totals
72,300
100%
Based on our analysis, we believe that a base annual growth rate of 2.0 per-
cent is a reasonable expectation for continued hotel demand growth for the
competitive supply through 2029. An additional 1.0 percent growth in
2025 and 2026 was factored into our analysis to account for the new hotel
rooms available when the subject hotel opens.
FACILITY RECOMMENDATIONS
Based on our evaluation of the local hotel supply and demand conditions we
believe that an 80 -room limited service hotel of upper midscale quality will
perform best within the Monticello competitive market. A strong national
franchise will be needed to compete with the hotels that exist in Rogers and
Maple Grove. The hotel's amenities should include an indoor pool, a meeting
Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
room of approximately 800 to 1,000 square feet, an exercise room, and
facilities to provide a complimentary breakfast.
POTENTIAL SITES
The City has identified four possible locations for a new hotel. These sites are
shown on the map on page 56. The hotel sites were evaluated on the basis of
visibility from major transportation routes, access, proximity to destinations,
proximity to restaurants, and the suitability of surrounding land uses.
We believe that the two most western sites (Site 1 and Site 4) are both suit-
able for immediate development, due to the suitability of the surrounding
land uses and their proximity to restaurants. Sites 2 and 3 lack surrounding
development and therefore are thought to be premature for a hotel.
PROJECTED OCCUPANCY
Based on the results of our market study, we estimate that the proposed ho-
tel would be able to capture a 5.0 percent premium above its fair share of the
primary market demand. Our analysis found that the hotel can expect to
achieve a market share that has a 5.0 percent premium over its fair share.
This premium will be due to the newness of its facilities as it competes with
the older Best Western Prime Chelsea Hotel. Its occupancy would be made up
of guests upgrading from the current hotels, guests currently leaving the
market to stay in newer hotels in surrounding communities, guests that ar at-
tracted to the market by the new hotel franchise, and guests that are pres-
ently turned away from the market on nights when the hotels are at capacity.
The results of our utilization analysis are presented in the following table,
which shows the subject hotel achieving projected occupancies that open at
54% and reach 64 % by its fifth year of operation. Its market share should
stabilize in its third year; occupancies projected for the first two years are
lower than the stabilized level of operation as the hotel will require time to
build public awareness and to develop its marketing program.
Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
RECOMMENDED MONTICELLO HOTEL
Projected Utilization
80 Rooms
AVERAGE DAILY RATE
1 .
The analysis from which we developed our projections of average daily rate for
the recommended hotel included the quality and pricing structure of the other
primary competitive hotels.
We estimate that the average daily rate for the primary competitive hotels will
range between $129 and $146 in 2023. Based on our analysis, we have
determined that the recommended upper midscale hotel should be able to
achieve an average rate of $135 in expressed in current 2023 dollars. Factored
into the room rates projected for the subject hotel is an inflation factor of 2
percent and a real growth factor of 1 percent, for a total increase of 3 percent
annually. The inflated average rate in 2025, its first full year of operation, is
projected to be $143.20.
8 Hospitality Consulting Group
2025
2026
2027
2028
2029
Market Demand:
Base Market
78,200
80,600
82,200
83,900
85,500
Crews
1,000
-
1,000
-
1,000
Total Market
79,200
80,600
83,200
83,900
86,500
Subject Hotel:
Commercial
7,300
7,800
8,500
8,600
8,800
Leisure
7,100
7,500
7,800
7,900
8,100
Group
1,500
1,700
1,800
1,800
1,900
Occupied Rooms
15,900
17,000
18,100
18,300
18,800
Available Rooms
29,200
29,200
29,200
29,200
29,200
Projected Occupancy
54%
58%
62%
63%
64%
Market Share
20.1%
21.1%
21.8%
21.8%
21.7%
Fair Share
20.7%
20.7%
20.7%
20.7%
20.7%
Penetration Rate
96.9%
101.8%
105.0%
105.2%
104.9%
AVERAGE DAILY RATE
1 .
The analysis from which we developed our projections of average daily rate for
the recommended hotel included the quality and pricing structure of the other
primary competitive hotels.
We estimate that the average daily rate for the primary competitive hotels will
range between $129 and $146 in 2023. Based on our analysis, we have
determined that the recommended upper midscale hotel should be able to
achieve an average rate of $135 in expressed in current 2023 dollars. Factored
into the room rates projected for the subject hotel is an inflation factor of 2
percent and a real growth factor of 1 percent, for a total increase of 3 percent
annually. The inflated average rate in 2025, its first full year of operation, is
projected to be $143.20.
8 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
PROJECTED AVERAGE RATE
80 Rooms
Year Average Daily Rate
2023 $135.00
2025
$143.20
2026
$147.50
2027
$151.90
2028
$156.50
2029
$161.20
FINANCIAL PROJECTION SUMMARY
Our financial projections prepared for the first five full years of operations
for the recommended hotel are summarized in the following table.
FINANCIAL PROJECTION SUMMARY
80 -ROOM UPPER MIDSCALE HOTEL
2020
2021
2022
223
2024
Occupancy 54%
Average Daily Rate $143.20
58%
$147.50
62%
$151.90
63%
$156.50
64%
$161.20
Total Revenue
$2,287,152
$2,518,603
$2,761,343
$2,876,170
$3,043,255
Departmental Expenses
(566,737)
(608,255)
(650,672)
(672,857)
(703,267)
Undistributed Expenses
(641,702)
(715,306)
(777,038)
(803,401)
(840,117)
Fixed Charges
(141,992)
(242,212)
(284,219)
(296,484)
(311,289)
Management Fee
(91,075)
(100,300)
(109,976)
(114,558)
(121,222)
Cash Flow For Debt Service
$845,646
$852,531
$939,438
$988,870
$1,067,360
ECONOMIC FEASIBILITY ANALYSIS
For purposes of analysis, Hospitality Consulting Group assumed the hotel to
have a total cost of $11,000,000, or $137,500 per guest room.
The financing terms utilized in the analysis assumed a 35 percent equity in-
vestment of $3,850,000, leaving a loan principal of $7,150,000 to provide
funds for the $11,000,000 total project cost.
9 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
Source of Funds:
Equity $3,850,000 35%
Debt 7,150,000 65%
$11,000,000 100%
Debt Term Assumptions:
Annual Interest Rate: 8.0%
Amortization: 20 years
Annual Payment: $718,000
The results of the feasibility analysis are presented in the following table.
Economic Feasibility Analysis
Estimated Project Cost: $11,000,000
35% Equity; 65% Debt
Cash Flow Avail. for Debt Servi
Debt Service
Debt Service Coverage Ratio
Cash Flow to Equity
Equity
Return on Equity
2025 2026 2027 2028 2029
$846,000 $853,000 $939,000 $989,000 $1,067,000
$718,000 $718,000 $718,000 $718,000 $718,000
1.18 1.19 1.31 1.38 1.49
$128,000 $135,000 $221,000 $271,000 $349,000
$3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000
3.3% 3.5% 5.7% 7.0% 9.1%
A debt coverage ratio (cash flow/annual debt service) of a minimum of 1.2
times is required and 1.4 times is typically preferred by lenders. This analysis
shows that the hotel is projected to generate sufficient cash flow to minimaly
meet its debt service requirements in the first two years, and will not pro-
duce a comfortable debt coverage until its fourth year.
Hotel investors typically like to see cash on cash returns of at least 10 per-
cent. A hotel development company, who also would manage the hotel, may
include the management fee in its investment decision and thus accept a
lower return. In this simple analysis, the projected cash on cash return on eq-
uity only reaches 9 percent by the hotel's fifth year of operation.
10 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
The project cost and terms of financing assumptions used in this analy-
sis produces marginal debt coverage in the hotel's early years and does
not provide an acceptable return on investment until its fifth year.
Therefore, we conclude that the hotel project may not be economically
feasible without some measures that either reduces its cost or the inter-
est rate, or both.
�y
11 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
SECTION 3: REGIONAL CHARACTERISTICS
INTRODUCTION
The following section provides an overview of the market environment
within which a new hotel would operate. Included within this section is a
review of selected economic and demographic data, along with a description
of the transportation infrastructure and attractions in the area.
LOCATION
Monticello is located in Wright County, approximately 37 miles northwest of
the Twin Cities of Minneapolis and St. Paul and 27 miles southeast of St.
Cloud. It is located along Interstate 94 at its intersection with State Highway
25.1-94 is a major east -west traffic route that bisects the state. Highway 25 is
a north -south corridor between the interstate and U.S. Highway 10, an
important route to St. Cloud and north central Minnesota. Highway 25 is the
only Mississippi River crossing between Clearwater and Elk River and is on
the National Scenic Byway Route, and the Mississippi River Trail Bikeway.
There are four lodging facilities in Monticello, of which three carry national
franchises. However, these hotels are not able to meet the needs of travelers
who seek newer and/or higher quality accommodations. We have determined
the primary market for a new Monticello hotel by analyzing drive times to the
surrounding towns that have such accommodations. This market area is
defined by the proximity of St. Cloud to the west and Albertville, Rogers and
Maple Grove to the east, and the hotels, restaurants and shopping options
available in these communities.
The hotel market area is smaller than the trade area because lodging accommo-
dations are typically selected at the location that is nearest to a traveler's
destination. While people residing in outlying communities may come to
Monticello for shopping, health care and professional services, visitors to these
communities are more likely to stay in the closest hotel that meets their quality
12 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
and service requirements. Thus, Monticello's primary hotel market is restricted
by the proximity of communities that have competitive hotels.
The determined market area for a new hotel, shown on the map on the
following page, includes the neighboring towns of Big Lake and Becker. The
irregular red line on the map depicts a 15 -minute drive time.
DEMOGRAPHICS
Population
The market area experienced a large increase in population over the last
decade. Population data for Monticello, the identified market area, and Wright
County is presented in the table below. Between 2010 and 2020, the county
population increased by more than 13 percent and Monticello increased by the
same amount.
POPULATION CHANGE
Primary Market Area
Monticello, MN
2010-2020
2000 2010 2020 Change
Monticello
8,544
12,759
14,455
13.3%
Big Lake
6,059
10,060
11,688
16.2%
Becker
2,673
4,538
4,877
7.5%
Silver Creek Twp.
2,332
2,335
2,559
9.6%
Total
19,608
29,692
33,579
13.1%
Wright County
89,986
124,700
141,333
13.3%
Source: U.S Census
13 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Reigional Characteristics
14 Hospitality Consulting Group
Monticello, Minnesota
Primary Hotel Market Area
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14 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
Wright County's population was 141,333 in 2020 and is estimated to be
147,350 in 2023. Its population is projected to increase by another 9.6 percent
to 161,422 by 20301, representing a 1.3 percent compound annual growth for
the decade. The county's population is projected to increase by 12.1 percent
between 2030 and 2040. This represents a slightly lower compound annual
increase of 1.1 percent.
The Metropolitan CounCi12 reports that the 7 -county Twin Cities Metropolitan
Area increased by 12 percent between 2010 and 2020. It projects that its
population will increase by another 818,000 by 2050. It estimates that the
area population will increase by 9 percent in the 2 02 0-2 03 0 decade, by 8
percent in the decade 2030-2040, and by 7 percent between 2040 and 2050.
This growth is expected to result in another 626,000 jobs. These increases are
relevant as growth in the outer ring suburbs will continue to stimulate growth
in surrounding communities, such as Monticello, Albertville, and Rogers.
Since 2020, Wright County has been the fastest growing county in the state,
achieving a population increase of 4 percent, according to US Bureau Census
estimates.
Between 2018 and 2021 the number of households in Monticello increased
by 686 to a total of 5,3793 households.
Household Incomes
The median household incomes for Monticello, the identified market area,
Wright County, and Minnesota are presented in the table below. Between 2018
and 2021, the median household income of Monticello increased by nearly 12
percent, while the county increased by 22 percent. The median is the midpoint
at which there are an equal number of households with larger and smaller
incomes. The median household income in Monticello was estimated to be
$73,651 in 2021, which is 5.2 percent below the state median.
Minnesota State Demographic Center
MetroStats, July 2021
US Census American Community Survey
15 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
MEDIAN HOUSEHOLD INCOME
Primary Market Area
Source: U.S. Census;
2021 ACS 5 -Year Estimates
BUILDING PERMITS
New housing construction in Monticello hit a peak in 2021 when 97 multifamily
units and 93 single family units were permitted. Residential development
declined in 2022 with a total of 35 single family units permitted and no
multifamily permits. In 2023 there are 476 housing units under construction
and another 257 residential units planned.
250
200
150
100
50
0
Building Permits
2020 2021 2022 2023
—0—Permits (Dwelling Units
Source: City of Monticello
16 Hospitality Consulting Group
2018-2021
2010
2018
2021
Change
Monticello
$62,891
$65,938
$73,651
11.7%
Big Lake
$61,941
$79,612
$93,524
17.5%
Becker
$60,021
$87,083
$80,083
-8.0%
Silver Creek
$52,507
$58,125
$64,821
11.5%
Wright County
$67,963
$81,881
$99,964
22.1%
Minnesota
$59,126
$68,411
$77,720
13.6%
Source: U.S. Census;
2021 ACS 5 -Year Estimates
BUILDING PERMITS
New housing construction in Monticello hit a peak in 2021 when 97 multifamily
units and 93 single family units were permitted. Residential development
declined in 2022 with a total of 35 single family units permitted and no
multifamily permits. In 2023 there are 476 housing units under construction
and another 257 residential units planned.
250
200
150
100
50
0
Building Permits
2020 2021 2022 2023
—0—Permits (Dwelling Units
Source: City of Monticello
16 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
Monticello is experiencing a significant amount of commercial development.
In 2022 nearly $24 million of commercial developments were permitted,
along with $2.9 million of industrial development. In 2021nearly $14.8
million of industrial development was permitted.
EMPLOYMENT
Employment is a strong indicator of an area's economic health. The graph be-
low shows that Manufacturing and Education, Health Care & Social Services are
the two largest employment categories in Monticello, accounting for 42 percent
of the total employment. Manufacturing businesses are generally strong gener-
ators of lodging demand.
Monticello Employment
Ag, fo rest ry, fishing,
Arts,entertair�l hunting,& mining, 2%
recreation,
accomrnodatio,food Construction, 8%
secs, 9%
Educational, health
care, social assistance,
21%
Professional,
scientific, mgmt,
administrative, 4%
Finance,
insurance, real estate,
6%
Information, 0.3%—
Major Employers
Manufacturing, 19%
410 Wholesaletrade, 4%
Retail trade,
11%
LTransportation &
warehousing, utilities, 4%
Monticello has three large companies that provide the largest source of
employment. It also has a number of manufacturers that generate hotel
demand. The largest companies are profiled below.
17 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
MAJOR BUSINESS EMPLOYERS
Company Name
Xcel Energy
Cargill Kitchen Solutions
CentraCare Health -Monticello
Ultra Machining Company
Polaris (WSI, Inc.)
Bondhus
Source: City of Monticello
Product / Service
Employees
Energy
650
Food Products Supplier
425
Health Care
577
Precision Machining
215
Precision Machining & Mfg.
120
Tool Mfg & Distribution
104
Xcel Energy operates an electric generating nuclear power plant in Monti-
cello. It completed a $665 million upgrade in 2013 that boosted output and
extended the life of the facility. Its operating license has been extended
through 2030. This facility needs to be re -fueled and maintenance performed
every two years for which a large number of contract workers (400-600) are
brought in for up to several months. While many of the workers bring
campers or trailers, a large number stay in area hotels.
Xcel also operates three coal-fired generators in nearby Becker. One of these
generators will be shut down by the end of this year, while the other two will
be taken out of service by 2030, as the utility moves toward clean energy
sources.
Xcel received approval in September 2022 to construct a 460 -megawatt solar
farm on 3,500 acres it owns near Becker in an effort to move away from coal
as a generating power source. The development will cost approximately
$575 million and create 300 construction jobs and 14 permanent full-time
jobs. In May of this year, Xcel applied for approval to construct another 250 -
megawatt solar array that would make the complex one of the largest in the
country. The addition would create 90 construction jobs. Both of these
projects are to be completed by the end of 2025. They are projected to create
$240 million in economic impact to the area.
Cargill Kitchen Solutions is a leading marketer of further processed egg
products. It operates a protein processing plant in Monticello that processes
over 125 million pounds of eggs annually. It is a subsidiary of Cargill, Inc., the
largest privately held company in the nation, which is headquartered in
Wayzata, MN.
18 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
CentraCare Health -Monticello is centered around a 124 -bed critical access
community hospital. The hospital, one of eight other CentraCare hospitals in
the region, offers 25 specialty services. The Center has 150 medical staff
members.
UMC (Ultra Machining Corporation) is a precision machining company with a
specialty in the medical and aerospace industries. The company also develops
prototype parts and does some assembly. It has a 72,000 -square foot facility in
Monticello. Founded in 1968, the company recently added a 60,000 -square foot
expansion to its 75,000 -square foot plant.
Polaris (WSI, Inc.) manufactures small precision parts and assembles engines.
It has 1200 employees at the Monticello plant.
Bondhus Corporation manufactures high quality hand tools used throughout
numerous industries. The nearly 60 -year-old company has 104 employees.
Wiha Tools USA manufactures and distributes professional grade precision
hand tools. Headquartered in Germany, the Monticello facility distributes tools
to North, Central and South America. A 90,000 -square foot manufacturing and
logistics center is expected to be completed by the end of this year which will
add 40 jobs. An 85,000 -square foot addition is planned for 2028.
Proposed Data Centers.
Data centers that house hundreds of computers require enormous amounts of
energy. Google had announced plans to construct a large data center on land
Xcel owns near its Sherco coal plant. Last September Elk River Technologies
announced it plans to build a data center on 384 acres near the Google site.
The project is estimated to cost up to a billion dollars and will create 1,200
construction jobs and100 full time permanent jobs.
Google abandoned its planned project in December 2022, but the Elk River
Technologies data center remains active,
Unemployment
The unemployment rate in Wright County as of May 2023 was 2.7 percent, a
level that is equal to the statewide Minnesota rate and significantly lower than
the national unemployment rate of 3.7 percent. The unemployment rate in the
local economy trends very closely with the state.
19 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
14.0%
12.0%
10.0°/
8.0%
6.0%
4.0%
2.0%
0.0%
Unemployment Rate (May)
2018 2019 2020 2021 2022 2023
Wright County Minnesota U5
Source: U.S. Bureau of Labor Statistics
SURROUNDING COMMUNITIES
In order to understand the dynamics of the area lodging market, we have pro-
vided a summary of Monticello's trade area and the surrounding communities,
which are shown on the map on page 14. Monticello hotels capture demand
from Big Lake and Becker, while they lose demand to Rogers and Maple Grove.
They also lose demand to Albertville, but gain demand on occasions when the
one hotel there is full.
Trade Area
Monticello enjoys a relatively large retail market area that encompasses an ap-
proximate 10 -mile radius with a total of more than 100,000 people. The sec-
ondary trade area extends west to include Clear Lake, Clearwater and Annan-
dale and has a population of approximately 35,000 people.
20 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
Big Lake
Big Lake is located 3 miles northeast of Monticello on Highway 10. It had a pop-
ulation of 11,688 in 2020. The median household income in the community is
20 percent above the state median. Big Lake has one small independent motel
and one fine dining restaurant and banquet facility, Willy's on the Water. It also
has a Mexican restaurant, El Loro. The Third Rail Bar & Grill, and Trails Grill
and Sports Bar are more informal bistro/pub restaurants. Lodging demand
from Big Lake is accommodated in Monticello due to the greater variety of ho-
tels and restaurants there.
Becker
Becker has an estimated population of 4,877 and is located seven miles north
and west of Monticello. The median household income in the community is 3
percent higher than the state median. The Sherburne County Generating Sta-
tion, the largest coal-fired power plant in the state, is located in Becker. The
maintenance of this facility periodically brings in crews that require lodging in
area hotels.
There are two motels in Becker, a 68 -room upper midscale GrandStay Hotel &
Suites and a 32 -room economy Becker Inn & Suites (once a Super 8). Restau-
rants are limited to the Pebble Creek Grill, located at the public golf course,
which serves lunch and dinner and can accommodate banquets of up to 225,
Los Ortizes Restaurant which is open for lunch and dinner and the Great Wall
Chinese Restaurant. Additional dining options include Charlie's Sports Bar and
Grill and Dueling Brews brewpub that serves sandwiches.
Albertville
Albertville is located seven miles east of Monticello on I-94. It has an estimated
population of 7,896 and a median household income that is 3 percent higher
than the state. Its major attraction is the Albertville Premium Outlets, a popular
outlet mall with more than 65 stores.
The 66 -room, upper midscale Country Inn & Suites is the only hotel in Al-
bertville, but the hotels in Monticello and the surrounding communities of Rog-
ers, Becker, Buffalo, and Maple Grove offer "shop and stay" packages for the
mall. While the shopping is an attraction, this hotel draws demand from Monti-
cello primarily because the popular D Michael B's Resort Bar & Grill is located
21 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
adjacent to it. There is also a Willy McCoys, Hong Thai, and The Space Aliens
Bar & Grill.
Rogers
Rogers is located 17 miles east of Monticello on I-94. It has a population of
13,295 and a median household income that is 76 percent higher than the state.
This community continues to develop rapidly and is known as a strong family
community with a good school system. It has a concentration of retail that is
anchored by Kohl's and a Super Target. Its largest retail attraction is a 185,000 -
square foot Cabela's outdoor store.
There are four hotels in Rogers: a Hampton Inn & Suites and a Holiday Inn Ex-
press & Suites upper midscale properties; an AmericInn midscale property; and
a Super 8 economy lodging facility. Food and beverage outlets include supper
clubs Maynard's Restaurant and Bar and Clives Roadhouse. A popular brewpub,
the Short or Tall Eatery & Dining Hall, is located adjacent to the Holiday Inn Ex-
press. Other restaurants include Guadalajara Mexican Restaurant, and two
Asian restaurants: Bo Bo and Hong Thai. In addition, there are over 25 other
food service options, including a variety of fast food outlets.
Maple Grove
Maple Grove is a suburb of Minneapolis located 24 miles east of Monticello on I-
94. It has a population of 70,253 and a median household income estimated to
be $117,442 that is 51 percent higher than the state. The community's largest
employer is Boston Scientific with around 3,000 employees. Maple Grove has
one of the largest retail concentrations in the state, making it a regional shop-
ping destination. Since the Shoppes at Arbor Lakes, a 370,000 -square foot life-
style center opened, three additional centers have been added, bringing the to-
tal retail space to nearly 2 million square feet. Only Bloomington with the Mall
of America has more space. Within the retail concentration at Arbor Lakes is a
wide variety of restaurants that include steakhouses, ethnic restaurants, bis-
tros, a brewpub, coffee shops and fast food.
There are 11 hotels in Maple Grove: six upscale hotels, two upper midscale ho-
tels, one midscale hotel and two economy motels. Three of these hotels carry a
Marriott franchise, two have a Hilton franchise, and two have an Intercontinen-
tal Hotel Group franchise.
22 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
TRANSPORTATION
Highways
The highway network around Monticello is shown on the map on the following
page. The irregular blue line indicates a 30 -minute drive time from Monticello.
This distance reaches St. Cloud to the northwest and Maple Grove to the south-
east.
Monticello is located at the intersection of Interstates 94 and State Highway 25.
Interstate 94 is a major route across the upper Midwest that connects Minneap-
olis -St. Paul with Chicago and Detroit to the east, and St. Cloud, Fargo, North Da-
kota and Billings, Montana to the west. At Billings, I-94 connects with Interstate
90 and continues west to Seattle, Washington. Highway 25 is a north -south
route across central Minnesota that connects Monticello with Big Lake to the
northeast and Buffalo to the south.
Traffic counts taken by the Minnesota Department of Transportation in 2022
show that Interstate 94 carries a large volume of traffic: a daily average of
57,300 vehicles to the east of Monticello and 43,900 vehicles to the west. Aver-
age daily travel on State Highway 25 between Monticello and Buffalo to the
south is about 15,900 vehicles and between Monticello and U.S. Highway 10 to
the north is about 10,400 vehicles. Highway 10 carries an average of 13,400 ve-
hicles a day to the west of the Highway 25 intersection and 18,800 vehicles a
day to the east of the intersection. This river crossing is the only one within 15
miles to the west and 13 miles to the east.
23 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
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24 Hospitality Consulting Group
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24 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Regional Characteristics
RECENT DEVELOPMENTS
The City of Monticello has been instrumental in bringing two recent projects to
the city.
Block 52
This redevelopment project was recently completed on a major downtown
block located at Pine and Broadway Streets. The project consists of 87 residen-
tial units, 30,00 square feet of retail space and underground parking.
Pointes at Cedar
This development will consist of a mix of housing, commercial business, and
public amenities to be constructed around three interconnected man-made
lakes. Located along Edmonson Avenue between Chelsea Road and School
Boulevard, the 100 -acre site is currently being prepared, with completion of the
lake expected by the end of this year. The first residential project is under devel-
opment on 10 acres of a 32 -acre site. Permitted this year was 100 -unit luxury
apartments and clubhouse, with another 100 -units planned.
RESTAURANTS I
Restaurants can be an important hotel requirement, particularly for commer-
cial travelers and for local businesses entertaining customers. There is a
shortage of restaurants of the type that would appeal to a commercial traveler
in Monticello, compared to Maple Grove. At least one quality restaurant exists
in both Albertville and Rogers, and both communities are close enough to the
many restaurants in Maple Grove to support their corporate hotels. Monti-
cello restaurant alternatives include:
• Applebee's Neighborhood Bar & Grill - A national franchised bistro
that serves lunch and dinner. Liquor is available.
Chatters Restaurant and Bar - A locally owned restaurant that serves
lunch and dinner. Evening entrees include steak, fish and chicken,
along with burgers, sandwiches and salads. Liquor is available.
• Bluestone Grill - Casual Mexican restaurant that serves lunch and din-
ner. Beer, wine and margaritas are available.
25 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Regional Characteristics
• Buffalo Wild Wings - A national franchised family-oriented sport bar
that serves lunch and dinner. Liquor is available.
• Cornerstone Caf6 - A locally owned, well-regarded restaurant that
serves lunch and dinner. Liquor is available.
• Pancho Villa Restaurant & Bar - A casual Mexican restaurant with a full
bar that serves lunch and dinner.
• Rancho Grande Authentic Mexican Restaurant - A casual restaurant
with a full bar that serves lunch and dinner.
• Perkins Family Restaurant - A national franchised coffee shop that is
open 24 hours. Liquor is not available.
• Pizza Ranch - an informal family restaurant with a menu centered
around pizza. Liquor is not available.
• Guild Tavern and Social House Restaurant - Located in the River City
Extreme bowling alley. It is a casual restaurant and sports bar that
serves lunch and dinner.
• Beef O'Brady's - a casual table service restaurant and bar located in
downtown Monticello.
• Asian Caf6 - a casual restaurant that features Japanese dishes and su-
shi. It is located in downtown Monticello.
It must be recognized that high-quality restaurant options are an important
factor in a new hotel's ability to capture some of the demand that presently
leaves the Monticello market. This requirement was expressed by several of the
large employers and similar concerns have been voiced in other hotel projects
located in smaller cities. While Monticello has a broad range of restaurants and
fast food, it does not have a chef -oriented restaurant or a steakhouse. Thus,
some hotel business will continue to be lost to Rogers and Maple Grove.
TOURISM
Monticello is located along the banks of the Mississippi River and is part of the
National Scenic Byway Route. At this location, the river is not deep enough to
be navigable by vessels larger than small fishing boats. However, with a mild
current, the river is ideal for canoes, kayaks and even paddleboats. Both banks
are tree -lined and the city has developed walking and biking paths that extend
26 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Regional Characteristics
six miles including the length of the city.
The City's most recent Comprehensive Plan cites the community's system of
parks and open space as a major factor in attracting and retaining new resi-
dents. At the present time, the city has three community parks located along
the Mississippi River that are connected by the aforementioned pathway.
These provide picnic facilities, restrooms, fishing piers and boat launches.
They also provide excellent locations from which to observe the flock of over
1,500 Trumpeter Swans that winter here. The nearby power plant warms the
river enough to keep it open during the winter. Several city residents provide
1,200 pounds of corn daily to help feed the once endangered birds. The feed-
ing spectacle is a popular attraction for birders.
Other existing recreational facilities include the Montissippi County Park, a
170 -acre park located along the Mississippi River northwest of the downtown
area. The park features several hundred feet of river frontage, a boat launch,
fishing pier, camping area, picnic grounds and two miles of trails for hiking,
biking and cross-country skiing.
Lake Maria State Park is located six miles west of Monticello. This 1,580 -
acre park of rolling terrain preserves one of the few remaining stands of "Big
Woods" hardwood trees that once covered southern Minnesota. Park activi-
ties include hiking (14 miles of trails), horseback riding, canoeing, fishing and
cross-country skiing. Amenities include camper cabins and backpack camp
sites. The park is open year-round.
The Bertram Chain of Lakes Regional Park was recently completed in a
joint effort by Wright County and the City of Monticello. The park is located
about three miles southwest of the city and consists of 1,200 acres of wood-
lands, lakes, wetlands and prairie. The park features a beach, several picnic ar-
eas, 7.5 miles of hiking trails and 14 miles of mountain bike rails. The park's
camping facilities include 38 RV sites and six camper cabins.
Monticello Athletic Park is a large field -sports complex located on the north
edge of the Bertram Regional Park. The large athletic park has 22 soccer fields,
five lacrosse fields, and eight football fields. Following the first phase of improve-
ments in 2019, many local athletic teams made Bertram their home field in 2020.
Immediate future plans call for the development of several baseball/softball fields,
permanent restrooms, a concession stand, playgrounds and picnic areas. The
27 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Regional Characteristics
masterplan eventually calls for more fields, ball diamonds and amenities. These
improvements will be based on community need and potential funding opportuni-
ties. The park is now funded by the municipal liquor fund.
The City has expanded its Pathway to include the entire length of the city up
to the Montissippi County Park and a path along Broadway. It plans to extend
the trails along the west side of the city limits to include the Bertram Lakes
Park complex. This extensive pathway will connect the city's recreational fa-
cilities. This will create a recreational amenity for residents and visitors that
will include and be supported by the Monticello Community Center.
U
28 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
SECTION 4: AREA HOTEL SUPPLY
A new hotel would seek to capture lodging demand from business activities in
Monticello, visitors to area residents, and travelers on Interstate 94. It should
be an upper midscale hotel that can capture demand currently leaving the
market due to the lack of upscale hotel rooms, rather than competing directly
with the existing hotels in the community.
Our analysis evaluated the facilities, amenities and pricing structure of the
competitive hotels in Monticello and the neighboring communities that are
capturing some of the Monticello lodging demand. Interviews with Monti -
cello's large employers revealed that a large portion of the upscale commer-
cial lodging demand utilizes hotels in Rogers, Maple Grove, and Albertville.
In this section of the report we present information regarding the area's ho-
tels that would be competitive with a new upper midscale hotel in Monticello.
HOTEL SUPPLY t
The Monticello hotel market is framed by St. Cloud to the west and Maple Grove
to the east. There are several hotels located along U.S. Highway 10 to the north,
but we identified little leakage of Monticello demand to these properties. There
are also two hotels (Country Inn & Suites and Super 8) located along State High-
way 55 in Buffalo to the south. These hotels limit the draw of Monticello hotels
from the south.
There are three franchised hotels and one older motel in Monticello. All three
franchised hotels were visited during our fieldwork. The Best Western Chelsea
Plus is an older but well-maintained upper midscale property. The other two
franchised hotels, a Days Inn and a Super 8, are economy hotels and therefore
would not be directly competitive with a new upper midscale property. The
fourth hotel, the AmericInn Motel is an older independent economy property
and thus not competitive with a new hotel.
29 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
MONTICELLO HOTELS
Hotel
Quality
Age
Rooms
October 2023 Rack Rates
Regular Suite
Amenities
Best Western Plus
Upper Midscale
23 Years
51
$130
$150-$160
Pool, hot tub, fitness room,
Chelsea Inn & Suites
Meeting room(1,200 so
Super 8
Economy
47 Years
70
$87-$97
$147
Pool, meeting room (1,500so
Days Inn
Economy
37 Years
33
$79-$85
$112
Jacuzzi suite
AmericInn Motel
Economy
42 Years
28
$59-$63
na
Refrigerators, microwaves
131
Source: STR and Hospitality
Consulting Group
The rack rates shown in the above table are for room rates posted for October of
this year. Summer rates are generally about $20 higher.
The three franchised hotels are located near each other on the south side of the
interstate, east of Highway 25. The area is currently more industrial than retail -
oriented, however multi -unit residential projects are being attracted to this area.
Restaurants on that side of the interstate include Applebee's, Chatters, Blue
Stone Grill, Buffalo Wild Wings, Taco Bell, McDonald's and a small oriental res-
taurant.
Primary Competitive Hotels
Interviews with the large Monticello employers disclosed that some commercial
lodging demand is displaced to hotels in Albertville, Rogers, and even Maple
Grove. We also found that much leisure demand, particularly on weekends, is
being displaced from Monticello due to frequent lack of room availability at the
Best Western Plus.
Albertville is a 15 -minute drive from Monticello, Rogers is 20 minutes, and Ma-
ple Grove is a 25 -minute drive. Within this market area, there are four hotels lo-
cated along the I-94 corridor that would be directly competitive with a new up-
per midscale hotel in Monticello. Due to the greater distance, hotels in Maple
Grove would be secondarily competitive with a new hotel in Monticello.
The locations of these competitive hotels are shown on the following map.
30 Hospitality Consulting Group
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Hotel Market Study - Monticello. MN Hotel Supply
Best Western Plus Chelsea Inn & Suites
This 51 -room, 23year-old hotel presents
the highest quality accommodations
available in Monticello. It has upgraded to
qualify for the franchise's "Plus" premium
designation. It has 14 suites and ameni-
ties include an indoor pool and hot tub,
an exercise room and 1,200 square feet of
meeting space. A hot breakfast is pro-
vided to Ruests. Its room rates are $130
for a regular room and $150 for a suite. Rates generally increase about 15 per-
cent during the summer and can increase by 45 percent on busy weekends. The
hotel is frequently full on Saturday nights and sometimes requires a 2 -night stay
over a weekend.
Country Inn & Suites - Albertville
jowl Inq
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This 66 -room, 19 -year-old upper
midscale hotel features an indoor
pool and hot tub, an exercise room
and a small 525 -square foot meeting
room. A hot breakfast is provided to
guests. Its room rates are $130 for
regular rooms and $141-$173 for
suites. Rates increase by about 15
percent during summers and 20 to 30
percent on weekends. The hotel offers
up to a 10 percent discount for a variety of travelers. The hotel is located adja-
cent to a popular restaurant, D Michael B's Resort Bar & Grill, and across the
street from the large Albertville Premium Outlet Mall. This is a Choice Hotels In-
ternational franchise.
32 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
Hampton Inn & Suites - Rogers
ENN
franchise.
This 16 -year-old, upper midscale hotel has
114 rooms along with an indoor pool, a fit-
ness center and a 1,012 -square foot meeting
room. A hot breakfast is provided to guests.
Its room rates are $124 - $129 for a regular
room and $145 - $149 for a suite. The hotel
offers a 15 percent discount for non-refunda-
ble advance reservations. This is a Hilton
Holiday Inn Express & Suites - Rogers
This 14- year-old, upper midscale hotel has
75 rooms, an oversized indoor pool area
that features several water park elements,
an arcade, fitness center and an 806 -square
foot meeting room. A hot breakfast is pro-
vided to guests. Its room rates are $119-
$124 for a regular room and $129 - $139 for
a suite. Weekend rates are $20 higher. It of-
fers a 15 percent discount for non -cancellable reservations. The hotel is an Inter-
continental franchise.
The characteristics and amenities of the primary competitive hotel supply are
summarized in the following table.
PRIMARY COMPETITIVE AREA HOTELS
33 Hospitality Consulting Group
Age
Rack Rates ( Oct. 2023)
Meeting
Hotel
Location
Quality
(Years)
Rooms
Regular
Suite
Space
Amenities
Primary Competition:
Best West Plus Inn & Suites
Monticello
UM
23
51
$130
$160-$170
1,200 sf
Pool, hot tub, fitness room
Country Inn & Suites
Albertville
UM
19
66
$139
$149-$159
525 sf
Pool, hot tub, fitness room
Hampton Inn & Suites
Rogers
UM
16
114
$166-$175
$194
1,012 sf
Pool, fitness room
Holiday Inn Express & Suites Rogers
UM
14
7S
$139
$14941S9
806 sf
Pool, hot tub, fitness room
306
33 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
Secondary Competitive Hotels
The following eight hotels are considered to be secondarily competitive with a
new upper midscale hotel in Monticello due to their location and/or quality. The
hotels in Maple Grove have a larger commercial component than the primary
competitive hotels and are less reliant on interstate demand.
AmericInn
Cambria Suites -Maple Grove
Hampton Inn -Maple Grove
This 44 -year-old, midscale hotel has 61
rooms along with an indoor pool and a
hot tub. A hot breakfast is provided to
guests. Its room rates are $114-$119 for
a regular room and $174 for a suite.
There is no premium for weekends,
however summer rates are $20 higher.
This is a Wyndham franchise.
This 14 -year-old, upscale hotel has 129
rooms along with an indoor pool, a fit-
ness center and 2,025 square feet of
meeting space. A hot breakfast is pro-
vided to guests. Its room rates are $137-
$153 for a regular room and $202 - $222
for a suite. Weekend rates are 20 percent
higher. This is a Choice Hotel franchise.
This 26 -year-old, upper midscale hotel
has 120 rooms along with an indoor
pool, a fitness center and a small 625 -
square foot meeting room. A hot break-
fast is provided to guests. Its room rates
are $188. Weekend rates are 25 per-
cent higher. This is a Hilton franchise.
34 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
Holiday Inn Hotel & Suites -Maple Grove
This 16 -year-old, upper midscale hotel is
the only full-service hotel in the market
area. It has 136 rooms along with an in-
door waterpark that is popular on week-
ends, a fitness center, a restaurant and
lounge, and two meeting rooms with a to -
`7!' tal of 1,635 square feet. Its room rates are
�r $218 for a regular room and $298-$343
for a suite during the week. Weekend rates
increase by as much as 50 percent. Rates
include four wristbands for the weekend water park. This is an Intercontinental
Hotel Group franchise.
Marriott Courtyard -Maple Grove
Hilton Garden Inn -Maple Grove
This 15 -year-old, upscale hotel has
115 rooms along with an indoor pool,
a fitness center and a 720 -square foot
meeting room. The hotel features a
limited restaurant and bar. It has the
highest room rates in the area at $319
for a regular room and $469 for a
suite.
This20-year-old, upscale hotel has
120 rooms along with an indoor pool,
a fitness center and 1,400 square feet
of meeting space. The hotel features a
limited restaurant and bar. Its room
rates are $219 - $229 for a regular
room and $249 for a suite. Weekend
rates are 10 percent lower.
35 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
Staybridge Suites
EI
SpringHill Suites
This 23 -year-old, upscale hotel has
119 rooms along with an indoor pool,
a fitness center and a small 176 -
square foot meeting room. The hotel
provides a breakfast buffet for guests
and a cocktail reception three eve-
nings per week. Its room rates are
$199 for a regular room and $239 for
a suite. Weekend rates are 5 percent
lower. This is an Intercontinental
Hotel Group franchise.
This upscale all -suite hotel opened in
2019 with 84 rooms. Each suite has a
minifridge and a microwave. A break-
fast buffet is provided to guests and
other amenities include an indoor
pool, fitness center, a convenience
store, and an outdoor grilling area. Its
�.
room rates are $171-$254 for a suite.
Weekend rates are 20 percent lower.
F, .
The secondary competitive hotels are summarized in the table below.
- J This is a Marriott franchise.
SECONDARY COMPETITIVE AREA HOTELS
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: STR and Hospitality Consulting Group
36 Hospitality Consulting Group
Age
Rack Rates
( Oct. 2023)
Meeting
Hotel
Location
Quality
(Years)
Rooms
Regular
Suite
Space
Amenities
Secondary Competition:
Americhm & Suites
Rogers
M
44
61
$114-$119
$174
none
Pool, hot tub
Cambria Suites
Maple Grove
U
14
129
$137-$153
$202-$222
2,288 sf
Pool, hot tub, fitness room, bistro bar
Hampton Inn
Maple Grove
UM
26
120
$188
na
625 sf
Pool, fitness room
Holiday Inn Hotel & Suites
Maple Grove
UM
16
136
$218
$298-$343
312/1,323 sf
Water park, fitness rm, restaurant, lounge
Marriott Courtyard
Maple Grove
U
15
115
$319
$469
720 sf
Pool, whirlpool, fitness room, limited rest, bar
Hilton Garden Inn
Maple Grove
U
20
120
219-229
$249
1,400 sf
Pool, whirlpool, fitness room, limited rest, bar
Staybridge Suites
Maple Grove
U
23
119
$199
$239
176 sf
Pool, hot tub, fitness room
SpringHill Suites
Maple Grove
U
4
84
na
171-254
558 sf
Pool, fitness room
884
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: STR and Hospitality Consulting Group
36 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Subtly
ROOM RATE STRUCTURE
Current room rates in Monticello range from $66 for economy lodging to $120
for midscale lodging accommodations, before discounts. Demand sometimes
peaks on weekends on account of tournaments and various social events.
Room rates are sometimes increased by up to $40 on these weekends and
rates generally are increased by $10 during the summer.
Room rates at the upper midscale hotels in the competitive supply range from
$130 to $166 before discounts.
The current posted room rates for the competitive area hotels are summa-
rized in the following table.
PRIMARY COMPETITIVE AREA HOTELS
Age Rack Rates( Oct. 2023) Lowest
Hotel Location Quality (Years) Rooms Regular Suite Discount
Primary Competition:
Best West Plus Inn & Suites Monticello UM 23 51 $130 $160-$170 $121
Country Inn & Suites Albertville
Hampton Inn & Suites Rogers
Holiday Inn Express & Suites Rogers
UM 19 66 $139
UM 16 114 $166-$175
UM 14 75 $139
306
$149-$159 $118
$194 $154
$149-$159 $123
Maple Grove has a stronger commercial base than does the communities in
the primary market, and it benefits from the generally higher room rates in
Minneapolis. Thus, it is able to achieve higher room rates and support several
upscale properties. Room rates at the Upper midscale and upscale properties
range from $137 to $319, before discounts. The current posted room rates for
the secondary competitive hotels are summarized in the following table.
37 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
SECONDARY COMPETITIVE AREA HOTELS
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: STR and Hospitality Consulting Group
MEETING FACILITIES
Meeting facilities allow a hotel to attract additional demand related to area
meetings, merchandise and hobby shows, as well as social functions. Meeting
and function space in Monticello is provided by two large venues:
• Monticello Community Center - The largest array of meeting facilities
in Monticello is located in the Monticello Community Center. The Missis-
sippi Room is used for business, entertainment and social functions. It
has 4,200 square feet and can accommodate up to 300 people. It is a pop-
ular venue for wedding receptions. In addition, there are three other
meeting rooms of 940, 462, and 168 square feet. The rooms are available
for rent to the public and liquor is allowed at events.
• River City Extreme is a bowling alley and entertainment complex lo-
cated in Monticello. In addition to a restaurant, bar and a large game
room, the complex features a ballroom with a capacity for 300 that is
popular for weddings and banquets.
• Super 8 has a 1,500 -square foot meeting space
• Best Western has 1,200 square feet of meeting space.
38 Hospitality Consulting Group
Age
Rack Rates ( Oct. 2023)
Lowest
Hotel
Location
Quality
(Years)
Rooms
Regular
Suite
Discount
Secondary Competition:
AmericInn & Suites
Rogers
M
44
61
$114-$119
$174
$103
Cambria Suites
Maple Grove
U
14
129
$137-$153
$202-$222
$120
Hampton Inn
Maple Grove
UM
26
120
$188
na
$163
Holiday Inn Hotel & Suites
Maple Grove
UM
16
136
$218
$298-$343
$165
Marriott Courtyard
Maple Grove
U
15
115
$319
$469
$158
Hilton Garden Inn
Maple Grove
U
20
120
219-229
$249
$184
Staybridge Suites
Maple Grove
U
23
119
$199
$239
$170
SpringHill Suites
Maple Grove
U
4
84
na
171-254
$156
884
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: STR and Hospitality Consulting Group
MEETING FACILITIES
Meeting facilities allow a hotel to attract additional demand related to area
meetings, merchandise and hobby shows, as well as social functions. Meeting
and function space in Monticello is provided by two large venues:
• Monticello Community Center - The largest array of meeting facilities
in Monticello is located in the Monticello Community Center. The Missis-
sippi Room is used for business, entertainment and social functions. It
has 4,200 square feet and can accommodate up to 300 people. It is a pop-
ular venue for wedding receptions. In addition, there are three other
meeting rooms of 940, 462, and 168 square feet. The rooms are available
for rent to the public and liquor is allowed at events.
• River City Extreme is a bowling alley and entertainment complex lo-
cated in Monticello. In addition to a restaurant, bar and a large game
room, the complex features a ballroom with a capacity for 300 that is
popular for weddings and banquets.
• Super 8 has a 1,500 -square foot meeting space
• Best Western has 1,200 square feet of meeting space.
38 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
A community needs public space to accommodate such functions as business
meetings, training sessions, seminars, banquets, fund raisers, reunions and re-
ceptions. Several decades ago, most hotels had restaurants and large meeting
spaces to fulfill these needs. However, the development of large numbers of
economy and limited service hotels which lack food service and offer only
small meeting space, have greatly reduced the number of new full service ho-
tels. As a result, restaurants, golf clubs and banquet halls are capturing in-
creasing shares of this business.
The City of Monticello responded to this need by including a large meeting
space within its community center. The executive director of the Monticello
Chamber of Commerce indicated that the community has a need for even larger
meeting space than what currently exists. Several local events have outgrown
the available meeting space so are forced to hold their functions in the commu-
nity center gym. She also mentioned that several larger groups have been turned
away from Monticello due to insufficient meeting space.
While a large event center at a new hotel would draw new events to the
community, such a facility would not be economically viable without significant
financial assistance, given the elevated construction costs and interest rates that
presently exist.
Based on this research, we feel that a divisible meeting room of 800 to 1,200
square feet would be appropriate for a new hotel in Monticello. Such a space
would help the hotel attract commercial meetings business and also accommo-
date smaller social functions. Due to the large ballroom space in the commu-
nity center, a similar large ballroom at the hotel would likely be under-uti-
lized.
39 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
SECTION 5: AREA HOTEL DEMAND
HOTEL INDUSTRY TRENDS
The lodging industry was devasted by the Covid-19 pandemic when travel
was severely restricted and many businesses shut down. Robert W. Baird &
Company reported that industry wide RevPAR (revenue per available room)
declined by 50 percent in 2020. Since that low, the industry has steadily been
returning back to normal and it exceeded the performance of most other in-
dustries in 2022. Through the first half of 2023, STR Global reports that indus-
try wide RevPAR was nearly 2 percent higher than the same period in 2019
(in adjusted dollars).
The leisure market segment was the first to recover, driven by pent-up de-
mand after covid restrictions supported by excess cash from savings and gov-
ernment payouts. The business and group segments have been slower to re-
cover. Business demand is expected to be back to 80 percent of normal by the
end of this year. A full recovery is projected to occur in 2026. Industry wide
occupancy in 2023 is projected to reach 64 percent with a 4 percent increase
in ADR (average daily rate) resulting in a 5.5 percent RevPAR increase.
Future revenue growth is expected to come mostly from room rate increases,
although some occupancy increase is expected due to the emerging commer-
cial and group market segments. PwC projects a 3.5 percent increase in
RevPAR for 2024.
Overall occupancy at Minnesota hotels increased from 48 percent in 2021 to 55
percent in 2022, according to STR Global data obtained from the Minnesota
Lodging Association. The competitive supply along the I-94 corridor experi-
enced an annual occupancy of 65 percent in 2022, which was 10 points higher
than the statewide average.
40 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
The statewide occupancy through May of this year was 57 percent compared
to 61 percent for the competitive supply. The statewide numbers are influ-
enced by the low occupancy experienced at Downtown Minneapolis hotels.
Statewide RevPAR in Minnesota increased by 11.4 percent through April of
this year.
Airbnb has eroded hotel demand in some markets, particularly resort locations
and large cities. Cofounded in 2008, Airbnb now has 2.9 million hosts and 8
million listings around the world. Hotels offer consistency while Airbnb offers
more amenities, sometimes unique accommodations, and a different lodging
experience at a lower price. These lodging options have the greatest impact on
hotels in markets where the supply of hotel rooms is limited, as in large cities.
For example, Airbnb is estimated to capture more than 10 percent of hotel de-
mand in Paris, London and New York City. In response to the competition, some
hotels are successfully listing rooms on the Airbnb platform. The largest impact
is felt by midscale and luxury hotels: a study of the industry between 2008 and
2017 found that Airbnb rentals resulted in an estimated RevPAR decline of 4
percent and 2 in these segments respectively. It is important to note that many
rentals occur in markets when hotels are full, so they do not result in reduced
hotel revenues. A search of the Airbnb platform found only four listing in Mon-
ticello.
HOTEL DEMAND
A new hotel in Monticello would seek to capture the upscale lodging demand
that is leaving the community to stay at higher quality hotels in neighboring
cities, upscale demand from the interstate, and a portion of the demand that is
presently accommodated by local hotels. In order to quantify the amount of
local demand that can be expected, we interviewed representatives of area
businesses, local government, and local hotels. In addition, we obtained
historic performance data for the four franchised hotels in the competitive
supply.
The patronage that will be available to a new hotel consists of commercial
visitors conducting business in the area, travelers on the interstate, people
attending social functions and visitors to area residents, and people attending
meetings and other group functions. In conducting our market analysis, we
looked at the characteristics of each demand component. A description of these
characteristics follows.
41 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
Commercial Demand
Commercial demand occurs steadily throughout the year with little seasonal
fluctuations other than a decline in business travel during holiday periods. This
segment of demand occurs mostly during the weekdays. It originates from travel-
ers conducting business in the area and passing through on the interstate. Com-
mercial travelers generally seek out franchised hotels that are located near their
business destination. Because much of this segment travels frequently, they are
more likely to participate in hotel loyalty clubs.
This segment is estimated to be approximately 80 percent of its pre-covid base.
The return of the business traveler will be an important factor in the future
growth in lodging demand.
Interviews with the large employers in the area revealed the usual number of
visitors from corporate personnel, management, vendors, potential employees
and customers.
Cargill Kitchen Solutions has fewer visitors than previously since its
corporate headquarters was moved to the Minneapolis suburb of
Wayzata. It sponsors some training events and is visited by personal
from other locations and maintenance specialists. The administrator
interviewed indicated that some of the visitors stay at the Best Western
Plus in Monticello, most of the upper-level visitors stay in Maple Grove,
attracted by the Hilton, Marriott, and Intercontinental hotel products and
the variety of restaurants and shops.
• UMC (Ultra Machining Corporation) produces precision machined
components. Am administrator at the company indicated they do get
some out-of-state visitors, but was unable to estimate the number.
Polarus (WSI, Inc.) estimates that it has an average of one visitor a
month that require lodging. These visitors typically utilize local hotels,
but sometimes go to hotels in Maple Grove. Brand loyalty, loyalty club
points and variety of restaurants were noted as reasons for leaving the
Monticello market. The company has multiple meeting rooms in its plant,
so has little need for outside meeting space.
• Xcel Energy operates a nuclear energy plant on the northwest edge of
Monticello and a coal-fired energy plant in nearby Becker. The nuclear
42 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
plant is shut down every two years for re -fueling and maintenance.
Crews of 400 to 600 workers are brought to the area for around 45 days
in the spring during these scheduled power outages. While many of these
workers bring campers and trailers, lodging contracts for the crews are
negotiated by the contractor and this demand can fill area hotels that
participate. Such an event occurred in April 2023, with the next outage
scheduled for Spring 2025. Even if the hotels in the competitive supply
do not participate in the worker contracts, they benefit from overflow
demand from the economy hotels that are filled with workers. The
nuclear plant just completed a $665 million project that will extend the
life of the generator (licensed through 2030) and increase its output.
Several business executives mentioned that a lack of restaurants in Monticello
that are suitable for entertaining would be a detriment to a new hotel for some
types of their visitors. In contrast to the limited restaurants in Monticello, there
is a wide variety of restaurants and fine dining options in Maple Grove.
Leisure Demand
The Leisure demand segment consists primarily of visitors to local residents by
friends and relatives, visitors attending weddings, reunions and other social
gatherings, participants in sports tournaments that are hosted in town, and
visitors to Monticello's special events.
Sports tourism is a growing segment of leisure hotel demand. A survey conducted
by the University of Minnesota found that about 5 percent of event participants at
the Bertram Chain of Lakes Park utilize hotels in the area. Local hotels should in-
creasingly benefit as the athletic facilities develop more state-wide and regional
tournaments
Leisure travelers passing through the area on Interstate 94 are estimated to account
for approximately 30 percent of the total demand accommodated by the four com-
petitive hotels. The Leisure market segment is largest during the summer months,
when vacation travel is at its peak, and reaches its low point in December and Jan-
uary. Leisure demand is typically the most price sensitive demand segment.
Monticello is exerting efforts to enhance its outdoor recreational amenities in an
attempt to attract tourists seeking more active experiences. These efforts include
expanding the bike paths throughout the city and linking its parks, and improving
access to the Mississippi for fishing, canoeing and kayaking. We believe these
43 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
efforts should be viewed as amenities that will enhance Monticello's attractiveness
as a destination, but are not strong enough to generate a significant amount of addi-
tional hotel demand. This is because the proximity to the Twin Cities area reduces
the probability of an overnight stay from area visitors.
Group Demand
Group business is generated by meetings, seminars and training sessions held
by area employers, government agencies, associations and businesses.
Monticello's location midway between St. Cloud and the Twin Cities makes it a
good location for regional groups. Demand from this segment has yet to fully
recover to pre-covid levels.
HOTEL MARKET PERFORMANCE
In order to assess the recent trends in the Monticello lodging market, we
obtained detailed performance data from STR, a well-known research firm
that collects and provides lodging data to the industry. The competitive
supply consists of the one upper midscale hotel in Monticello (Best Western
Chelsea Inn) and the three upper midscale hotels located along the I-94
corridor in Albertville (Country Inn & Suites) and Rogers (Hampton Inn &
Suites and Holiday Inn Express & Suites)
%, 'Ah
This data shows that the competitive set of four hotels achieved an overall
annual occupancy of 64.7 percent in 2022, the highest level achieved in the last
eight years. The hotels achieved an average daily room rate of $126.87, which
represents an 11 percent increase over the previous year. Generally, a hotel
targets a 60% to 70% occupancy to be successful.
Lodging Demand
The amount of hotel demand accommodated by the four competitive hotels
has increased over the last two years documenting the recovery from the ex-
treme impact from covid-19 felt largely in 2020. The number of occupied
roomnights in 2022 exceeded the 2021 level by nearly 15 percent and was 1.6
percent higher than even the pre-covid demand in 2019. The recent trend in
occupied hotel rooms is shown in the following graph.
44 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
Lodging Demand
(Occupied Rooms)
2018 2019 2020 2021 2022
Source: STR
This demand resulted in the annual occupancies of the competitive set
shown below. The market achieved about a 65 percent annual occupancy in
2022, which was one point higher than the pre-covid level in 2019.
Occupancy
2018 2019 2020 2021 2022
Source: STR
A graph depicting monthly occupancies is shown below. Occupancies tend to
peak during the summer months which is a pattern typical of an interstate lo-
cation. The fact that the summer increase is not that large relative to the rest
of the year indicates there is a strong commercial component to the lodging
demand which occurs throughout the year.
45 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
90.0
80.0
70.0
> 60.0
u
50.0
CL
u
4 0. 0
a 30.0
20.0
10.0
0.0
Source: STR
Seasonality of Demand
4k'0 0 oet Qec
2019
2020
2021
2022
2023
The graph shows the recovery from the large downturn in demand experienced
in 2020. It also marks the impact of the Xcel Energy work crews in April of 2021
and 2023. Demand in 2022 exceeded 2019 pre-covid demand. The rush to
travel experienced in 2022 has subsided slightly: year -to -date through May to-
tal demand is nearly equal to the demand experienced during the same period
last year.
The seasonality of demand is an important component in determining the
size of a new hotel and in projecting its annual occupancy. Monthly perfor-
mance data over the last three years for the competitive set shows that lodg-
ing activity peaks in the summer, exceeding 70 percent in the months of April
through September.
46 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
■ 2021 ■ 2022 ■ 2023
Source: STR
Average Daily Rate
The average daily rate over the last five years is shown in the graph below.
The recent trend in average daily rate is shown in the following graph. The in-
crease in ADR since 2020 is remarkable with a 16 percent increase in 2021 fol-
lowed by an 11 percent increase in 2022. Year-to-date through May, the ADR
for the competitive set is up over 8 percent.
These large increases were a combination of hotels trying to recover from the
poor 2020 performance, along with the necessity to cover increasing labor
costs necessary to attract workers after Covid.
47 Hospitality Consulting Group
Occupancy by Month
90.0
80.0
70.0
60.0
50.0
CL
� 40.0
U
30.0
20.0
10.0
0.0
■ 2021 ■ 2022 ■ 2023
Source: STR
Average Daily Rate
The average daily rate over the last five years is shown in the graph below.
The recent trend in average daily rate is shown in the following graph. The in-
crease in ADR since 2020 is remarkable with a 16 percent increase in 2021 fol-
lowed by an 11 percent increase in 2022. Year-to-date through May, the ADR
for the competitive set is up over 8 percent.
These large increases were a combination of hotels trying to recover from the
poor 2020 performance, along with the necessity to cover increasing labor
costs necessary to attract workers after Covid.
47 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
Source: STR Global
HOTEL DEMAND PROJECTIONS
Growth rate assumptions were developed from analysis of the area's popula-
tion forecasts, historic demand growth trends, and industry forecasts.
Market Mix
It is important to identify the mix of business in a lodging market since the differ-
ent segments are likely to be growing at different rates and have different room
rate characteristics. The mix of the lodging demand accommodated by the com-
petitive set is estimated to consist of the following:
ESTIMATED MARKET MIX (2022)
Market Occupied % of
Segment Roomnights Total
Commercial
Leisure
34,000 47%
31,100 43%
Group 7,200 10%
Totals 72,300 100%
48 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
We estimate that 47 percent of the competitive set market is generated by com-
mercial activity, 43 percent is generated by local and leisure travelers, and 10
percent comes from meetings and other group functions.
We estimate that approximately 30 percent of the lodging accommodated by the
competitive hotel set is business that comes of the interstate that is approxi-
mately equal parts commercial and leisure demand.
Growth in Lodging Demand
In estimating future levels of lodging demand that would be available to a
new hotel, we considered the following factors:
Factor 1: The continued recovery from the Covid impact will result
in more lodging demand, particularly in the commercial and group
segments. The hotel industry is tied directly to the regional and
national economy. As business activity continues to pick up, sales-
men, executives and other business travelers will return to the
road in increasing numbers. The recent increases in disposable in-
come resulting from higher wages will support increases in vaca-
tions and other leisure travel. Hotel industry analysts expect the
hotel industry to fully recover by 2025.
Population projections for Wright County show an expected 14
percent increase between 2020 and 2030. This represents a com-
pound annual rate of 1.3 percent. A 12 percent growth is expected
for the decade between 2030 and 2040.
The addition of more hotel rooms will allow for more guests to be
accommodated on the nights in which the hotels are at capacity.
This situation occurs on many nights during the summer and on
many weekends throughout the year. An additional 1,000 room -
nights have been added in the odd years to account for the de-
mand from the Xcel work crews that can be accommodated by the
additional available hotel rooms.
4. The addition of a new national franchise will draw more travelers
off the interstate and discourage local commercial and leisure de-
mand from leaving the Monticello market.
49 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
Based on these factors, we believe that a base annual growth rate of 2.0 per-
cent is a reasonable expectation for continued hotel demand growth for the
competitive supply through 2029. An additional 1.0 percent increase in
2025 and 2026 was factored into our analysis to account for the new hotel
rooms available when the subject hotel opens.
The amount of lodging demand projected to be captured by the competitive
set of hotels is summarized in the following table. This demand includes de-
mand that is presently leaving the market due to insufficient hotel quality
and capacity and demand that will be attracted to the Monticello market by a
new franchised hotel.
MONTICELLO AREA LODGING MARKET
Projected Growth (With 80 -Room Hotel)
Note 1. Assumes subject hotel opens with 80 rooms
Note 2. Assumes crew business results in 1,000 additional roomnights in 2025, 2027, and 2029
Source: Hospitality Consulting Group
50 Hospitality Consulting Group
Available
Demand
Growth
Market
Year
Rooms
(Roomnights)
Rate(2)
Occupancy
Historic:
2018
306
69,200
62%
2019
306
71,100
2.7%
64%
2020
306
46,100
-35.1%
41%
2021
306
63,000
36.4%
56%
2022
306
72,300
14.8%
65%
Projected:
+
2023
► 306
74,400
2.9%
67%
2024
306
75,900
2.0%
68%
2025(1)
386
79,200
4.3%
56%
2026
386
80,600
1.8%
57%
2027
386
83,300
3.3%
59%
2028
386
83,900
0.7%
60%
2029
386
86,500
3.1%
61%
Note 1. Assumes subject hotel opens with 80 rooms
Note 2. Assumes crew business results in 1,000 additional roomnights in 2025, 2027, and 2029
Source: Hospitality Consulting Group
50 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Recommended Facilities
SECTION 6: RECOMMENDED FACILITIES
This section of the report presents the facilities that are recommended for a
hotel that will be most successful given the area market characteristics.
Estimates of the utilization of the recommended hotel are presented in the next
section of the report.
HOTEL FACILIITY RECOMMENDATIONS
Building both quality and amenities into a hotel adds cost and therefore, higher
quality hotels with a restaurant and meeting space must charge higher room
rates. Thus, the price sensitivity of a market must be assessed in order to
determine the type of a hotel project that can be supported by the subject
market.
The full-service hotel has all but disappeared in recent years for locations other
than urban areas, large office parks, and corporate centers. This is due to their
higher cost (and higher room rates) relative to limited -service hotels that can
offer the same quality room but at a lower rate. Due to the challenges of staffing
and operating a restaurant, full-service hotels are also considered to be of
greater risk by lenders and investors.
Based on our evaluation of the local hotel supply and demand conditions
we believe that an 80 -room limited service hotel of upper midscale quality
will perform best within the Monticello competitive market.
Guest Rooms
The guest rooms should be finished with high quality floor and wall coverings
and appropriately furnished. Bathrooms should be tiled and have granite
countertops. Most of the bathrooms should have a walk-in shower, rather than a
tub. Rooms should include smart televisions with at least one popular streaming
service, a coffee maker, and free high-speed internet. We suggest the hotel's
51 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Recommended Facilities
room complement should include some interconnecting rooms to better
accommodate leisure travelers. Four 1 -bedroom suites are recommended to
accommodate relocations, wedding parties and guests celebrating special
occasions. At least one of the suites should offer full kitchen facilities suitable for
long term stays.
Meeting Facilities
The hotel should include a public function room of approximately 1,000 square
feet. A room of this size could accommodate 50 to 80 for a meeting, 50 for a
banquet, and 100 for a reception. This amenity will allow the hotel to attract an
additional demand segment made up of area meetings and social functions.
Other Amenities
Other amenities that are recommended for the hotel include:
• An indoor pool that will improve the hotel's competitiveness for leisure
travelers and for visitors to area residents;
• An exercise room with several high-quality exercise machines and a
television;
• A business center with a computer and printer available to guests 24
hours a day; I
• Complimentary breakfast for guests; and
• High speed wireless internet access throughout the hotel.
Parking
Adequate and convenient parking will be required for the success of the hotel. In
order to meet local code requirements, we estimate that the hotel should have at
least 100 parking spaces. Additional parking may be required to accommodate
attendees at functions that are not staying at the hotel.
Franchise Discussion
There is an emerging trend within the hotel industry whereby guests select a
52 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Recommended Facilities
hotel based on its company's rewards program, rather than on convenience of
location, room rates or amenities. The large franchise companies award points
for staying in their hotels which can then be redeemed for free or discounted
stays at any hotel within their respective chains. Thus, it is not unusual for
travelers to drive an extra distance to stay at a hotel whose rewards program
they participate in. This factor can distort the competitive environment within a
particular hotel market.
Marriott, Hilton, and Intercontinental Hotel Group have the most popular
programs, as they have hotels throughout the world, including a number of
popular resorts, where rewards can be redeemed. Choice Hotels has a liberal
rewards program that provides free hotel rooms, but its inventory of hotels and
resorts is not nearly as extensive as the three aforementioned hotel companies.
Because these hotel brands are represented in nearby Albertville, Rogers and
Maple Grove, we recommend that a hotel carrying a well-recognized national
franchise should be considered for Monticello in order to achieve maximum
market penetration. The stronger the subject hotel's franchise, the less business
will be lost to these hotels in the surrounding markets.
�I
53 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Site Review
SECTION 7: SITE REVIEW
The City has identified four possible locations for a new hotel. The general
suitability of these sites is discussed below.
CRITERIA
Hotel sites are evaluated on the basis of visibility from major transportation
routes, access, proximity to destinations, proximity to restaurants, and the
suitability of surrounding land uses.
Visibility and Accessibility
All of Monticello's existing hotels are located near the Pine Street/Highway
25 intersection with the interstate. Their locations provide visibility from the
interstate and easy accessibility for highway travelers. The technology of
smart phones and GPS systems has reduced the importance of visibility and
accessibility as they allow for a guest to easily book a hotel in advance and
find its location. Thus, the need for visibility is diminished as fewer travelers
stop at a hotel on impulse.
Proximity to Destinations
The largest industrial area is located on the southern side of Interstate 94
along Chelsea Road. Businesses located in this vicinity include UMC, Polaris, and
Aroplex Injection Molding.
Businesses located on the western side of the interstate along Broadway include
BondHus and the CentraCare medical complex.
Proximity to Restaurants
Most of the community's restaurants are located along Highway 25, with
three of the more popular ones (Applebee's, Chatters, and Buffalo Wild
Wings) on the south side of the interstate. All three are located
54 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Site Review
approximately 0.5 miles or more from the existing hotels so are beyond a
comfortable walking distance. There is also a variety of fast food restaurants
in this area. A table service restaurant within easy walking distance would
create a competitive advantage for a new hotel.
Suitability of Surrounding Land Uses
Generally, a retail or residential neighbor is preferable to an industrial land
use. These typically are more compatible with a hotel as they are quieter,
have pedestrian activity, and external lighting.
SUMMARY EVALUATION
As with any real estate development, the cost of the site and its necessary
improvements ultimately has the greatest influence on selection.
The four identified site locations are shown on the map on the following
page.
Site 1 has several potential hotel sites within the new Pointes at Cedar
commercial/residential development. These sites are desirable because of
their proximity to the restaurants located nearby along State Highway 25 and
their proximity to the existing hotels. There are several potential hotel sites
within the masterplan, however, we favor the site that is closest to Chelsea
Road. This would be across the street from the Best Western Plus and very
near the two franchised economy motels. The combination of these hotels, all
within walking distance of each other, would provide a large number of
rooms at varying price points that would be attractive to larger groups
meeting in the city.
The two potential sites along Cedar Street are less desirable because of the
incongruous nature of the commercial establishments on the west side of the
street.
Site 2 is a large tract of agricultural land located at the eastern exit on I-94 and
bounded by the interstate on the north and Chealsea Road on the south.
Known as Midtown Monticello, the site's masterplan calls for a mixed use of
office, medical, hotel, and restaurant. With the exception of a Mill's Fleet Farm,
55 Hospitality Consulting Group
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1
oll
lir .0 _ � _ •-1�
F ,Y`
rIN�J f'
Ja■ ,, f .,.
„� fl i�.-+'- �� � #■ 'f,��• * +>iLG � it
School-Blvd^-�� Ait r•;.
Hotel Market Study - Monticello, MN Site Review
the land uses along the south side of Chelsea Road are industrial. Businesses
located here include UMC, Polaris, and Aroplex Injection Molding. A hotel at
this location would be convenient for visitors to these businesses. Because of
the proximity to the interstate, noise abatement would be an important
consideration in the construction of a hotel.
The site is visible for traffic eastbound on I-94 but is blocked for westbound
traffic by the overpass. Fenning Avenue, which runs along the site's eastern
border, provides convenient access to the CentraCare medical center and
downtown Monticello.
This site seems premature for a hotel at this time but its viability will improve
as the surrounding area develops.
Site 3 is located east of the eastern I-94 exit on the edge of the city. It is
bordered by the interstate to the north and Broadway Street (Old Highway
152) on the south. The site lacks any commercial development in the
immediate area, but has excellent access to downtown via Broadway Street as
well as the businesses along Chelsea Road.
The site has excellent visibility and accessibility for westbound travelers on I-
94 as they would pass by the hotel before having to exit the interstate.
Eastbound travelers would have to exit before encountering the property, but
would also have good access to reach the hotel.
This site seems even more premature for hotel development than Site 2 and
will benefit from commercial development in the surrounding area. Because of
the proximity to the interstate, noise abatement would be an important
consideration in the construction of a hotel on this site.
Site 4 is located on the north side of I-94 and west of State Highway 25, which
is the main road into downtown Monticello. It is bordered to the north by 7th
Street West, and is separated from the highway by a Runnings Home, Farm &
Outdoor Store and a Cub Foods grocery store. Residential development lies to
the north and further west.
There is a Rancho Grand Mexican restaurant, a Pancho Villa restaurant and a
Kentucky Fried Chicken outlet in the immediate area. The site has excellent
visibility for eastbound travelers on I-94 as they would pass by the hotel before
57 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Site Review
having to exit the interstate. Visibility for westbound travelers is partially
blocked by the Highway 25 overpass.
We think this site is suitable for new hotel development.
58 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
SECTION 8: UTILIZATION PROJECTIONS
Our analysis of the Monticello lodging market concluded that the community is
losing the more upscale demand to higher quality (upper midscale and upscale)
hotels and franchises of the larger hotel companies that are located in
neighboring cities. In order to assess the viability of a higher quality hotel, we
quantified the amount of demand that such a hotel could capture, given the
dynamics of the market, and estimated the average daily rate it could achieve.
UTILIZATION ASSUMPTIONS
As presented in the Hotel Demand chapter, annual lodging demand in the
competitive market has recovered in 2022 from the covid downturn and the
market occupancy was approximately one point higher than the peak years of
2015 and 2019.
The focus of a new hotel in Monticello should be to capture the demand that is
currently leaving the market due to the lack of higher quality hotel accommoda-
tions and to capacity constraints. While the Best Western Prime Chelsea Hotel
is an upper midscale hotel and well maintained, it is still over 20 years old. It
also sells out frequently on Saturday nights and business is strong enough that
it requires a two -night minimum stay on some weekends.
A new, upper midscale hotel would benefit from local demand that would
upgrade from the economy motels when they are full with the Xcel work crews.
The hotel could participate in the worker contract business at a discounted rate
if it had capacity and chose to do so.
Based upon an assessment of the market demand, we have estimated the
potential utilization for the recommended hotel's first five full years of
operation, assumed to begin in 2025 and stabilize in 2027. In developing the
utilization estimates, several key assumptions were made including the
59 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
following:
• The hotel will obtain and be operated under a strong national fran-
chise;
• The hotel will be managed by competent personnel;
• Hotel management will implement a comprehensive program of on-
going maintenance covering all facilities, furnishings and equipment;
• Management will conduct an aggressive program of pre -opening
marketing and will continue an effective program of advertising and
group promotions targeted toward area groups and social
gatherings throughout the projection period; and
• No new hotels, other than the subject, will be constructed in Monti-
cello during the projection period.
In addition, all findings, estimates, assumptions and conclusions discussed in
this report are integral parts of the analyses and estimates that follow.
PROJECTED OCCUPANCY VL
In order to calculate the occupancy that the subject hotel is likely to achieve,
we looked at the performance of the other competitive hotels in the primary
market and analyzed the lodging demand that is generated by employers and
activities in the Monticello area and by travelers on the interstate.
Further insight into the market can be gained by analyzing the weekly de-
mand patterns. As shown below, on average an occupancy greater than 70
percent was achieved on Tuesday, Wednesday and Saturday nights through-
out the year. The high weeknight occupancies indicate that a strong commer-
cial demand component exists in the market.
60 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
Annual Day -of -Week Occupancy
° 72.3%
656% —
43.Z76
70.1%
X 5.4 °e
62.0%
Sun Mon Tues Wed Thurs Fri Sat
For the months of June 2022 and through May 2023, an average occupancy of
greater than 70 percent was reached on Tuesday in six months, on Wednes-
day in eight months, on Thursday in five months, and on Saturday in nine
months. The competitive market ran at near capacity in June 2022, with the
monthly average for every night except Sunday achieving occupancies
greater than 79 percent. Average occupancies at these levels indicates that
the market is unable to accommodate all of the demand on certain nights,
resulting in demand leaking out of the market, most likely going to hotels in
Maple Grove.
Based on the forecasted continued economic improvement and growth in local
population, we have assumed that the amount of lodging demand accommo-
dated by the subject hotel will increase at a base annual rate of 2.0 percent
throughout the projection period. An additional 1.0 point demand growth is
projected for the new hotel's first two years of operation due to the additional
capacity it provides, as well as increased marketing efforts among the
competitive hotels in response to the new competitor.
The sources of this new demand included:
Additional commercial demand that is presently deterred from stay-
ing in Monticello (and goes to Maple Grove) due to lack of high-quality
accommodations;
61 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
• Additional demand from travelers on I-94 attracted by a new hotel
carrying another national franchise and offering additional capacity
on nights when the local hotels fill up;
• Additional demand from meetings and training sessions held by area
companies, associations, and organizations;
• Additional demand from sports tournaments held at the Monticello
Athletic Park; and
• Additional demand generated by social functions such as weddings
and reunions which will be attracted by the new facilities.
Projected Hotel Utilization
Based on the results of our market study, we estimate that the proposed ho-
tel would be able to capture a premium above its fair share of the primary
market demand. By calculating the ratio of the rooms available at the pro-
posed hotel to the total number of rooms available within the market, the
"fair share" percentage of demand for the hotel may be determined. The fair
share calculation reflects the market share that the hotel could expect to cap-
ture if all available rooms in the market were favored equally by potential
guests and choices were made on a purely random basis. The recommended
80 rooms represent 20.7 percent of the competitive supply (80/386 =
20.7%). Our analysis found that the hotel can expect to achieve a market
share that has a 5.0 percent premium over its fair share. This premium will
be due to the newness of its facilities as it competes with the older Best West-
ern Prime Chelsea Hotel.
The results of our utilization analysis are presented in the following table,
which shows the subject hotel achieving projected occupancies that range
from 54 percent in its first year to 64 percent in its fifth year.
62 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
RECOMMENDED MONTICELLO HOTEL
Projected Utilization
80 Rooms
2025 2026 2027 2028 2029
Market Demand:
Base Market 78,200 80,600 82,200 83,900 85,500
Crews 1,000 - 1,000 - 1,000
Total Market 79,200 80,600 83,200 83,900 86,500
Subject Hotel:
Commercial
7,300
7,800
8,500
8,600
8,800
Leisure
7,100
7,500
7,800
7,800
8,100
Group
1,500
1,700
1,800
1,800
1,900
Occupied Rooms
15,900
17,000
18,100
18,200
18,800
Available Rooms
29,200
29,200
29,200
29,200
29,200
Projected Occupancy
Market Share
Fair Share
Penetration Rate
54% 58% 62% 62% 64%
20.1% 21.1% 21.8% 21.7% 21.7%
20.7% 20.7% 20.7% 20.7% 20.7%
96.9% 101.8% 105.0% 104.7% 104.9%
Occupancies projected for the first two years are lower than the stabilized
level of operation, as the hotel will require time to develop its marketing pro-
grams, particularly for group business, and to maximize public awareness of
the hotel facilities. The hotel is expected to achieve its full market share of
leisure demand in the second year and its full market share of the commer-
cial and group demand in its third year. Thus, its market penetration will sta-
bilize in its third year of operation.
It must be recognized that some local demand will still choose lodging in Ma-
ple Grove because of the restaurants, shopping and variety of Upper Midscale
and Upscale hotels that exist there.
Market Mix
The mix of the hotel's lodging demand at its stabilized level of operation is shown
in the table below.
63 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
ESTIMATED MARKET MIX
New 80 -Room Hotel (Stabilized)
Market Occupied % of
Segment Roomnight Total
Commercial
8,500
47%
Leisure
7,800
43%
Group
1,800
10%
Totals
18,100
100%
PROJECTED AVERAGE RATE
The analysis from which we developed our projections of average daily rate for
the recommended hotel included the quality and pricing structure of the other
primary competitive hotels.
As shown in the table below, current weeknight rack rates for regular rooms at
the competitive area hotels range from $130 to $179. Room rates are very
flexible and can change daily depending on bookings. All the hotels charge a
premium for Friday and Saturday nights (ranging from 5 to 45 percent) and
during the summer (premiums ranging from 5 to 15 percent). The Best
Western Plus in Monticello tends to charge the highest weekend premium (of
up to 45 percent). It was estimated to achieve an average rate of about $120 in
2022.
The average daily rate at a hotel falls below the rack rates due to the numerous
discounts that are offered to guests and to lower rates charged during periods
of slack demand. Some of the competitive hotels offer a 10% discount for
seniors and AAA members; some offer a 10% to 15% discount for their loyalty
club members, and a 10% to 15% discount for advance non-refundable
purchase. Performance data obtained from STR shows that the competitive
supply achieved an overall average rate of $126.87 in 2022. This rate is more
than 11 percent higher than the average rate achieved in the previous year. For
the first five months of 2023, the average rate was nearly $128, which is 8.3
percent higher than the same period last year.
64 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
We estimate that the average daily rate this year for the primary competitive
hotels will range between $129 and $146. Based on our analysis, we have
determined that the recommended upper midscale hotel should be able to
achieve an average rate of $135 in expressed in current 2023 dollars.
XQ619NoIN VAW.11:1A.111:[oil N� 91
Note 1: Posted rates October 2023
Source: Hotel web sites and Hospitality Consulting Group
The large increases in ADR that occurred in the last two years is not expected to
continue. The industry -wide ADR is forecasted to increase between 3.0 and 4.0
percent in 2024. Accordingly, we believe that a 3.0 percent annual rate growth
is reasonable for projecting future room rates in the Monticello competitive
market. Factored into the average room rate projected for the subject is an
inflation factor of 2 percent and a real growth factor of 1 percent, for a total
increase of 3 percent annually. The inflated average rate in 2025, assumed to be
its first full year of operation, is projected to be $143.20.
PROJECTED AVERAGE RATE
80 Rooms
Year Average Daily Rate
2023 $135.00
2025
$143.20
2026
$147.50
2027
2023 Rack Rates(1)
Weekend Summer
Estimated
Estimated
Hotel
Location
Quality
Age
Rooms
Regular
Suite
Premium
Premium 2022 ADR
2023 ADR
Primary Market
Best Western Chelsea Inn
Monticello
Upper midscale
18
52
$130
$150-$160
45%
15%
$120
$130
Country Inn &Suites
Albertville
Upper midscale
14
66
$130
141-173
20%
15%
$119
$129
Hampton Inn &Suites
Rogers
Upper midscale
11
114
$179-$189
$194
5%
15%
$135
$146
Holiday Inn Express & Suites
Rogers
Upper midscale
9
75
$139
$149-$159
5%
5%
$125
$135
Note 1: Posted rates October 2023
Source: Hotel web sites and Hospitality Consulting Group
The large increases in ADR that occurred in the last two years is not expected to
continue. The industry -wide ADR is forecasted to increase between 3.0 and 4.0
percent in 2024. Accordingly, we believe that a 3.0 percent annual rate growth
is reasonable for projecting future room rates in the Monticello competitive
market. Factored into the average room rate projected for the subject is an
inflation factor of 2 percent and a real growth factor of 1 percent, for a total
increase of 3 percent annually. The inflated average rate in 2025, assumed to be
its first full year of operation, is projected to be $143.20.
PROJECTED AVERAGE RATE
80 Rooms
Year Average Daily Rate
2023 $135.00
2025
$143.20
2026
$147.50
2027
$151.90
2028
$156.50
2029
$161.20
65 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
PROJECTED ROOM REVENUE
Based on the occupancy and average rate projections developed in this market
study, we project that the recommended hotel facilities should be able to
achieve the levels of room sales shown in the table below.
PROPOSED MONTICELLO HOTEL
Projected Room Revenue
80 Rooms
2025 2026 2027 2028 2029
Available Rooms
29,200
29,200
29,200
29,200
29,200
Occupied Rooms (Rounded)
15,900
17,000
18,100
18,300
18,800
Annual Occupancy
54%
58%
62%
63%
64%
Occupied Rooms (Rounded)
15,900
17,000
18,100
18,300
18,800
Average Daily Rate
$143.20
$147.50
$151.90
$156.50
$161.20
Room Sales (Rounded)
$2,277,000
$2,508,000
$2,749,000
$2,864,000
$3,031,000
�Y
Y
66 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
SECTION 9: FINANCIAL PROJECTIONS
Estimates of cash flow from operations before debt service have been prepared
for the first five years of operation for the hotel, expected to open in 2017. The
major assumptions as to the hotel occupancy and room rates are noted at the
bottom of the projection columns and have been developed from an analysis
of the local lodging market. The operating expense projections are derived from
industry data for small limited service hotels.
Room revenues reflect an annual increase of 3.0 percent in average daily rate
and expense categories have been inflated at an annual rate of 2.0 percent,
with the exception of labor and real estate taxes that were inflated at 3.0 per-
cent. Many of the expenses were projected on an amount per occupied room
basis, while the relatively fixed expenses reflect only inflationary increases.
The projected Utility expense has both a fixed and a variable component.
The financial projections on the following page are presented in the reporting
format suggested by the Uniform System of Accounts for Hotels.
NOTES TO FINANCIAL PROJECTIONS vp
Revenue
Guest Room Revenue projections are based upon the occupancy and average
rate estimates previously presented.
Miscellaneous Income consists of meeting room rentals, movie rentals, guest
laundry, pool rentals, interest and other ancillary revenue sources presented
net of associated costs.
Departmental Expenses
Rooms Departmental Expenses include payroll and related benefit expenses
for the front desk, housekeeping, and Laundry. It also includes other miscella-
neous rooms expenses such as breakfast expense, cleaning and guest room
67 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
RECOMMENDED 80 -ROOM UPPER MIDSCALE HOTEL
PROJECTED CASH FLOW FROM OPERATIONS BEFORE DEBT SERVICE
2025
2026
2027
2028
2029
OCCUPIED ROOMNIGHTS 15,900
17,000
18,100
18,300
18,800
OCCUPANCY 54.5%
58%
62%
63%
64%
ADR $143.20
$147.50
$151.90
$156.50
$161.20
AMOUNT
AMOUNT
AMOUNT
AMOUNT 0AMOUNT
0.2%
REVENUE:
Guest Rooms
$2,276,880
99.6%
$2,507,500
99.6%
$2,749,390
99.6%
$2,863,950
99.6%
$3,030,560
99.6%
Vending
5,642
0.2%
6,153
0.2%
6,682
0.2%
6,891
0.2%
7,221
0.2%
Miscellaneous Income (net)
4,630
0.2%
4,950
0.2%
5,271
0.2%
5,329
0.2%
5,475
0.2%
Total Revenue
2,287,152 100.0%
2,518,603
100.0%
2,761,343
100.0%
2,876,170
100.0%
3,043,255
100.0%
DEPARTMENTAL EXPENSES:
Rooms Departmental Expenses
565,044
24.8%
606,409
24.2%
648,667
23.6%
670,790
23.4%
701,101
23.1%
Vending Expenses
1,693
30.0%
1,846
30.0%
2,005
30.0%
2,067
30.0%
2,166
30.0%
Total Departmental Expenses
566,737
24.8%
608,255
24.2%
650,672
23.6%
672,857
23.4%
703,267
23.1%
Total Departmental Profit
1,720,415
75.2%
1,910,349
75.8%
2,110,671
76.4%
2,203,313
76.6%
2,339,988
76.9%
UNDISTRIBUTED OPERATING EXPENSES
Administrative & General Expenses:
207,767
9.1%
218,495
8.7%
229,668
8.3%
236,329
8.2%
244,899
8.0%
Information & Telecommunications
17,973
0.8%
18,333
0.7%
18,322
0.7%
18,688
0.6%
18,685
0.6%
Marketing Expenses
102,460
4.5%
112,838
4.5%
123,723
4.5%
128,878
4.5%
136,375
4.5%
Franchise Fee
136,613
6.0%
150,450
6.0%
164,963
6.0%
171,837
6.0%
181,834
6.0%
Utilities
104,476
4.6%
113,938
4.5%
123,736
4.5%
127,606
4.4%
133,714
4.4%
Property Operations & Maintenance:
72,414
3.2%
101,253
4.0%
116,626
4.2%
120,064
4.2%
124,611
4.1%
Total Undistributed Operating Expenses
641,702
28.1%
715,306
28.4%
777,038
28.1%
803,401
27.9%
840,117
27.6%
INCOME BEFORE FIXED CHARGES
1,078,713
47.2%
1,195,043
47.4%
1,333,633
48.3%
1,399,912
48.7%
1,499,872
49.3%
FIXED CHARGES
Insurance
32,782
1.4%
35,822
1.4%
39,143
1.4%
42,773
1.5%
46,739
1.5%
Real Estate Taxes
63,672
2.8%
131,165
5.2%
135,100
4.9%
139,153
4.8%
143,328
4.7%
Management Fee
91,075
4.0%
100,300
4.0%
109,976
4.0%
114,558
4.0%
121,222
4.0%
Replacement Reserve
45,538
2.0%
75,225
3.0%
109,976
4.0%
114,558
4.0%
121,222
4.0%
Total Fixed Charges
233,067
10.2%
342,512
13.6%
394,195
14.3%
411,042
14.3%
432,512
14.2%
CASH FLOW BEFOR DEBT SERVICE
$845,646 37.0%
$852,531 33.8%
$939,438 34.0%
$988,870 34.4%
$1,067,360 35.1%
supplies, cable TV fees, linens and cleaning supplies, and other direct operating
costs for the rooms department. The payroll component of this expense is rela-
tively fixed, varying only slightly in response to changes in occupancy, as house-
keeping staff and certain other hourly workers have variable schedules.
Undistributed Operating Expenses
Administrative and General Expenses include management and administra-
tive payroll and the general costs associated with operating the hotel facility,
68 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
including credit card commissions, bank charges, professional fees, travel and
entertainment and other miscellaneous costs.
Marketing Expenses include the costs associated with advertising, sales and
promotion, and include travel agent commissions, promotional materials, and
other promotional expenditures. This expense is calculated at 5 percent of total
revenue and includes a franchise marketing fee of 2.5 percent of room revenue.
Franchise Fees are fees paid to the franchise company as a royalty. The expense
is calculated to be 5.0 percent of room revenue, an amount typical for most fran-
chises.
Utilities expense includes costs related to heating and cooling, electricity, gas,
water and sewer. Utilities expense is projected from a base of $6.20 per occu-
pied room and includes both a fixed and a variable portion.
Property Operations & Maintenance expenses includes the costs associated
with repairs, maintenance, grounds keeping, and other related property operat-
ing costs. This expense is reduced over the early years as the facility will be new
and the equipment under warranty.
Management Fee
Management Fee - We have assumed that the hotel will be managed by a pro-
fessional management company for a fee equal to 4.0 percent of total revenue.
Fixed Charges
Insurance expense is projected to be $375 per room, similar to the premiums
paid by other hotels with pools.
Property tax expense is projected from an estimate of $1,500 per room, an
amount derived from industry data, and was increased by 3.0 percent each year.
This expense amounts to approximately 5.0 percent of total revenue. In the first
year, the tax expense assumes the hotel is only half completed at the time of as-
sessment.
Replacement Reserve represents funds that will be set aside from operating
cash flow to fund the future cost of replacing and upgrading furnishings and fix-
tures in the facility that will be required to maintain its competitive standing in
69 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
the market on a continuing basis. This reserve is calculated at 2.0 percent of
projected total revenue in the first year, increasing by an additional 2.0 percent
of revenue in the second year, stabilizing at 4.0 percent in the third year.
ECONOMIC FEASIBILITY ANALYSIS
In order to test the economic feasibility of the project, we prepared an analysis
of the hotel's ability to generate sufficient funds to cover its estimated debt ser-
vice.
Project Cost
The following development budget estimate was prepared by Hospitality Con-
sulting Group for purposes of testing the preliminary economic feasibility of the
project. It is based on budgets from other upper midscale hotels from projects on
which we have worked, but the quality and scope of amenities selected for the
actual project could cause the costs to vary significantly.
For analysis purposes, we have assumed the hotel to have a total cost of
$11,000,000, or approximately $137,500 per guest room.
70 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
Recommended 80 -Room Upper Midscale Hotel
Monticello, Minnesota
Building Specifications: 80 -unit Upper Midscale Hotel
with indoor pool, hot breakfast, meeting room, and exercise room.
Land
Building and Improvements
Site Work Allowance
Total
Per Room
$880,000
$11,000
6,930,000
86,625
960,000
12,000
Fixtures, Furnishings, and Equipment 1,200,000 15,000
Financing & Amortizable Costs 340,000 4,250
Contingency & Working Capital 240,000 3,000
Development/Other Fees 450,000 5,625
Total Project Costs $11,000,000 $137,500
Financing Scenario
The terms for hotel financing depend on the experience and financial strength of
the developer and the operator. At the present time, conventional hotel loans are
being made at 8.0 to 8.5 percent interest rate with the requirement of between
30 and 40 percent equity. For analysis purposes we have assumed an 8.0 percent
interest rate and a 35 percent equity investment or $3,850,000, leaving a loan of
$7,150,000 to provide funds for the $11,000,000 total project cost.
Source of Funds:
Equity
Debt
$3,850,000 35%
7,150,000 65%
$11,000,000 100%
Debt Term Assumptions:
Annual Interest Rate:
Amortization:
Annual Payment:
8.0%
20 years
$718,000
71 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
The results of this analysis are presented in the following table.
Economic Feasibility Analysis
Estimated Project Cost: $11,000,000
35% Equity; 65% Debt
2025
Cash Flow Avail. for Debt Servi, $846,000
Debt Service $718,000
Debt Service Coverage Ratio
Cash Flow to Equity
Equity
Return on Equity
1.18
2026 2027 2028 2029
$853,000 $939,000 $989,000 $1,067,000
$718,000 $718,000 $718,000 $718,000
1.19 1.31 1.38 1.49
$128,000 $135,000 $221,000 $271,000 $349,000
$3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000
3.3% 3.5% 5.7% 7.0% 9.1%
A debt coverage ratio (cash flow/annual debt service) of a minimum of 1.2 times
is required and 1.4 times is typically preferred by lenders. This analysis shows
that the hotel is projected to generate sufficient cash flow to minimaly meet its
debt service requirements in the first two years, and will not produce a comfort-
able debt coverage until its fourth year.
Hotel investors typically like to see cash on cash returns of at least 10 percent. A
hotel development company, who also would manage the hotel, may include the
management fee in its investment decision and thus accept a lower return. In
this simple analysis, the projected cash on cash return on equity only reaches 9
percent by the hotel's fifth year of operation.
The project cost and terms of financing assumptions used in this analysis
produces marginal debt coverage in the hotel's early years and does not
provide an acceptable return on investment until its fifth year. Therefore,
we conclude that the hotel project may not be economically feasible with-
out some measures that either reduces its cost or the interest rate, or both.
72 Hospitality Consulting Group
ADDENDUM
r
Jr
73 Hospitality Consulting Group
CONSULTANT QUALIFICATIONS
HOSPITALITY CONSULTING GROUP
Stephen Sherf — President, Hospitality Consulting Group
Stephen Sherf has over 30 years of consulting experience in the hospitality industry. He
spent 15 years with a large national public accounting firm, where he was the partner -in -
charge of the hospitality consulting division for the Upper Midwest. He also started a
gaming consulting company where he worked for 15 years, and in 2000, founded a hospi-
tality consulting company. He has also worked as a sales agent for hotels with Minneap-
olis-based Leines Hotel Advisors.
Mr. Sherf has an extensive background in hospitality consulting that encompasses market
studies, valuations, appraisals, acquisitions and sales. He has performed market studies
and other advisory services for over 200 hotel projects located mainly throughout the Mid-
west for clients that include developers, lenders, hotel companies, and municipalities.
He also has particular expertise in development consulting to the gaming industry and has
worked on numerous income producing real estate projects that include nursing homes, el-
derly housing, subsidized and market rate housing, office buildings, retail developments,
convention centers, ice arenas, restaurants, convenience stores, bowling alleys and cine-
mas. 46
Operating positions held during Mr. Sherf s career include restaurant manager, auditor,
Vice President of Development for a hotel company with 13 properties, and Treasurer for
a gaming company where he oversaw the operations of three Colorado casinos.
Mr. Sherf is known for his hands-on involvement and realistic conclusions. Where appro-
priate, development recommendations are backed by an economic feasibility analysis and
a sensitivity analysis to assess risk.
He has provided expert witness testimony relating to the valuation of hotels and restau-
rants and business interruption claims. He has taught continuing education seminars and
spoken at gaming, investment, and state appraisal conferences. He has been a guest lec-
turer at the University of Minnesota Graduate School of Business and Stout University.
Mr. Sherf received an undergraduate degree in economics and an MBA in finance from
Cornell University. He holds a real estate license in Minnesota and Wisconsin and has
taken several American Appraisal Institute courses. He is a Certified Public Accountant
(inactive), has served on the planning commission for the City of Minnetrista, and has
held a Colorado gaming license.
74 Hospitality Consulting Group
Industrial Economic Development Committee (lEDC)
Potential Calendar Year 2023 Table Topics
Please circle the items that you want to have as Table Topics in 2023. If there is consensus among the
members that these are worthy topics, some of them may be pushed into 2024. Discussion encouraged.
1. Co -Work Facility Concept Presentation and Discussion — Follow-up
2. Industrial Land Inventory and Absorption Review and Trends
3. Housing Assistance Programs by MHFA
4. Lodging — Recruitment Discussion
5. Restaurant— Recruitment Discussion
6. Wright County EDA Activities Update — Darek Vetsch
7. Central Mississippi River Regional Planning Partnership Progress Report - Update
8. Google Data Center Update - Anticipated Spinoff Development Impacts
9. Chelsea Commons Update or Block 52 Update
10. 5-G Rollout Timeline Update
11. Local School District Facilities and Programs Update
12. Xcel Energy Monticello Nuclear Generating Plant (MNGP) Update
13. Wright Tech Center Programs Update
14. Electric Vehicle Impacts and development opportunities and funding
I J. Other:
16. Other:
FC)
IEDC Agenda 09/05/23
3A. Economic Development Updates
Prepared by:
Meeting Date:
® Regular Agenda Item
Administrative Assistant
9/5/2023
Reviewed by:
Approved by:
N/A
Economic Development Director
REFERENCE AND BACKGROUND
Information overview by Jim Thares, Economic Development Manager.
201BUSINESS
2 3)) RO N TA LE
Hosted by the City of Monticello I EDC
to highlight funding opportunities for local businesses!
DATE: September 14,2023
� TIME: 3 .5 p.m.
PLACE: Nordic BrewPub
sao Cedar Street, Monticello, Mn
3:15 p.m. Introduction: Event Purpose & Format and Recognize
Sponsors - Sarah Kortmansky, IEDC Chairperson, Jim
Thares, City of Monticello Economic Development Manager
3:25 p.m. Presenter Introductions
3:30 p.m. Initiative Foundation Programs
- Dan Bullert
3:45 p.m. MN Department of Employment & Economic Development
- Dave Heyer
4:00 p.m. Wright County Economic Development Partnership
- Tim Zipoy
4:10 p.m. City of Monticello Economic Development Authority
- Jim Thares
4:25 p.m. Open questions, discussion with all financial resource
providers at tables. (Other financial assistance providers
include: MBFC, CMDC, Women Venture)
5:00 p.m. Event wrap-up and comments
(casual, no formal closing planned)
Date of
Company Name
Business Category
Project Description
Contact
IL
Retained lobs New lobs
Total Investment
5/22/2018
Karlsburger Foods
Food Products Mfg.
Facilty Expansion
11/29/2018
Project Blitzen
Precision Machining
Exist Bldg or New Const.
3/28/2019
Project Nutt
Co -Working Space
Existing Building
5/9/2019
Project FSJP
Light Mfg -Res. Lab
New Construction
8/16/2019
Project Jaguar
Office
New Construction
1/20/2020
Project Panda v3
Service -Child Care
New Construction
12/23/20- 6-
Project TDBBST
Industrial
New Construction
30-22
$1,400,000
Active Search
22,000 sq. ft.
2/16/2021
Project Cold
Industrial -Warehouse -Di
New Construction
10,500 sq. ft.
0
stri
$4,100,000
3/19/2021
Project Orion
Warehouse-Distributi
on
New Construction
2/28/2022
Project Emma II
Light Ind -Assembly
New Construction
6/16/2021
Project UBAA
Child Care Services
New Construction or Exist
6/30/2021
Project Ecosphere
Industrial Tech Mfg.
New Construction
08/31/2023
Project BA710
Lt Assem-Distribute
New Construction 6,500 to 7,000 sq. ft 0
10 $650,000
Building -Facility
Retained lobs New lobs
Total Investment
Project Status
New Construction 42,000 sq. ft.
40 $3,600,000
Active Search
2/7/2022
Project Shepherd
III
20,000 sq. ft. +/-
42
10 to
$4,500,000
On Hold
Project Cougar
Precision Machining -Mfg.
20
38 $4,700,000
Active Search
12,000 sq. ft.
10
$1,200,000
Concept Stage
?
?
?
?
Concept stage
20,000 sq. ft.
0
20+/-
$1,400,000
Active Search
22,000 sq. ft.
22
4
$2,700,000
Active Search
10,500 sq. ft.
0
21
$4,100,000
Active Search
10,000 to 15,000 sq.
0
9
$1,850,000
Concept Stage
ft.
80,000 sq. ft.
0
21
$12,000,000
Concept Stage
832,500 sq. ft.
0
500
$125,000,000
Active Search
20,OOOsq. ff.
0
4
$1,350,000
Active Search
5,000 sq. ft.
0
14 to 19
$2,000,000
Act Search
1,000,000 sq. ft.
0
1122
$85,000,000
Act Search
7/29/2021
Project BA710
Lt Assem-Distribute
New Construction 6,500 to 7,000 sq. ft 0
10 $650,000
Active Search
10/28/2021
Project Stallion
Technology Servicer
New Construction 42,000 sq. ft.
40 $3,600,000
Active Search
2/7/2022
Project Shepherd
III
Lt Assembly Distribution
New Construction 75,000 sq. ft.
75 $10,500,000
Active Search
4/28/2022
Project Cougar
Precision Machining -Mfg.
New Construction 35,000 to 45,000 sq. ft.
38 $4,700,000
Active Search
Date of
Contact
Company Name
Business Category
Project Description
8/11/2022
Project Sing
Precision Machining
New Construction
20
$5,800,000
Active Search
10/28/2022
ProjectlAG
Mfg.
New Construction
250,000
130
$24,000,000
11/9/2022
Project Tea
Mfg
New Construction
?
?
12/13/2022
Project Love
Mfg
New Construction
4/20/2023
Project Lodge DH1
Lodging -Service
New Construction
4/20/2023 1 Project Lodge RS2 I Lodging Service I New Construction
4/26/2023 1 Project Lodge DO I Lodging Service I New Construction
5/30/2023 Project Flower -M
&M
6/9/2023 Project Pez
7/1/2023 1 Project V
Commercial I Concept Expansion
08/31/2023
Building -Facility Retained lobs New lobs Total Investment Project Status
400,000 sq. ft. 0 500 $90,000,000 Active Search
12
300,000 sq. ft.? 0 50? $70 to $80,000,000 Active Search
$1.300,000
25,000 sq. ft.
55
20
$5,800,000
Active Search
New Construction
250,000
130
$24,000,000
Active Search
?
?
?
$9,500,000 to
$12,500,000
Active Search
?
?
?
$9,500,000 to
$12,500,000
Active Search
?
?
?
$9,500,000 to
$12,500,000
Active Search
?
?
?
?
Concept
Mfg
New Construction
6,000 to 8,500 sq. ft.
12
2
$1.300,000
Active Search
New Construction
150,000 + sq. ft.
?
$16,000,000
Active Search
8/16/2023 Project Lodge RT4 Lodging-Hopsitality New Construction
Contacts: M
= 03 YTD =
21
? N/A ? $11,500,000 to Active Search
$14,500,000
AGENDA
REGULAR MEETING – PLANNING COMMISSION
Tuesday, September 5, 2023 – 6:00 p.m.
Mississippi Room, Monticello Community Center
Commissioners: Chair Paul Konsor, Vice Chair Andrew Tapper, Teri Lehner, Eric Hagen,
Melissa Robeck
Council Liaison: Councilmember Charlotte Gabler
Staff: Angela Schumann, Steve Grittman, Ron Hackenmueller, Hayden
Stensgard
1. General Business
A. Call to Order
B. Roll Call
C. Consideration of Additional Agenda Items
D. Approval of Agenda
E. Approval of Meeting Minutes
• Joint Workshop Meeting Minutes—August 1, 2023
• Regular Meeting Minutes – August 1, 2023
• Special Meeting Minutes–August 15, 2023
F. Citizen Comment
2. Public Hearings
A. Consideration of a request for Preliminary of Great River Second Addition;
Consideration of a request for Development Stage Planned Unit Development (PUD)
for a 138 -unit multi -family residential building in the B-3, Highway Business District
Applicant: Briggs Companies
3. Regular Agenda
N/A
4. Other Business
A. Community Development Director's Report
S. Adjournment