News for the Hospitality Executive
|By Jim McCartney, Saint Paul Pioneer Press, Minn.
Knight Ridder/Tribune Business News
Jan. 8, 2004 - The Radisson Hotel South in Bloomington, considered by many a flagship hotel in the Minnetonka-based Radisson Hotel chain, will soon be flying the flag of arch-competitor Sheraton Hotels.
Starwood Hotels & Resorts, a New York-based chain with 750 properties including the Westin and Sheraton chains, will take over management of the hotel from Radisson and rechristen it as a Sheraton.
"We expect it will open as a Sheraton in mid-March," said Mark Ricci, a spokesman for Starwood.
Radisson founder Curt Carlson built the upscale 565-room convention hotel in 1970, his first step toward building a nationwide hotel empire. The Twin Cities' third-largest hotel has operated as a Radisson ever since, even after it was sold for about $32 million eight years ago to LaSalle Hotel Properties.
New York-based LaSalle officials declined to comment on the move. The Radisson South, located on the northwest corner of Interstate 494 and Highway 100, is one of LaSalle's 17 hotel properties totaling 5,600 rooms.
"It's the owner's announcement to make, and they haven't announced anything official yet," said Tom Polski, a spokesman for Carlson Hospitality Worldwide, which includes the Radisson brand.
It's not unusual for hotel owners to switch management firms, but the move caught Twin Cities hotel experts a bit off guard.
"It's a little surprising that their flag would be gone -- (Radisson South) is a big presence here," said Pat Riley, a hotel consultant based in Minnetonka. It's especially noteworthy given that Radisson's headquarters is in the Twin Cities, he added.
"I'm sure Radisson hates to lose it," said Steve Sherf, a hotel consultant with GVA Marquette Advisors in Minneapolis.
While the Radisson South is the Radisson chain's largest in the Twin Cities, the Radisson Plaza in downtown Minneapolis is considered its flagship here, said Greg Ortale, president of the Greater Minneapolis Convention and Visitors Association. The Radisson Riverfront in downtown St. Paul now will be the chain's largest Twin Cities hotel.
Ortale, who said he was "aware" that LaSalle was shopping for a new manager, agrees with Polski that it is not uncommon for hotel owners to switch brands.
"Normally, owners make changes for two reasons -- either they think they can get more business or higher room rates, or they are disappointed in the way it is being managed," said Robert Mandelbaum, a hotel consultant with PDK Consulting in Atlanta.
Although Ricci said he did not yet know what his company plans for the hotel, some hotel analysts expect that it may get a significant renovation as part of the change.
"When they change brands, the owners usually take the opportunity to do a major renovation," Mandelbaum said.
On the other hand, the switch from Radisson to Sheraton is a "lateral move," so few upgrades likely will be required, he said.
The nation's hotel market, along with the rest of the travel industry, has suffered in the aftershock of the Sept. 11, 2001, terrorist attack, the SARS outbreak and the recent recession, and the Twin Cities is no exception, Sherf said. Hotel occupancy has dropped significantly in the last few years, as have room rates.
But things are improving, especially at hotels along the airport-friendly Interstate 494 strip, which had an occupancy rate of 61 percent in the first half of the year -- better than the other two big Twin Cities hotel markets of downtown Minneapolis and downtown St. Paul, according to a survey by GVA Marquette.
Three Bloomington hotels totaling about 1,000 rooms will be demolished as part of the expansion of the Minneapolis-St. Paul International Airport, and fewer rooms means less competition and improved prospects for the remaining hotels in the area, Sherf said.
Starwood has three hotels in the Twin Cities: the Sheraton West in Minnetonka, the Four Points at Sheraton in St. Paul's Midway area and the Four Points at Sheraton near the Metrodome in Minneapolis. Starwood recently announced plans to buy the U.K.-based Le Meridien hotel group, which would give it a fourth hotel in this area -- the new 255-room Le Meridien Hotel that is part of the Block E development in downtown Minneapolis.
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