Occupancy Wins, Revenue Loss: Is Minnesota's Hospitality Boom a Mirage?

The results are in from Hospitality Minnesota's September 2025 CoStar reports, and the performance of Minnesota’s hotel industry paints a picture of stark contrasts. While the Twin Cities metro area is seeing demand that outpaces the nation, the underlying financial reality suggests a struggle for value that is costing the state moreso than the rest of the US.

The Occupancy Triumph: Minneapolis Beats the Nation

For those focused on filling rooms, the news for the Minneapolis metro area is a clear victory. In September 2025, the Minneapolis market achieved an impressive 66.9% occupancy rate. This performance significantly exceeded the overall United States occupancy rate of 63.4%.  Similiar higher-than-national occupancy rates were also experienced in Minneapolis both in August and July.

The strong demand positions Minneapolis competitively within the Upper Midwest, outperforming Madison, WI (66.6%). However, regional powerhouse Chicago, IL, showed the ceiling for the region, posting a dominant 74.2% occupancy.

The Revenue Reality: A Steep Value Deficit

The positive occupancy news is tempered by a sobering look at pricing power. The state and the metro area are both lagging substantially in Average Daily Rate (ADR), indicating that while we are selling rooms, we are selling them for less.

The national average ADR in September 2025 was a robust $162.70. By comparison:

• The Minneapolis ADR was $143.66.
• The overall Minnesota Area (statewide) ADR was even lower at $139.07.

This difference reveals a value deficit of nearly $20 per room in the metro and over $23 per room statewide compared to the national average. The statewide lodging performance also reflects a broader challenge, with the overall Minnesota Area occupancy rate falling to 61.1%, landing below the national average.

The reality for Minnesota’s hospitality sector is clear: Demand is strong in key metro areas like Minneapolis, but translating that demand into premium revenue remains the industry’s most critical challenge. High occupancy is only part of the story; closing the gap with the US average is essential for long-term profitability.

Interested in the Full Report?

If you are interested in a deeper dive into this data or would like to view the complete STR Report or the Upper Midwest Hospitality Report for September 2025, please reach out to our team directly.