Ellen Creager

Detroit Free Press

If you're a Detroiter looking for a bargain hotel in downtown, or a visitor from another corner of Michigan, being a tourist in the Motor City isn't quite the deal it used to be.

And while the recent increase in the average downtown room rate might stress the pocketbook, experts says it's a strong harbinger of Detroit's continued economic turnaround from the depths of the Great Recession. The stronger demand also has brought more new hotel construction to greater downtown the past couple years, representing new jobs and fresh investment. That's more good news.

"I think the downtown is the place to be, and there's a perception that it is safer and hip,” said Chuck Skelton, president of Hospitality Advisors in Ann Arbor, who says the demand for downtown Detroit rooms has gradually increased since 2010. "I believe all the dynamics of businesses actually having employees downtown, as well as people living there and the activities like casinos and professional sports has contributed to the growth.“

The average downtown Detroit hotel room rate is now $153 a night, plus (15%) tax, according to the Detroit Convention and Visitors Bureau. That represents about a 4% increase over last year.

Rooms for $175, $250 or even $300 a night are increasingly common, especially on busy weekends and during special events. Some hotels now require a two-night minimum stay for certain weekends, such as the Free Press Marathon.

Why are rates rising? Simple supply and demand. The downtown hotel occupancy rate through August of this year was nearly 70%, according to the CVB. In 2008, it was only 47%. Rates and occupancy are up nearly 4% over last year. When you're popular, you can charge more.

"We are constantly getting calls from people who can’t believe how expensive it is to stay downtown,” said Zach Fairchild, co-director of the Detroit Hostel, which caters to independent international travelers who want to visit the city. “We are trying to fill a niche.”

Detroit has about 5,000 hotel rooms downtown, up from about 3,000 10 years ago, the CVB estimates. Four downtown hotels are AAA-rated four-diamond properties: the MGM Grand Detroit, Westin Book Cadillac, Motor City Casino Hotel and the Greektown Casino Hotel, which was added to the list in October.

The last hotel to open downtown was the Aloft Detroit in 2014, transforming the historic David Whitney Building near Grand Circus Park. But several new boutique hotels with a total of 916 rooms are either under way or on the drawing board for 2017 and beyond. They include the Shinola Hotel, Element Hotel, Wurlitzer Hotel, West Elm Hotel, Detroit Fountain Hotel, and an unnamed “athletes’ hotel” near the new Little Caesars hockey arena.

► Related: Shinola Hotel to open in downtown Detroit in 2018

► Related: Upscale retailer to open boutique hotel in Detroit's Midtown

There also are a growing number of alternative lodgings in the city.

Eric Larson, CEO of the civic group Downtown Detroit Partnership, said the growing number of new hotels in the greater downtown is another sign of Detroit's continued turnaround and an important part of the city’s comeback.

“The hotel industry in Detroit for a long time has been viewed as very stagnant and has not shown a lot of freshness or innovation,” Larson said. “And what we’re seeing now is a real interest in not only creative brands that are much more widely recognized nationally and internationally, but the boutique hotels reflect a level of confidence in the investment communities that just doesn’t exist when you’re fighting a real uphill battle.”

Concentration of ownership

Another trend? The Marriott hotel chain now controls 43% of the hotel rooms in the center city because of its September acquisition of the Starwood hotel chain. Marriott now owns not only the Detroit Marriott at the Renaissance Center and Courtyard by Marriott, but also Aloft Detroit and the Westin Book Cadillac.

This concentration of ownership could be a positive for convention business, said Michael O’Callaghan, COO of the Detroit CVB. It could allow the CVB potentially to offer larger blocks of rooms with consolidated terms to convention planners.

Could it also mean higher rates? Marriott International did not respond to a Free Press request for comment, but O'Callaghan is hopeful the answer is no.

“We want to believe this will have a positive impact on visitors to Detroit,” O'Callaghan said, adding that the eventual opening of more hotels downtown will lessen Marriott's slice of the market.

Metro boost

Outside the center of Detroit, the entire metropolitan region is also seeing a boost in hotel occupancy and prices, according to data provided to the Free Press by STR, which tracks the hotel industry.

Occupancy rates have soared since 2010, going from barely more than 50% to 66.4% this year, close to the national average. The average room rate, too, has jumped from about $75 a night in 2010 to $97 a night now. Still, rates are still well below the national average rate of $124.

“You can interpret that two ways. On one hand, you can say, Detroit is a bargain,” said Jan Freitag, lodging performance analyst at STR. “Another way is to say, oh, we have a long way to go to get on par with other cities.”

Across metro Detroit, the supply of hotel rooms is up 1.8% this year, “and that speaks to Detroit being attractive to developers,” he said. Overall, metro Detroit’s hotel scene “looks exactly like the average market.

"After what they’ve been through, average is good.”

Contact Detroit Free Press Travel Writer Ellen Creager: ecreager@freepress.com, 313-222-6498, on Twitter @ellencreager. Free Press Business columnist John Gallagher contributed to this report.

Alternative Lodgings in Detroit

♦Hostels: There is only 1 hostel in the city, the five-year-old, nonprofit Hostel Detroit. About 70% of its guests are international travelers. “They are definitely people who come here intentionally, who are excited about the city. A lot of people come for the techno scene and urban planning interests. I constantly have people say Detroit is the best experience they have ever had.” says Zach Fairchild, co-director. The hostel is in North Corktown on a rather empty street. Shared dorms are $30 a night (www.hosteldetroit.com.)

♦Inns/Bed and Breakfast: The Inn on Ferry Street (www.innonferrystreet.com) near the Detroit Institute of Arts is a longtime favorite inn with travelers. Rooms are $179 a night. Another lovely B&B, the Inn at 97 Winder St. near Comerica Park, closed in September after a decade in business. It is for sale for $2.99 million. “Stay tuned,” says manager Amy Brown.

♦Airbnb: It lists 162 private lodgings for travelers to rent in the City of Detroit, with an average price of $141 a night. Offerings range from a studio for $40 a night to a 4-bedroom house for $192 a night and a “million dollar penthouse” on the riverfront for $800 a night www.airbnb.com.

♦Other lodging: The El Moore Lodge in Midtown has residences, plus it rents out some of its “lodge” rooms, rates are $70-$255 a night (http://elmoore.com).

— Ellen Creager

New downtown hotels coming

If all of these hotels actually open in the next three years, there will be 916 more center-city hotel rooms for visitors to Detroit to choose from. Will the addition of more supply push room rates down? It all depends on how many customers the hotels attract.

♦ Shinola Hotel (2018): 1400 Woodward, 130 rooms. Near Campus Martius. Old building renovation.

♦ Wurlitzer Hotel (2018): 1509 Broadway, 106 rooms. Across from Detroit Opera House. Old building renovation.

♦ Element Detroit Hotel (2018): 33 John R, 110 rooms. In same area as Wurlitzer. Old building renovation.

♦ Detroit Fountain Hotel (2017): 250 W. Larned near Cobo Center, 100 rooms. Former Detroit Fire Department headquarters renovation.

♦ West Elm Hotel (2018): Corner of Cass and Canfield, near Wayne State campus, 120 rooms. New construction.

♦ “Athletes’” hotel (2019): At Woodward and I-75, 350 rooms, new construction, part of Ilitch plans for land adjacent to the new Little Caesars hockey arena.

Tips for vacationing in your own home town

♦ Try a weeknight for cheaper rates. For instance, the MGM Grand charges $199 a night on weeknights but $329 on Saturday nights (and New Year's Eve is $599!).

♦ Book last-minute. If you are flexible, use the HotelTonight app or Expedia to scout any last-minute deals. If hotels still have inventory, they should discount it.

♦Watch out for 2-night minimums. Sometimes when big events happen downtown, hotels like the Detroit Marriott Renaissance and Westin Book Cadillac require a 2-night minimum stay.

♦ Book a package. Many Detroit hotels have excellent bed and breakfast packages, romance packages that include a meal or spa treatment, or packages tied to downtown events.

♦ Ask for a hotel gift card for Christmas. Maybe your family and friends can chip in to send you to a nice place.

♦ Stay in the suburbs. Instead of a glamorous downtown hotel, budget-minded folks might want to stay at a nice hotel outside the city and drive downtown for dinner or activities.

♦Download the "D Discount Pass" from www.visitdetroit.com for up to 20% many attractions in town.

— Ellen Creager