The Michigan hotel industry is a tale of many markets. Post-COVID, leisure properties in northern and western Michigan exceeded even the most optimistic projections for 2021 and 2022 while the larger, more commercial markets undoubtedly suffered from the stay-at-home, travel-restricted environment. As we entered 2023 under the persistent overhang of inflation and the prospect of higher interest rates, it was unclear if the resorts would continue to outperform and if the cities would bounce back. Looking at the results, however, our industry seems to be experiencing resilience in both markets.

According to data from STR Global, Michigan markets may stay strong in 2023, with occupancy for the state increasing by nearly 1.0% through September 2023 and ADR up a robust 4.9%. While Michigan trails the entire US- as it always has - its outperformance in ADR is something we see rarely. Clearly such a broad stroke doesn’t account for different results in different markets, but for the state as a whole, the numbers are encouraging.

This content is provided by Alpine Realty Capital

Dedicated to serving Michigan hotel owners and operators since its founding in 2007, Alpine Realty Capital is pleased to be the presenting sponsor of The Check-In. Before founding Alpine Realty, I (Ed Walsh) spent 15 years assisting hotel leaders with feasibility analysis, real estate appraisal, site selection, and cost analysis services, as well as the mortgage financing and transactional services that are the basis of Alpine’s businesses. Having worked in every market in the Lower Peninsula and most in the U.P., I have extensive experience in the Michigan lodging industry and look forward to bringing you updates over the next twelve months.

Ed Walsh

President

Alpine Realty Capital

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Note: This is a developing topic and subject to change. At the time of writing, the following information is accurate and fully updated. The MRLA is closely tracking these bills and will provide updates as they become available.

In the past few months, state legislators have been considering a pair of bills that would raise taxes for hotels at the county and city level, in an attempt to raise funds for tourism-friendly facilities such as convention centers, amphitheaters, and even aquariums.

What are these bills? Two separate but similar bills are currently circulating through the Michigan legislature, and both affect excise taxes, which refers to taxes attached to specific goods or services. House Bill 4931 operates at the county level and would allow boards of commissioners in 9 counties (Calhoun, Genesee, Ingham, Kalamazoo, Kent, Midland, Muskegon, Saginaw, and Washtenaw) to raise already-permitted excise taxes on accommodations from 5% to 10%. The second bill, House Bill 5048, applies to Michigan cities and townships, permitting city councils to leverage a 2% excise tax on hotels. However, before these taxes could be implemented, the taxes would also have to be passed by voters.

How do these bills affect my bottom line? House Bill 4931, for one, would give county leaders the permission to double the amount of taxes currently levied on sales for hotels in certain Michigan counties. House Bill 5048 would pave the way for a tax that did not exist before, with 2% increase in overall taxes for hotels in affected cities. Even more, hotels that land in a location affected by House Bill 4931 AND House Bill 5048 could see total taxes go up by 7%. If both bills pass as written, Grand Rapids would have the highest hotel taxes in the county.

How would the funds be used? In the case of both bills, the money raised by the new and heightened taxes on hotels would be dedicated to mostly tourism-friendly projects in order to encourage new visitors to Michigan communities.

What happens next? While House Bill 4931, the one impacting counties, has not yet been scheduled for a hearing and has only been proposed, House Bill 5048 has already been passed by the House of Representatives and has advanced to the Senate for a vote.

How is the MRLA responding? MRLA has been working with lawmakers to find a solution that supports Michigan's tourism industry while also protecting the wellbeing of hotels. In particular, the MRLA has successfully advocated for and secured industry-favorable amendments to House Bill 5048, narrowing the scope of the bill to just Kent County cities and townships instead of applying statewide.

This month, a premier travel magazine released the results of its annual travel awards, with Michigan hotels showing up strong in the Midwest. According to readers of Conde Nast Traveler, four MRLA members were among the top fifteen places to stay in the Midwest, with the Shinola Hotel of Detroit, Island House Hotel and Hotel Iroquois of Mackinac Island, and The Vault Hotel of Houghton winning top spots.

Conde Nast Traveler is a global publication, and this year's competition included over half a million voters.

For decades, the Michigan Hospitality Foundation has trained up-and-coming hospitality leaders, equipped students for adventurous careers all over the state, and built connections between fired-up professionals and phenomenal employers in the hospitality industry. Now, the MHF is continuing its mission to grow and support the industry's workforce by inspiring a new generation, showcasing the exceptional opportunities (and breathtaking views) possible in a hospitality career.

This Video is For You. Everything the MHF does is designed to strengthen your workforce. Share this video on your social media feeds and help us inspire your next stellar team members. 

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