Fewer Rooms and Bigger Questions for Downtown Milwaukee’s Hotel Scene

Greg Marcus is challenging Milwaukee’s conventional wisdom. For years, city and business leaders – previously including Marcus – have called for expanding Downtown hotel capacity to handle more and larger conventions. 

That’s why it was a surprise when Marcus Hotels and Resorts announced in December that its $40 million renovation of the city’s largest hotel would exclude 175 of the Hilton Milwaukee’s 729 rooms, eventually leading to the sale and redevelopment of the hotel’s west tower for another use. 

Corporate CEO Greg Marcus says he can’t justify maintaining the Hilton’s capacity if some kind of public subsidy provides an advantage to a potential new competitor – perhaps on the city-owned lot right across North Fifth Street. 

No major new convention hotel is currently proposed; Visit Milwaukee President Peggy Williams-Smith says it could be years away. 

But Marcus is trying to reframe the conversation. In the competition for conventions, where key selling points are what’s biggest and newest, he warns that current hotel players could be left behind. And he wants to protect his company’s position atop the local market, where it also owns the 307-room Pfister Hotel and Saint Kate – The Arts Hotel, with 219 rooms. 

On the surface, the argument for increasing hotel capacity seems straightforward. Visitors are important to the local economy. Visitors of all stripes spent $2.3 billion in Milwaukee County in 2023, supporting 27,226 full-time jobs and generating $231.1 million in state and local taxes, according to the state Department of Tourism. 

That drove the Wisconsin Center District’s $456 million expansion of the Baird Center, completed last year. The project doubled the size of the convention center, to 1.3 million square feet, and boosted its largest exhibition space to 300,000 square feet. In its expanded state, the Baird Center now can handle two major events at once, or reduce downtime by providing space for one convention to set up while another is dismantled, Marcus notes. The district estimates the expansion will bring Milwaukee another 100,000 visitors a year. And all those visitors will need places to stay. 

With that in mind, the city has long listed a new hotel as a preferred use in its quest for a developer for the parking lot south of what’s now Vel Phillips Plaza. Meanwhile, in the four decades that site has sat vacant, 21 hotels of under 250 rooms each have opened less than a one-mile walk from the Baird Center, about half of them in the last 10 years alone. Four more are proposed or under construction.

Eleven hotels lie within a half-mile of the Baird Center, and two more have been proposed. But experts and tourism officials say a proliferation of small and mid-sized properties isn’t as helpful in attracting conventions as one big hotel would be.

You might think that adding more than 3,000 nearby hotel rooms would be great for attracting conventions. But that’s not how it works. 

Meeting planners prefer to house all attendees under one roof, to maximize informal contact, hotel consultant Greg Hanis says. That also reduces the number of hotel contracts that planners have to negotiate. 

“Planners don’t want to deal with a bunch of little hotels,” Marcus says. Williams-Smith says her staff works hard to convince planners that Milwaukee is attractive enough to justify that inconvenience. 

And Milwaukee’s largest Downtown hotels are aging, Williams-Smith notes. The 481-room Hyatt Regency is 45 years old, while the Hilton and the Pfister date to the days when most visitors arrived by train, Hanis says. 

Planners tell Visit Milwaukee that hotel availability is a major reason they didn’t bring events here. A new 500- to 800-room “convention headquarters” hotel would drive convention demand, Hanis and Williams-Smith say. 

Rival cities agree. Construction is underway on an 800-room Signia hotel that would join the existing 1,005-room J.W. Marriott and several other major hotels connected by skywalk to Indiana-polis’ convention center. And in Cincinnati, groundbreaking is expected later this year on an 800-room hotel that would be linked by skywalk to its convention center. Both projects coincide with expansions of convention facilities. 

However, Milwaukee’s hotel market is still recovering from the COVID-19 pandemic. Even with the boost from the massive Republican National Convention, hotel occupancy was lower in 2024 than in 2019, Hanis says. That’s partly because of all the new hotels: Although demand for rooms was 0.7% higher than in 2023, the number of rooms increased 2.4%, driving the occupancy rate down to about 56%, according to an analysis by the Tourism Economics consulting firm. 

Marcus also points to financial challenges at some properties, including a bankruptcy filing by the Marriott and foreclosure on the Cambria. The Iron Horse Hotel emerged from bankruptcy last year. 

Williams-Smith agrees “the market is not ready” yet for a big new hotel, but adds, “This is something we need to start planning.”  

Marcus wants a guarantee that planning won’t include a subsidy. The city’s request for proposals for the lot south of the new Vel Phillips Plaza rules out tax-incremental financing for a hotel there. But Downtown Ald. Bob Bauman says “we could always change our mind” if necessary to bring in a new convention hotel.  

And even without a TIF, Marcus argues that “subsidies come in many forms,” including state and federal programs.  

Marcus himself sought a subsidy in 2016, when his company unsuccessfully asked the city to sell that lot for $1 to allow the Hilton to expand to nearly 1,000 rooms. He sees such an expansion as the city’s best hope for a hotel that size. 

Now Marcus says he wants the city to create “a level playing field” by using its zoning powers to protect existing hotels near the Baird Center by restricting development of subsidized competitors. Bauman questions whether that would interfere with private property rights, but adds he would need to see details. 

Without such a guarantee, Marcus says he would sell the Hilton’s west tower, possibly ending Milwaukee’s chances for a 1,000-room hotel. He says he’s already getting calls from developers who could turn the tower into apartments or condos. 

Williams-Smith says she hopes it doesn’t come to that. “I need Greg Marcus, and I need his hotel rooms, and I need all the hotel rooms we have,” Williams-Smith says. “But I also have to look to the future.” 

Hotel Vacancy

FOR FOUR DECADES, MILWAUKEE’S HOPES for a major new hotel have rested on the ruins of an old one. The 12-story, 200-room Randolph Hotel stood at North Fourth Street and West Wisconsin Avenue for 58 years. It opened in 1927, one year before the nearby Schroeder Hotel (now the Hilton Milwaukee), in what was then a booming Downtown.

But as the central business district lost retailers to suburban shopping malls in the 1960s and 1970s, the Randolph transitioned into long-term housing for low-income residents. By the 1980s, city officials were pushing to revitalize Wisconsin Avenue, highlighted by the 1982 opening of the Grand Avenue shopping center. Over the protests of affordable housing advocates, the Randolph was demolished in 1985 and the site became a parking lot while the city sought development proposals. Since then: 

• 1985: Reports indicate the site is being eyed for an Embassy Suites hotel. It never materializes.   
• 1993: A midday farmers market begins on the site. It eventually moves to Zeidler Union Square.  
• 1998: The Midwest Express Center (now the Baird Center) opens across Wisconsin Avenue. 
• 1999: A proposed 300-room Embassy Suites fizzles due to lack of financing. 
• 2004-05: A plan to build a 225-room Sheraton Hotel is abandoned after environmental contamination is discovered. The city Redevelopment Authority
  leads a cleanup. 
• 2007-09: A proposal to build The Catalyst, a 31-story mixed-use complex including 160 hotel rooms, collapses for lack of financing. 
• 2014: NEWaukee holds the first summer Night Market. 
• 2016: Jackson Street Holdings proposes the Nexus, with three hotels totaling 506 rooms. Marcus Hotels and Resorts proposes eMbarKE, adding 256 rooms to its 729-room Hilton, plus 200 apartments. Both unsuccessfully seek public subsidies. 
• 2024: Baird Center expansion is completed. Vel Phillips Plaza opens on the northern end of the site, with a food service building and a transit stop.