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Local Investors to Build 46-Room Hotel (2018-04-25)
Written by: Holli Seehafer

The investment group, 15 Hotel Group, Inc., announced plans Monday to build a 46-room GrandStay hotel in Milbank. The project is expected to start with the groundbreaking in early April and conclude in time to be open for the pheasant hunting season this fall. It is expected to cost approximately $5 million to complete.

A public hearing is slated for Monday, March 5, at 5:30 p.m. in the Milbank city offices for the planning board to consider a variance that will allow the construction of the hotel on South Highway 15 near the intersection with Tenth Avenue in Milbank.

The hearing is necessary because the height of the proposed hotel will be 44 feet at the gable peak, but the zoning for the lots on which it will be built only allows for structures up to 30 feet in height. “The highway business district is zoned to include hotels as acceptable,” commented Mark Leddy, who along with his wife, Susan, are the principal owners of 15 Hotel Group, Inc. “The height is the only reason we need to have the hearing,” he added.

In addition to the Leddys, the corporation, 15 Hotel Group, also includes a small number of additional investors. Leddy noted that all the owners are local residents.

As planned, the hotel will be situated on the lot that has been vacant for decades and the lot that was the former site of a greenhouse. The combined space is nearly three acres.

The three-story hotel, which measures 161 feet in length and 63 feet in width, plus a jut-out to accommodate part of the swimming pool space, will be located toward the north and east boundaries on the property. The shape of the lots will leave plenty of green space on the property. “There is a nice line of trees already in place to provide a natural buffer between the hotel and the residences to the east,” Leddy said.

The plan includes 20 guest rooms on each of the second and third floors, while the main level will incorporate the lobby, breakfast area, exercise area, swimming pool, six guest rooms and a meeting room that seats 38. “It’s a very nice layout; we really like how it flows,” Leddy commented. The hotel will have arrangements for non-guests to book the meeting room. The parking lot will be on the west side, near the highway, and Leddy said there will be plenty of space for parking pickups towing boats or other recreational vehicles.

Among the guest rooms, four are designed for extended stays, and two will be compliant with handicap accessibility standards. “We are excited to offer these specialized rooms as there are no options like that in Milbank currently,” Leddy said.

The 15 Hotel Group franchised with GrandStay Hospitality, LLC, which specializes in hotels located in smaller communities. GrandStay’s most recent ventures include new hotels in Cannon Falls and New London, MN. The group has nearly 30 hotels, mostly in Minnesota, but also in the Dakotas and Wisconsin.

GrandStay contracts with TruLine Construction as the general contractor for new hotel projects. According to Leddy, TruLine will utilize some of the same contractors it has used for other projects, but will also incorporate the services of local contractors. “They have been getting bids locally for things like concrete, shingling and landscaping,” Leddy said.

Leddy noted that GrandStay’s philosophy reflects a willingness to work with the franchisees to customize the facilities to fit well into the communities it enters. The company also assists in the start-up and marketing aspects of getting the new hotel started.

While Leddy plans to be active in the project from the corporate standpoint, none of the investors wish to manage a hotel, he indicated. GrandStay’s management connected the 15 Hotel Group members with Blue Sky Hospitality, the management company that operates GrandStays in Cannon Falls, New London and Morris, MN. Blue Sky will hire a local general manager to oversee the daily operations, guest relations and marketing aspects of the hotel.

The plans for the hotel began more than a year ago, but as Leddy noted, “Financing for a project like this in a rural community is a challenge. To build in Milbank takes more equity than building the same hotel in a larger community.”

The Leddys and other investors identified a need in Milbank for the type of hotel for which the GrandStay hotels are known. He said their goal isn’t to pull business away from existing hotels, but rather to draw in new clients. “There’s a slippage of people who could be staying here in Milbank, but we are missing them,” Leddy said. “When those people go somewhere else, the community isn’t just losing the income from a hotel room; it’s also lost restaurant meals, lost tickets at the movie theatre, lost bar or lounge revenue, lost tanks of gas as the visitors get ready to leave the next morning.”

“GrandStay offers a strong regional brand for the business traveler as well as the family traveler,” Leddy said. “This will be a great opportunity for events we are missing out on such as weddings, class reunions and other events that could be held here in town. We as a community cannot afford to miss out on that economic activity any longer. This project will have a positive impact on many other local businesses,” he predicted.

The sales tax generated during the construction cycle will be a boon to the city funds. Leddy pointed out that the facility will be subject to the third penny (bed and booze) sales tax, so there will be an ongoing benefit to the city’s revenue stream.

Leddy said the members of the Milbank Area Chamber of Commerce board and the Grant County Development Corporation have all been very supportive and helpful in the endeavor. He added that data developed by the GCDC in a housing and hospitality study showed the need for additional hotel options in the community.

~Holli Seehafer

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