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North Dakota Oil Boom Boosts Hotel Business

North Dakota Oil Boom Boosts Hotel Business

When Maria Zafra moved from Florida to Minot, N.D., about two years ago to manage a new La Quinta property, it was hard for people to find hotel rooms. The room supply in Minot was still catching up to the demand from a regional oil boom that started in 2009. But now, Zafra says, it’s easy for out-of-towners to book last-minute rooms in the area. “The population is growing at a steady rate,” she says, “but not as fast as the hotels are growing.”

Throughout western North Dakota, the oil boom has created instant towns where thousands of oil workers need long-term lodging. According to Gregory LaBerge, national director of Marcus and Millichap’s hospitality group (see “The Dakota Tiger” sidebar), employment in the oil and gas natural resources category went from 7,400 workers in 2009 to nearly 29,000 workers as of April 2013. Minot, where the population grew more than 10 percent in the past decade—from 36,500 to 41,000—serves as a case study for a boom that has affected other cities, such as Williston and Dickinson. Five years ago, Minot was home to just one or two oil companies, says Jerry Chavez, president and chief executive of the Minot Area Development Corporation. Today, nearly 60 companies have taken up residence there. At the same time, North Dakota has skyrocketed from the eighth state in oil production to No. 2, behind Texas. As of May, unemployment in North Dakota was 3.2 percent, the lowest of any state.

Meanwhile, the city of Minot is expanding. The downtown is being revitalized with a $120 million investment of commercial retail and housing, Chavez says. A new airport terminal is planned, he adds, to keep up with the Minot Airport’s growth from one airline carrier four years ago to four today. The new terminal project is expected to include a taxiway and additional parking. “Minot is growing in every direction,” Chavez says. “We want to raise our quality of life.”

This huge growth has led to a similar boom in Minot’s hotel industry. There wasn’t a large labor force in the region when the oil fields were discovered in 2007, so hotel occupancies in Minot started to rise even before the boom officially began. “Some of these hotels were booked for a year before they even finished construction,” Chavez says. “Companies would come in and they’d want X amount of rooms for their employees.”

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