Traverse City hotels are capitalizing on a resurgent economy and multiple national accolades by investing in property expansions and pricey renovations.

West Bay Beach, a Holiday Inn Resort, is among the latest hospitality properties to undergo a major remodeling. In 2012, ValStone Partners, LLC, a Michigan-based private equity firm, purchased the hotel – which sits in a prime location on West Grand Traverse Bay in downtown Traverse City – and immediately set about overhauling the facility.

The recently completed $4.5 million renovation updated every inch of the hotel's 179 rooms, two pools, two restaurants, lobby, meeting space and beachside patio. The makeover earned the hotel a Holiday Inn Resort designation, the first property outside of the east or west coasts to do so.

New ownership is a driving force behind several of the area's hotel upgrades, explains Traverse City Convention & Visitors Bureau President Brad Van Dommelen.

“Traverse City is perceived as a hot market right now, thanks to the great media exposure we've had and our presence on national top 10 lists” including Best Small Towns, Top Summer Trips and Best Places to Retire, notes Van Dommelen. “Owners are investing in the market because they're seeing momentum. And there's a desire to enhance their product, because that brings a higher (room) rate.”

The 39-room Howard Johnson of Traverse City and 37-room Knights Inn of Traverse City, both owned by Todd and Beth Gokey (who also own the newly opened Copper Falls Steakhouse), have received high marks from customers after undergoing recent extensive renovations. In June, AmericInn – originally constructed in 1998 – also announced the completion of a full-scale renovation of its 47-room hotel, replacing all guest room beds and bedding, installing flat-screen televisions throughout the facility and updating paint, furniture, artwork, draperies and carpeting.

The same month, Super 8 came under the ownership of Cobblestone Hotels, a national franchise, and was converted into a Boarders Inn and Suites. The conversion was accompanied by a refresh of the hotel's 65 rooms.

New properties are equally – if not more – effective at capturing consumer attention as renovated ones, something the investment group behind Hotel Indigo Traverse City is banking on. The planned four-story, 105-room boutique hotel along Grandview Parkway in downtown Traverse City generated significant media coverage when it broke ground earlier this spring, with a targeted completion date of summer 2014.

The $15 million project – which will include a conference center, lobby and rooftop lounges, spa, pool, restaurant and 79 underground parking spaces – is the first new lodging facility to be introduced to downtown Traverse City in over three decades. Currently, the Holiday Inn Resort, Bayshore Resort and Park Place Hotel are the only major hospitality centers servicing the downtown district.

“With Indigo, we're now very balanced in regards to our product offerings,” said Van Dommelen. “We have hotels both on and off the water, cabins and cottages, bed and breakfast spots – you name it. With our diversity, it'll be rare that we can't find something a customer is looking for in Traverse City.”

Van Dommelen believes that the number of hotel rooms in the area is now more than satisfactory to meet visitor demand. “We could perhaps use more rooms for a few weeks in the summer, but then you have to contend with the other nine months out of the year where they might sit empty,” he explained. Instead, as evidenced by the recent construction boom, “upgrading our current product is the top priority.”

Upgraded product, of course, tends to mean upgraded pricing. Van Dommelen says there's “no question rates have risen” over the last few years, and will likely continue to do so.

“Rates respond to demand,” he noted. “Hoteliers are going to push rates until they see demand fall off. Of course, there is a limit to what the market will bear. When occupancy falls off because rates are too high, owners will adjust accordingly.”