First hotel built on Lake Minnetonka in a century opens May 1

When a three-story, half-vacant office building along the shores of Lake Minnetonka came on the market in 2022, Kelly Olsen spied an opportunity.

The COVID-19 pandemic was still fresh, with many office workers remote or coming in far less often than the usual five days a week. That caused both demand for and values of office buildings to wane, giving Olsen the final push to pursue a long-held goal for the Spring Park place.

The Mound resident purchased the 24,000-square-foot property for $5.2 million and converted it into the Shoreline Hotel, which will open May 1 as the first new hotel on the lake in a century.

Office space across the Twin Cities metro, from downtown towers to suburban complexes, has struggled the past five years. The office vacancy rate in the Twin Cities rose to about 22% in the first quarter of this year, up 2½ percentage points from the fourth quarter of 2024, according to Colliers International, an investment management company.

That’s given developers like Olsen license for creativity, morphing structures into residential or other commercial uses. For Olsen, it’s a hotel, restaurant and bakery.

She said her biggest challenge in converting the property was convincing the community a busy leisure business would be as good a neighbor as a quiet office building.

“The [city] approval process was very difficult,” Olsen said. “They were worried about parking. They were worried about sound. They were worried about smell coming from the kitchen.”

Spring Park city officials did eventually approve the project, though the permit carried a lot of restrictions about noise and other issues, she said.

Fortunately, the office building itself needed no structural changes to become a hotel, Olsen said. It already faced the lake, and its offices were the right size for hotel rooms, with “wall-sized windows with sliding doors looking out onto the lake,” she said.

That was fortuitous, because if Olsen had to tear it down and build a new structure, it would be considerably farther back from the shoreline. The Lake Minnetonka Conservation District and lakeside cities require setbacks of 50 feet from the lake, but the 1996-built office building was grandfathered in at about half that, Olsen said.

The only major construction challenge was removing a 300-year-old oak tree that was in bad health, Olsen said. But she salvaged some of its wood to form the bar top at the on-site Cabana Anna’s restaurant.

To any other developers considering similar projects, Olsen said she would advise gathering community residents’ feedback from the get-go.

“Don’t be afraid to put your brainstorm out into the public domain,” she said. “I let them behind the curtain. I tried to be really transparent.”

Anyone going for city approval with a fully developed plan could set community members “immediately hammering them with things they don’t like about it,” she said.

“This project changed many times over the course of the three years,” Olsen said. “It evolved over time because I was willing to take feedback and really listen to what the community needed.”

The Shoreline has 27 rooms, including 23 with wall-to-wall, floor-to-ceiling glass facing the lake. Seventeen will have private, lake-facing decks. Prices will start around $300 a night for rooms facing the street, and $450 for lake views, Olsen said. A larger “Captain’s Quarters” suite with a kitchenette, living room and fireplace will run $800 to $1,200 a night, depending on the season.

Baxter, Minn.-based Leisure Hotels and Resorts will manage the Shoreline.

Other amenities include a sand beach, paddleboards, bikes and wakeboarding equipment. The property includes a marina with 32 boat slips for guests of the hotel and restaurant. Boats will also be available to rent.

Cabana Anna’s will serve locally sourced food described as “South Florida meets Minnesota,” Olsen said, including seafood and comfort foods. Olsen named the restaurant after her grandmother, Anna Berg, who was 104 years old when she died in 2016.

As the first new hotel on Lake Minnetonka in about 100 years, the Shoreline is reviving the storied tourism history in the area.

Lake Minnetonka was a popular cross-country destination in the late 19th century, when there were about 40 hotels on its shores. By the early 1900s, most had closed.

The most recent hotel rooms to be built right on the lake were in the Lafayette Club in Minnetonka Beach, constructed in 1924, Olsen said. It had rooms available for members or guests of members until COVID-19 hit, when they were closed and have not reopened, Olsen said.

Since the early 1990s, developers have pursued other hotel projects on the lake but failed for various reasons, including questions about whether they would be sufficiently profitable in winter. Other hotels have opened in recent years in lakeside cities Excelsior and Wayzata, but are not directly on the shore.

Olsen expects the hotel to be popular with people visiting the Twin Cities as well as those who live here. For example, thousands gather annually on Big Island, the lake’s largest island, for Fourth of July festivities, she said.

“You know they’re out there having drinks,” said Olsen, whose first husband died in a 2008 car crash with a drunken driver. “We’re saying, ‘Don’t load your car up and drive after you’ve spent all day drinking on the lake. Come over and stay with us.’”