MN tourism and hospitality survey reports summer surge mixed with shortfalls
According to a recent Minnesota tourism and hospitality industry survey that addressed summer business, the 2021 season served up a combination of bright spots for several business types, but also reflected ongoing hardship for some of the state’s tourism sectors and regions. Winding down from the important summer travel season, three quarters of survey respondents reported higher business revenue, but some fared better than others and customer traffic was mixed.
The tourism and hospitality industry has made some steps forward, but still stands as one of the hardest hit sectors of the economy during the pandemic. According to Tourism Economics, the pandemic-related travel downturn has cost Minnesota $10 billion in travel spending losses since Jan. 2020.
The survey, conducted in partnership by Explore Minnesota, Hospitality Minnesota and the Federal Reserve Bank of Minneapolis, targeted a cross-section of tourism and hospitality businesses across the state, including food and drink, attraction and entertainment and lodging (hotels and motels, resorts, bed and breakfasts, campgrounds, houseboat operations and vacation rentals). Addressing business between May and August, the survey examined two key indicators of economic recovery: revenue and customer traffic in relation to supply, compared with summer business impact in 2020 and 2019.
Revenue was up for most businesses, but customer traffic was moderate and mixed across the Minnesota region/business type. Seventy-one percent of businesses reported higher summer revenue versus 2020, and 45% reported higher summer revenue than in 2019. Half of respondents reported less customer demand relative to their businesses’ operation capacity compared to summer 2020. Sixty-three percent of businesses in the food and drink sector reported higher revenue in summer 2021 compared to 2020, and 42% reported higher revenue versus summer 2019.
Minnesota’s food and beverage sector has made significant strides since last winter, when nearly all businesses in that sector reported dire financial conditions.
Industry recovery varied by season, business type and geography across the state. Regionally, southern Minnesota and Twin Cities metro businesses reported the lowest customer traffic. Overnight lodging accommodations across all Minnesota regions reported somewhat or significantly higher revenue compared to last summer. Revenue was higher for 92% of businesses in the northwest; 90% higher in central; 89% higher in northeast; 81% higher in Twin Cities metro; and 64% higher in southern Minnesota.
As of Aug. 2021, 34% of businesses have met or surpassed pre-pandemic business levels and another 41% of businesses expect to be by 2022.
While outdoor leisure and wedding activity is significantly up, business travel and groups continue to struggle.
After a few months of steady recovery, consumer travel perceptions are starting to shift again due to the COVID-19 Delta variant.
“We’re encouraged to see that some areas and businesses across the state are seeing a strong demand and continued growth but the whole industry is not out of the woods yet,” said Leann Kispert, interim state tourism director for Explore Minnesota. “Hardship and debt remain for our hospitality and tourism sectors in places throughout the state that depend on meetings, large group events and business travelers to drive consumer foot traffic.”
Despite some growth, the tourism and hospitality workforce is still down. Eighty-one percent of survey respondents reported tight labor availability. In line with national trends, the industry continues to experience significant labor challenges, impacting the ability to deliver the same level of service that guests experienced before the pandemic. According to the U.S. Bureau of Labor Statistics, the U.S. leisure and hospitality industry is the hardest hit sector, still down 1.7 million jobs (10.3%) since Feb. 2020.
Businesses, for the most part, are cautiously optimistic that recovery will continue this fall. Sixty percent of businesses expect higher revenue and customer demand this fall versus 2020. Businesses that experienced a good summer are anticipating a similar season ahead but remain concerned about the potential impact of the Delta variant.
“The current onset of the COVID-19 Delta variant continues to highlight how volatile sustained tourism recovery is and how differently the pandemic impacts segments of this industry,” Kispert said. “Consumer confidence and traveler preferences vary widely, and those who are traveling also seem to be spending more.”
Complete Minnesota tourism and hospitality industry survey results and illustrations can be viewed at mn.gov/tourism-industry/research/reports.
With cautious optimism, the Minnesota Department of Natural Resources is adjusting some wildfire-related restrictions in Minnesota due to improved field... read more