Minnesota Tourism Industry Grapples with Continued Volatility
Visiting Canal Park in Duluth Paul Vincent c/o Explore Minnesota

Minnesota Tourism Industry Grapples with Continued Volatility

On top of concerns about the Delta variant, 81 percent of hospitality businesses surveyed report significant labor challenges.

Just as Minnesota’s hospitality and tourism industry was hobbling back from $10 billion in travel spending losses since the onset of Covid-19 in early 2020, concerns about the Delta variant are causing renewed volatility.

Outdoor leisure and wedding activity is up significantly over last summer, but business travel and groups continue to struggle, according to a new survey conducted in partnership by Explore Minnesota, Hospitality Minnesota, and the Federal Reserve Bank of Minneapolis.

On top of Covid concerns, 81 percent of the businesses surveyed in Minnesota report significant labor challenges. That’s in line with national trends; according to the U.S. Bureau of Labor Statistics, the U.S. leisure and hospitality industry is the hardest hit sector, still down 10.3 percent (1.7 million jobs) since Feb. 2020.

But there are bright spots in the survey findings. Summer revenue is up over last year for 71 percent of businesses surveyed, which include a cross-section of food and drink, attraction and entertainment, and lodging companies. While doing better than last summer might not seem like much, considering many businesses were shuttered and how many people were unable to travel in 2020, the survey also shows that revenue this summer topped 2019 numbers for 45 percent of tourism and hospitality businesses. Other encouraging findings:

  • 63 percent of food and drink businesses reported higher revenue this summer compared to 2020 and 42 percent reported higher revenue than in 2019.
  • When it comes to lodging, 34 percent of businesses have met or surpassed pre-pandemic business levels.

“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,” Explore Minnesota’s interim state tourism director Leann Kispert said in a statement. “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.”

Demand varies by region, with more tourists heading north. In central, northeast and northwest Minnesota, 67 to 70 percent of those surveyed reported demand at or above supply. In the Twin Cities and southern Minnesota, only 35 to 40 percent could say the same.

But businesses seem cautiously confident about a strong fall, the survey shows. Sixty percent of Minnesota’s hospitality and tourism businesses said they anticipate higher revenue and customer demand this fall compared to 2020.

“Consumer confidence and traveler preferences vary widely,” Kispert said, adding an encouraging note: Among those who are traveling, she said, spending is up.