NISSWA — After two years of the coronavirus pandemic, the travel, tourism and hospitality industry is returning, but the recovery is uneven and there are still challenges ahead.
Many events are returning this summer, Lauren Bennett McGinty, new director of Explore Minnesota, the state’s tourism promotion agency, told a group of more than 100 people gathered for the Lakes Area Summer Kickoff event to to preview the summer tourist season.
The event, hosted in partnership with the Brainerd Lakes, Crosslake, Pequot Lakes, Nisswa and Cuyuna Lakes Chambers of Commerce, filled a meeting room Thursday, April 14 at the Grand View Lodge in Nisswa.
Some businesses rebounded quickly from early shutdowns in spring 2020 uncertain at the start of the pandemic. One sector that has been slow to recover is business travel. That could also change, as Explore Minnesota pointed to a recent industry survey with 39% of leisure travel companies reporting to be at or above pre-pandemic levels.
It is unclear whether the pandemic has changed things in the long term. In the short term, interest in outdoor experiences has skyrocketed along with the demand for recreational vehicles. Cancellations at the start of the pandemic also created opportunities for others who may have struggled to find an opening in the past, attracting new customers. The ability to work from anywhere can mean that more people will find family vacations where they can spend their time in the remote office and at the end of the work day, get out to join the family, go golfing , go to the spa or walk to the beach.
Industry losses run into the billions of dollars and many challenges remain, whether it’s the struggle to fill jobs or businesses that cannot recover from debt incurred over the past last two years.
Liz Rammer, president and CEO of Hospitality Minnesota, a nonprofit association of businesses in the state’s hospitality industry, was one of the keynote speakers at the tourism event.
“This is a very important industry for our state,” Rammer said. “And you all probably know that tourism and hospitality generates a lot of business. Normally, it employs one in 10 Minnesotans, so it’s a huge employer. The real impact of a pandemic is, you can see it here, $15 billion in lost sales.
Rammer said the industry generates 18% of state sales tax.
“So we know it’s really important to get everyone back at full speed so that we can move our economy forward in our state,” Rammer said.
In terms of the workforce, Rammer said the state still lost 32,000 jobs in recreation and hospitality compared to pre-pandemic numbers. Rammer said up to 95,000 people may have permanently left the industry for various reasons during the shutdowns.
Labor shortages, Rammer noted, were an issue before the pandemic with expectations that the industry would be short of 25,000 to 30,000 workers over the next decade, before any disruption by COVID-19.
On the first Memorial Day after the pandemic began, Rammer said things had changed quickly.
“I know for our resort and camping folks, all the cancellations started coming in for the summer. And as we got closer and closer to Memorial weekend, the fear really started to happen, wondering if we were going to have a season at all, unopened golf courses, unopened beaches, unopened fitness centers, all that.
Businesses have also adapted quickly, shifting to doing things online and offering catering, take-out and meal kits. In some ways, with takeout, restaurants can expand their dining areas as people seek the dining experience but at home, Rammer said. What has emerged, Rammer said, is the new term for leisure travel. Technology is also changing things, and Rammer noted that a robot recently delivered his pizza to a pizzeria in Rochester. Technology, she said, can be used to help save people employed for important interactions.
As for economic conditions with a recent survey in March, Rammer said there are still headwinds.
“It’s been a choppy recovery,” she said. “And when the media asks us – how do you describe it? All we can say is that this is a mixed bag. Because some companies have done extraordinarily well. Others are doing well, and some are still struggling.
It depends on location, business model, clientele and not all have been served with the help of grants. The restaurant industry is still very vulnerable, Rammer said, adding that nearly 50% are expressing concern about insolvency next year. She reported that 66% of restaurants took on an average of $552,659 in debt, projecting $3.6 billion statewide. Data collected also indicates that 64% of foodservices and 52% of hotels saw lower winter 2022 revenue compared to 2019. Hotels were largely excluded from funding, which was frustrating as they all pay taxes and employ people in the community, Rammer says.
She pointed to data from their survey showing that 55% of hotels have an average debt of $723,685, projected at $403 million statewide.
She said Minnesota is in the middle of the pack when it comes to what states have done, but Minnesota could do better. A return to normal revenues for food service and hotel operators is expected to occur in 2023 or later.
So the message to lawmakers, Rammer said, is that seeing busy restaurants, bars, hotels and resorts in communities can be misleading because so many challenges remain and it will take time for businesses to recover. to be able to recover. Hotels, she said, have done better in Greater Minnesota than in the metro, with facilities dependent on conventions, concerts and events, which are beginning to return.
Staffing shortages continue to be a challenge, with 88% of companies surveyed citing these shortages as limits on days or hours of operation and limiting the ability to clean hotel or resort rooms.
“Staff shortages have impacted businesses by not being able to stay open at their regular hours,” Rammer said, adding that these are still challenges they face. She said inflation is also a challenge, with some companies choosing not to pass it on to their customers, but that can only last for a while. Supply chain issues also persist.
Rammer said she spoke to resorts who weren’t sure how 2020 was going to go after a very tough spring, but then they had a great year, and then 2021 came and it was even better. She said the resort and campground sector did better than any other with a strong percentage surpassing their pre-pandemic numbers. Ninety percent of resorts, campgrounds and outfitters say creditworthiness is not an issue, with 96% saying financial health is positive/growing, and 49% expect revenues above normal in the second trimester. Almost two-thirds, or 65%, have already exceeded pre-pandemic revenues.
“And we are encouraged to see that this particular sector has done so well and has been able to really show its properties to new customers throughout the pandemic. It bodes well for them going forward,” Rammer said.
Renee Richardson, Managing Editor, can be reached at 218-855-5852 or [email protected] Follow on Twitter at www.twitter.com/DispatchBizBuzz.