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Businesses in the hospitality and tourism industry throughout the state reported being financially healthy and stable despite many making less money this summer than in summer 2023, though hotels remain nearly even with last year’s revenues according to a new survey report published by the Federal Reserve Bank of Minneapolis.

Out of the 266 respondents, nearly 50% had some level of decline in revenue compared with the year before, according to survey results, though this does not indicate businesses were unprofitable, and businesses are not generally feeling optimistic about the prospects of the fall.

Of the businesses surveyed in the metro and in the northeast region, over 50% responded saying that their revenues were “significantly” or “somewhat lower” than last year. Exactly 50% of northwest respondents had lower revenues while less than 50% of respondents in the central and southern regions of the state reported lower revenues.

The survey results were presented at a webinar by Regional Outreach Director Ron Wirtz.

While the inflation rate has lowered from years prior, 60% of those surveyed reported the “price inflation for goods & services” being the biggest challenge facing their business, while wage increases was the second with about 27% of respondents.

When broken into subsectors of the hospitality industry, the survey showed that attraction/entertainment and food/drink establishments and other businesses all reported a drop in revenue. Overnight accommodation was the only subsector to see roughly equal amounts of respondents saying they say an increase, stagnation or decrease in revenue.

Minnesota Hospitality CEO Angie Whitcomb said during a discussion of the survey that the hotel numbers in the metro were a cause for optimism.

According to Jon Ruzicka, first vice president at Marcus & Millichap, the central business district of Minneapolis saw an increase in revenue-per-available-room or RevPAR. In the summer of 2023, RevPAR was $83.81, while for summer 2024 saw RevPAR sit at $98.57. This bump is good, Ruzicka said but still below pre-pandemic levels because of the slower return of business travel.

“If business travel comes back, we should get close to where we were pre-COVID,” Ruzicka said in an interview with Finance & Commerce.

Marcus & Millichap Senior Associate Joseph Ferguson said something that might help boost numbers further for businesses in the metro is that more properties are trading hands, which brings in new investments.

“Some long-term properties that couldn’t have sold in the past five years are finally trading to new incoming investors, and franchises are requiring them to do renovations, so you’re going to see a lot more mid-scale, upper mid-scale, even economy-tiered hotels completely refreshed,” Ferguson said.

Ruzicka said hotel operators, like many other businesses, are facing issues with labor and insurance. Whitcomb, during the webinar, said members she has talked to are having issues with the decrease in seasonal workers.

“Temporary guest workers are essential to their being able to successfully run their daily operations,” Whitcomb said. “I talked to one member last week, who for the last two years has not been able to secure the same number of H3 visa workers that he’s used to and that he needs.”

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