Jun 21, 2021 - News

Are Minneapolis hotels missing out on the tourism rebound?

Twin Cities region hotel occupancy
Data: STR/Greater MSP; Chart: Danielle Alberti/Axios

Hotel rooms in downtown Minneapolis are still very empty, even as other cities enjoy a rebound in tourism.

State of play: Downtown's tourism struggles are a big reason why the overall Twin Cities metro has been one of the worst performing large hotel markets in the country.

  • The Twin Cities had a 42.5% occupancy rate in April and a 43.5% occupancy in May, which ranked 24th and 25th of the 25 largest markets, according to global hospitality benchmarking firm STR.
  • Downtown Minneapolis' occupancy was 22% in April and 24% in May, according to STR. Meanwhile, St. Paul's occupancy was 45% and 48% those months.

Why it matters: Tourism brings money to restaurants, retailers and other businesses in the city. And the city uses hotel tax revenue to pay off debt on U.S. Bank Stadium, Target Center and the Minneapolis Convention Center.

Between the lines: While the metro has faced many of the same challenges others have during the pandemic, the state's tighter COVID restrictions and the Derek Chauvin trial have kept tourists and most business travelers away.

Yes, but: Public safety, both real and perceived, is also a factor, said Ben Wogsland, director of public affairs for the trade group Hospitality Minnesota.

  • Some hotel operators are having a hard time getting employees to work downtown, he said.

Threat level: A May survey of Minnesota hotel and motel operators found that 57% said they would be insolvent within a year under current conditions.

What to watch: In a letter to Mayor Jacob Frey, Hospitality Minnesota CEO Liz Rammer asked the city to use federal relief money for direct grants to hotel operators. The organization cited a $30 million Washington, D.C. program that gave direct payments to operators.

  • Frey has proposed $500,000 to Meet Minneapolis, the city's convention and visitors bureau, for incentives to attract conventions and another $500,000 boost for a marketing campaign.

Of note: After the murder of George Floyd, Meet Minneapolis called off marketing campaigns, but they're now ramping things up, said CEO Melvin Tennant.

  • "The room nights on the books for 2022 are actually outpacing room nights on the books for the same time in 2019," he said.

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