Minnesota hospitality industry lost $15 billion during COVID pandemic

Continuing labor shortages, decreased revenue, persistent inflation, and complicated supply chain bottlenecks threaten to keep many of these businesses in debt for the foreseeable future.

An empty sidewalk outside of Brit's Pub in downtown Minneapolis. (Alpha News)

The hospitality industry in Minnesota is projected to have lost $15 billion over the course of the COVID pandemic.

Results from a new survey — conducted by Hospitality Minnesota, the Federal Reserve Bank of Minneapolis, and Explore Minnesota Tourism — show that COVID lockdowns and restrictions played a role in reducing hospitality revenue “by an equivalent of up to 249 days.”

Along with the projected $15 billion losses in revenue, hospitality and tourism businesses have lost roughly 32,000 total workers since the beginning of the pandemic. Many have also gone into debt to continue paying rent, insurance, utilities, taxes, and other necessary bills to continue operating.

“While the majority of businesses have so far survived economic collapse, data indicates that we face a multi-year economic recovery,” Hospitality Minnesota’s survey summary said. “Economic headwinds remain related to lower-than-normal revenue, significant inflation, supply chain challenges and a historic workforce shortage.”

As far as a “return to normal” is concerned, Hospitality Minnesota says its projections differ depending on the sector in question. For instance, nearly two-thirds of resorts and campgrounds have once again “met or surpassed pre-pandemic level revenues,” but around half of hotels and 53% of restaurants may not see normal levels of revenue until 2023 or later, or never.

Labor shortages continue to abound as well. The survey reveals that 88% of Minnesota’s hospitality and tourism businesses describe the labor market as “tight,” with a majority of those respondents describing it as “very tight.”

Concerns about debt haven’t gone away either. 46% of all businesses are worried about insolvency to varying degrees within the next six to 12 months. Two-thirds of restaurants and 55% of hotels took on debt during the pandemic — with the two sectors’ combined debt amounting to just over $4 billion statewide.

Continuing labor shortages, decreased revenue, persistent inflation, and complicated supply chain bottlenecks threaten to keep many of these businesses in debt for the foreseeable future.

“People don’t realize that restaurant owners aren’t millionaires. We aren’t even 100-aires,” restaurateur Steve Hesse told the Pioneer Press. “We’re living month to month, week to week, just like everybody else. Then getting into the pandemic where we’re shutting down, a lot of restaurant owners put everything we had into these restaurants. All of our money, all of our savings, we put up our houses. It was hard.”

Hospitality Minnesota will use the results of its survey to advocate for measures that help the industry recover more quickly, explaining how the unwillingness of Congress to provide additional federal relief means state and local leaders need to work on solutions instead.

“With a $9.25B surplus and an additional $1 billion in American Rescue Plan funding coming to [Minnesota], the legislature is currently considering various legislative actions to address workforce training, direct grant assistance, tax relief and other legislation,” the survey summary adds.