Minnesota’s hotels, entertainment, restaurants seeing lower profits, new survey suggests – Austin Daily Herald

By Clay Masters and Gretchen Brown

How is the economy doing? That depends on who you ask.

On Wednesday, the Federal Reserve Bank of Minneapolis released the results of a new survey of Minnesota’s tourism and hospitality sector — think hotels, food and drink and entertainment.

The results show profits were down for more than half of the 135 businesses surveyed.

“Hospitality businesses who responded to the survey had a pretty weak summer in Minnesota overall,” the Fed’s analyst Haley Chinander told MPR News host Clay Masters.

Chinander said a majority of those hospitality businesses saw declines in traffic and revenue.

In downtown St. Paul, MPR News producer Gretchen Brown spoke with Kesha Barber at the front desk of the DoubleTree Hotel.

Barber said it seems like guests still think experiences are worth shelling out for.

“I’ve seen a lot of people come in and doing vacations based on concerts and shows and events here in the city,” she said. “People will pay for entertainment.”

But she hasn’t been on a vacation herself yet this year. Inflation is playing a role.

“I mean everything is going up, so it is factoring into being able to go.”

A few blocks away at the St. Paul Hotel, Brown met Emily Grodzik and Grant Henderson of Hopkins, Minn., who were checking out of the hotel after celebrating their one-year wedding anniversary.

The couple said they feel protected from some price increases because they don’t have kids. But they’ve still noticed impacts.

“Grocery bills are higher. When we go out to eat, the prices are noticeable,” Henderson said.

Still, making room for a nice night on the town was worth it for them.

“You have to be a bit more precious and picky about how often you do it,” Grodzik said. “This year everything we’ve done to splurge has been worth it.”

A new J.P. Morgan Cost of Living survey indicates higher-income Americans are more likely to be confident in the U.S. economy, while middle-and lower-income Americans are less likely.

In the Fed survey, Minnesota’s hospitality businesses said they were feeling a squeeze, pointing to high prices and labor costs as their top concerns.

“Right now, rising input costs and wages were really eating into the already declining revenue that they were getting, especially as customer traffic slowed,” Chinander said.

Slowing hiring can sometimes be a sign of a recession, and some national reports indicate many retailers are exercising caution with holiday hiring.

Hiring stayed consistent within Minnesota’s hospitality industry throughout the summer. Companies were not looking to add workers, nor let go of them.

Chinander was surprised by how much inflation still factors into these surveys, even though inflation is now much lower than it was three years ago. There’s uncertainty about how much worse things might get.

“We had one hotel owner comment that bookings for next year were just a lot lower than what they’ve seen in the past, and people weren’t booking as far out anymore,” Chinander said.

“A brewery mentioned facing higher prices for the aluminum for their cans. One business owner mentioned that cleaning supplies were more expensive, and another restaurant said that the price of imported wine was just a lot higher right now.”

Editor’s Note: Chinander’s views are her own and not necessarily those of the Federal Reserve Bank of Minneapolis.