By Steve Fernlund
A recent report on a September survey of hospitality business owners across the state found that increasing prices and higher labor costs were the top challenges for owners. The survey was conducted by the Minneapolis Federal Reserve Bank and the Minneapolis-based organization Hospitality Minnesota.
According to the report by Fed analyst Haley Chinander, nearly half of the 135 survey respondents reported that customer traffic had declined this summer compared to the same time last year. She wrote, “With fewer people going out to eat or booking getaways in the state, most businesses did not see revenue growth in the peak season.”
A comment from a northern Minnesota resort owner in the survey was, “With prices rising and people losing jobs, the vacation is always the first thing eliminated from the budget.”
More than half of the businesses reported lower profits over the year, while only 17 percent reported growth.
According to the report, many responding businesses said they were in good financial health overall. Most reported that they were hiring to fill turnover, and very few were reducing headcount.
Some businesses, mainly those in northern Minnesota, said they were impacted by changes in Canadian tourism. Of the 65 percent that saw a change in Canadian tourist traffic, most experienced a moderate to significant decline. “Our Canadian tourists, that are usually a high revenue for our town, have not been there this year,” wrote a hotelier near Red Lake who participated in the survey.
Respondents’ expectations for the fall shoulder season showed some modest improvement from this summer: A smaller share of businesses expected declines in revenue and profits. However, only a small share expected growth.
This is from a hotel owner in central Minnesota: “Our summer sea son was better than expected, but there are signs of a significant slow down for the fall.”
Some businesses said that inflation is hitting them from two directions. On the one hand, rising operating costs are eating into prof its. On the other hand, the price in creases needed to offset those costs deter customers.
Nearly 60 percent of respondents reported experiencing some negative effects from recently proposed or implemented tariff and trade policies.
A Minneapolis restaurant owner wrote that higher labor costs from paid leave legislation and minimum wage increases coming next year, “will have a significant negative impact on already declining narrow profit margins.”
The Minnesota Tourism & Hospitality Survey was conducted from September 3 to 24, 2025. The on line survey received 135 complete responses from a convenience sample of hospitality and tourism industry business contacts in Minnesota. Of the respondents, 46% were Twin Cities metro area. The remaining 54 percent were from across Greater Minnesota.
