The Minneapolis hospitality industry is hurting, but how bad is it?
Collections of a hospitality-specific city tax were down by 81 percent last spring.
No doubt, hotels, bars, restaurants, and entertainment venues in the City of Minneapolis have suffered in the past two years with COVID restrictions, surging crime, and a series of devastating riots. Some observers sense a comeback is underway. There is plenty of anecdotal evidence on both sides: reports of restaurant and venue closures on the one hand, claims of waits for restaurant tables, new restaurant openings, and big turnouts for recent NHL and NFL events on the other. (Update: a Star Tribune columnist writes on efforts to “reanimate” downtown Minneapolis.)
What’s missing is hard data comparing current business conditions to the Beforetimes. American Experiment’s John Phelan took a look at restaurant reservations, comparing a single day last week to the corresponding day in 2019. Using numbers from the restaurant reservation service OpenTable, he found that activity in Minneapolis that day was down almost 60 percent. (Update: a group of restaurant owners is suing the City of Minneapolis over its recently imposed vaccine mandate.)
For those looking for a broader measure of activity, the city collects its own taxes on hospitality-related activity. Items covered by the tax range from liquor-by-the-drink, bar and restaurant-sold food and beverage, lodging and entertainment. Since 2018, these tax revenues have been used to support a special fund within the city budget called the Downtown Assets Special Revenue Fund.
The most recent data available for this tax revenue date from the first half of 2021. In the first half of pre-pandemic 2019, these taxes brought in $31,439,794. In the first half of 2020, these taxes brought in $25,905,480. Keep in mind, January and February of 2020 were pre-pandemic months. Lockdowns and the George Floyd riots would not occur until later in the spring.
In the first half of 2021, these taxes brought in a paltry $5,897,000, an 81 percent reduction from 2019 levels. Keep in mind that the Delta variant, the Omicron variant, vaccine mandates, and the return of mask mandates have all occurred since June of last year.
It looks like the hospitality industry in Minneapolis is in for a long, uphill climb.