State tourism is primed for rebound

  • Article by: LARRY OAKES , Star Tribune
  • Updated: May 26, 2012 - 3:47 PM

Lower gas prices, higher airfares and stabilized economic prospects are brightening the outlook for Minnesota's travel season.

With the recession receding in the rear-view mirror, more Minnesotans are feeling good enough about money to hit the road this summer.

As this holiday weekend officially kicks off the summer travel season, falling gas prices, an uptick in job security, the early spring, better fishing and higher airfares all are conspiring to entice more residents to plan driving vacations to such classic destinations as the Brainerd lakes area and the North Shore.

Some 39 percent of lodging and camping businesses expect occupancy to be higher this summer than last, and 44 percent expect a revenue increase, according to a recent survey of 370 hospitality businesses by the state tourism agency. The results were more positive than in a similar survey two years ago, when businesses first noticed an uptick from the recession lows of 2009.

"There's a sense of renewed optimism," said John Edman, agency director for Explore Minnesota Tourism. "As consumers gain more confidence in the economy, they are more likely to take leisure trips. And the continuing trend of vacationing close to home really benefits Minnesota."

Tourism is an $11.3 billion annual industry in Minnesota, employing 235,000 workers -- making it a key sector of the state economy. Besides more jobs, a strong tourism industry helps state coffers, since it accounts for 17 percent of state sales tax revenue.

Reservations are now "pretty darn close" to pre-recession levels, said David Spizzo of Breezy Point Resort near Brainerd, which is seeing a significant increase in reservations over last year, especially from Canadian travelers.

"People want to take vacations again," said Nancy Krasean, director of marketing at Cragun's Resort, also near Brainerd.

Pumped for summer

Gas prices are averaging about $3.69 a gallon nationwide. That's down from $3.89 just a few weeks ago. Average Twin Cities prices are slightly lower.

A recent report from the American Automobile Association (AAA) estimates that 31 million Americans will hit the road in cars this holiday weekend, a 1.2 percent increase over last year.

That bodes well for a "drive destination" such as Duluth, said Terry Mattson, president and CEO of Visit Duluth.

Hospitality executives in the city overlooking Lake Superior consider the Twin Cities their "core consumer market," said Mattson, whose organization is running an ad campaign in the Twin Cities over the next few weeks, including 40 billboards depicting iconic Duluth scenes and the slogan: "Duluth is good for you."

Mattson said that by focusing marketing efforts two hours south, Duluth had seen 19 consecutive years of tourism growth until a slight downturn in 2009. But that was followed by "all-time record" years in 2010 and 2011.

"What was an $80 million-a-year tourism industry in the late 1980s now accounts for at least $780 million in direct impact each year," Mattson said. "Everything is pointing toward a very good summer season. Duluth is outpacing its own projections year-to-date. It's still early, but people are buying more cars. Folks are getting out more."

Despite setbacks such as projected job cuts at a couple of premier Minnesota employers, the state's general economic outlook is sunnier than it's been in years, which also is encouraging a return to more normal summer travel habits, experts say.

"I worry when I hear about potential layoffs at General Mills and Medtronic, but then I see 50,000 job vacancies at compared to 5,000 or 6,000 at the depths of the recession, so there's evidence the picture is improving," said Dan McElroy, president of Hospitality Minnesota, an umbrella of the Minnesota restaurant, lodging, resort and campground associations.

Rob Grunewald, an economist with the Federal Reserve Bank of Minneapolis, has a similar view.

"Despite recent layoff announcements, overall employment and income are expected to grow in Minnesota through 2012, a positive sign for the upcoming tourist season," Grunewald said. "The continued economic recovery in Minnesota, combined with easing gas prices, should support moderate growth in tourism this summer."

'Cautiously optimistic'

McElroy said he's "cautiously optimistic" that the season will be another good one for his hospitality industry members, most of whom tell him reservations from June through August are ahead of the same period last year -- especially camp site reservations.

"Saving money is part of it," he said. "But we're also seeing people booking seasonal or longer-term [camp] sites. It's like your own summer cabin without the property taxes and maintenance."

In part, he credits the good outlook, especially among resorts, to better fishing success the past three years, thanks to size restrictions imposed by the state Department of Natural Resources, cormorant control and other regulations that have helped fish populations thrive.

Meanwhile, despite the some recent layoff announcements, employers generally are beginning to shift from slashing workers to worrying about retaining workers, said John Challenger, of global outplacement firm Challenger Gray & Christmas.

That shift bodes well for workers who have been too overworked and worried about potential layoffs to take vacations.

Emir Beganovic of Minneapolis expects his family to be among those vacationing by car, with two trips planned to Chicago and one to their cabin in northern Minnesota.

"I like the leisurely pace of driving," he said.

Staff writer Dee DePass and student intern Patrick Dunphy contributed to this report. Larry Oakes • 612-673-1751

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