HOTEL OCCUPANCY
Hotel occupancy rates are back on the rise after several months of decline in the latter half of 2021 and early 2022. Recovery for hotels and hospitality businesses in MSP has been volatile but industry experts are hopeful as case levels decline in 2022.
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WHAT THE DATA IS TELLING US The MSP region’s hotel occupancy rate decreased from January to February 2022 to 41.7%, up 5.6 percentage points from from January levels. The February occupancy rate was 23.1 percentage points higher than the rate one year ago, when the pandemic was still taking its toll on travel and hospitality, but still 17.5 percentage points lower than 2019 (pre-COVID) levels. The earliest sign of impact from the COVID19 pandemic on the MSP hospitality industry was in March 2020, when regional hotel occupancy dropped from 55% to 32%, when typically rates increase as the weather warms. Hotel occupancy rates have fluctuated with new waves and variants of the virus, as well as typical seasonal increases and decreases throughout the year. |
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This metric tracks the hotel occupancy rate, or share of hotel rooms that were occupied on average, in the MSP region, with boundaries that closely mimic the 15-county metro area. Data is updated monthly and provided by STR.
WHY THIS MATTERS TO ECONOMIC RECOVERY:
The initial restrictions on travel and stay-at-home orders instituted due to the COVID19 pandemic resulted in sudden and dramatic shocks to the hospitality industry in the MSP region, a region vibrant with tourism, music and arts, and sports and events. State and CDC urging to stay home for the holidays, along with rising COVID case rates and state restrictions imposed late in November, led to worsening conditions for an already weary industry sector. As the pandemic continues, consumers are still traveling less per expert advice, and are experiencing income losses that affect their ability to spend on travel. Hotel occupancy and the recovery of this industry specifically is a leading indicator of consumer confidence and personal financial wellbeing among residents of our region.
RACIAL EQUITY AND INCLUSIVE RECOVERY:
The hospitality industry employs a disproportionate number of BIPOC workers. A 2020 analysis by GREATER MSP showed that 40% of BIPOC workers in the region were employed in retail trade, accommodation/food service, and healthcare. Furthermore, hotels are concentrated geographically in central business districts and near tourist attractions. Therefore, workers in these communities have been disproportionately impacted by economic declines in this industry, and these challenges faced by BIPOC workers amplify long-standing structural racial disparities in the MSP region.
TELLING THE FULL STORY:
There is considerable variation in hotel occupancy rates within the region, though all three principal cities in the MSP region are seeing continued increases in hotel occupancy in February from levels in January. Bloomington continues to have the highest occupancy rate this month at 49.9%, 8 percentage points higher than January. Minneapolis and Saint Paul both saw a roughly five percentage point increase from January levels.
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Seasonality plays a large role in MSP’s hotel occupancy rates, and therefore it is difficult to observe the influence of the COVID19 pandemic in month over month trends in the data. At this juncture, year-over-year trends are more helpful in understanding the economic impact of the pandemic on the hospitality industry. Additionally, watching trends in employment within the sector and in other related industries like air travel and food service can help to tell the full story of what’s happening in the hospitality industry.
HOW TO LEARN MORE:
STR provides premium data benchmarking, analytics and marketplace insights for global hospitality sectors. Visit their website to learn more about data solutions, industries that are served, and to gather additional data insights.
Meet Minneapolis is the destination marketing organization for the City of Minneapolis. They are watching these trends closely as they work to market, sell and maximize the visitor experience of Minneapolis for the economic benefit of the community.
Visit Saint Paul is Saint Paul’s Official Convention & Visitors Bureau, watching hospitality industry trends and working with businesses in the city of Saint Paul to generate economic growth for Saint Paul by effectively marketing the RiverCentre campus, Saint Paul and the region as a preferred convention and tourism destination.
Bloomington Convention & Visitors Bureau is the official marketing organization of the city of Bloomington, MN. They promote travel and tourism to the city, its partners, local attractions and the surrounding communities, and also track hospitality industry trends closely for the city of Bloomington.
Hospitality Minnesota is a business association bringing information, resources, and advocacy to help hospitality businesses connect and thrive in Minnesota.
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