MINNEAPOLIS -- Facing an ongoing workforce shortage, more than one-third of Minnesota restaurant and hotels operators project revenue won't return to pre-pandemic levels until next year.
Higher costs and supply chain challenges remain for the state's hospitality businesses, according to a survey by Hospitality Minnesota, the Federal Reserve Bank of Minneapolis and Explore Minnesota Tourism that was taken last month.
Even as consumers return to restaurants and hotels, managers are less sure they can accommodate demand because the industry has 32,000 less workers than pre-pandemic levels, Hospitality Minnesota reported.
"I'm hearing the nervousness about finding the workforce to service the demand," said Ben Wogsland, executive vice president for Hospitality Minnesota, representing restaurants, hotels and campgrounds. "That's the number one thing I'm hearing across all hospitality sectors."
One result may be that restaurants continue to operate at reduced hours. Establishments with counter service or that can pivot to a bigger share of takeout have an advantage.
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According to the survey, 36% of hospitality operators say their business has returned to, or surpassed, pre-pandemic revenue levels. However, 37% say they won't cross that threshold until next year.
About 19% expect to reach it this year, and 5% said they never expect sales to be as good as they were before the pandemic.
One bright spot is the resort and campground sector, which continued to outperform previous years. Half of operators reported higher winter revenue than 2019 and about the same number expect the positive trend to continue into spring.
Recently returning workers and events are good news for the hard-hit central business districts of Minneapolis and St. Paul, though operators are cautiously optimistic after previous waves of coronavirus variants stalled recovery.
"I think you're seeing trepidation, even for this next quarter," Wogsland said.
Minnesota's hospitality and tourism industry lost over $15 billion in revenue, or about 249 days of business during the past two years, due to shutdowns, capacity rules, and reduced demand, the trade group reported.
The survey also found that nine out of 10 hospitality operators are now experiencing difficulty both in finding workers and in getting critical goods on time to run their businesses.
About two-thirds of restaurant respondents reported taking on debt because of challenges related to the COVID-19 downturn. About half of hotel respondents had taken on debt.
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About four out of ten respondents said they have been able to pass on the higher costs of goods in recent months by raising prices to customers.
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