Minnesota Tourism 2013 Pre-Summer Business Survey Points to a Good Summer
Release Date: May 24, 2013
Minnesota Tourism 2013 Pre-Summer Business Survey Points to a Good Summer
- Overview: A recent Explore Minnesota Tourism (EMT) survey revealed that Minnesota lodging and camping properties have positive expectations for the upcoming 2013 summer season. Sizable portions of respondents expect both occupancy and revenue to be up this summer, compared with last summer. The late arrival of spring this year posed challenges for resort and campground business levels, but did not keep Minnesota hotels and motels business levels from improving compared with last spring. Results reflected only moderate concern about the impact of gas prices on summer business. Comments in survey responses were generally optimistic, but also noted continuing concerns about the economy and related business challenges. These results build on overall positive results from similar surveys conducted over the past few years.
- Expectations for Summer 2013 (June through August): Survey responses pointed toward higher expectations for summer 2013 occupancy and revenue, when compared with summer 2012. (Note: For this and other questions about year-over-year changes, only the direction and not the degree of change was ascertained.) Positive expectations for both occupancy and revenue outnumbered negative expectations by more than two to one.
A weighted average 38% of respondents expected upcoming summer occupancy to be up, 46% expected it to be the same, and 17% expected it to be down from last summer. This outlook is very similar to the 2012 summer outlook in results from the pre-summer survey a year ago. Occupancy expectations for summer 2013 were similar across Minnesota tourism regions and accommodation types. Expectations for summer 2013 revenue followed the same positive pattern as for occupancy expectations, and were also very similar to the 2012 summer outlook from a year ago. A weighted average 44% of respondents expected upcoming summer revenue to be up, 40% expected it to be the same, and 16% expected it to be down from last summer.
Comments about expectations for summer business included more mentions of a better economy and an improved jobs outlook than in the past few years, along with customers’ pent up demand and respondents’ ability to raise lodging rates based on improved business levels. Customers continue the trend of delayed planning and booking closer to the time of travel, with the cold spring cited as a reason for some inquiring customers not yet being in the mood to book for summer.
- Spring 2013 Business Levels: Respondents reported lower levels of both occupancy and revenue in spring (i.e., April and May) 2013 compared with the same months of 2012. A weighted average 28% of respondents reported that spring 2013 occupancy was up, 28% reported it to be the same, and 44% reported it to be down from a year earlier. For spring revenue, 31% of respondents reported that it was up, 26% reported it to be the same, and 42% reported it to be down from spring 2012 levels. More than half of responding resorts and campgrounds reported that occupancy and revenue this spring were lower than last year. On the other hand, among responding hotels and motels, whose business is much less weather-dependent, more than half reported that occupancy and revenue were up this spring. Respondents from the Metro region also reported substantially better spring business levels than respondents from other regions.
It is worth noting that recent Minnesota reports from Smith Travel Research, Inc. (STR) align more closely with positive hotel/motel results than with negative resort and overall results for spring business levels on the EMT pre-summer survey. STR results show growth in occupancy and other Minnesota lodging metrics for the month of April (i.e., the most recent month reported) and year-to-date through April, compared with 2012. The differences between EMT and STR results relate to a combination of different spring business levels of resorts and hotel/motels and differences in weighting of EMT and STR results. Property-based weighting of EMT results gives more emphasis to numerous but smaller resorts, and unit-based weighting of STR results gives more emphasis to fewer but bigger hotels and motels.
The impact of weather on spring business levels played out very differently in 2013 than it did in 2012. Most respondents this year (61%) indicated that the late arrival of spring impacted their business in a negative way, while only 6% reported a positive impact and 34% said the late spring did not impact their spring business. By contrast, a similar question a year ago revealed that early warm weather had a negative impact on only 10% of respondents, but a positive impact on 34% of respondents and no impact on a majority of respondents (57%). Numerous comments from resort respondents this year noted that late cold, snow and ice out conditions shortened their spring preparation time. Some reported cancellations over walleye fishing opener, a very important spring/summer kickoff weekend for many businesses.
- Financial Health: Similar to a year ago, nearly three quarters of survey respondents were positive about the financial health of their business. A weighted average 15% of respondents rated their business as “growing” and 57% rated it as “stable, but positive.” On the negative side, 17% of respondents rated their business as “stable but negative” and 8% rated it as “declining.” Three percent of respondents said they didn’t know. Well over half of respondents in each region and accommodation type rated their current business health as positive (i.e., either “growing” or “stable but positive”), with the highest positive levels represented by respondents from the Metro region.
- Gas Price Impacts: Results to a question about gas price impacts reveal that half of survey respondents (50%) thought gas prices would not likely impact their business this summer, up from 37% in results to the same question a year ago. Additional results included 17% of respondents checking that gas prices will contribute to increased bookings due to travel closer to home, and 25% checking that gas prices will contribute to decreased bookings due to limited travel. Numerous respondents checked multiple responses, especially among three response options about gas prices leading to decreased bookings and sales. The survey period concluded just as Minnesota gas prices unexpectedly spiked to historic highs due to maintenance-related shutdowns of multiple key refineries. High gas prices are a short-term concern, but high gas prices have not had a significant impact on Minnesota travel in the past and gas prices are expected to ease by the peak summer travel season.
- Other Changes over the Past Year: Respondents were asked about changes over the past year on eight items, with up/same/down/NA response options. Items that showed the biggest upticks were “number of customers seeking deals, multi-night discounts, etc.” (47% up, 5% down) and “incidence of bookings closer to the time of travel” (44% “up” responses compared with 6% “down”). Two other items had more “up” than “down” responses – “number of customers looking for packages like overnight plus nearby attractions, etc.” (11% up, 6% down) and “number of business travelers” (15% up, 13% down). Items with more “down” responses than “up” responses included “average length of stay” (13% up, 20% down), “number of international travelers” (10% up, 16% down), “amount of meeting and conference business” (6% up, 12% down), and “amount of non-lodging sales” (8% up, 13% down). A number of the items had a high rate of “does not apply” responses.
- General Comments: Overall, comments reflect optimism that the economy and travel continue to improve, though some recession-related trends linger. Value-conscious consumers are still looking for deals and searching for affordable getaways, often at the last minute. Several respondents acknowledged that trends like these accelerated during the recession, but are likely to persist indefinitely. Other comments noted increases in online bookings and increased demand for internet access. Interestingly, along with numerous comments about customers pressing for deals, a few comments noted a decline in the frequency of this behavior associated with improved economic conditions.
- Survey Invitation Lists, and Response Rates: Explore Minnesota Tourism (EMT) conducted an informal, unscientific online survey in May 2013, soliciting responses by email from 1,701 accommodations (indoor lodging properties and campgrounds) throughout Minnesota that have provided EMT with an email address. A total of 240 responses were received for a 14% response rate. Ninety-six percent of the respondents (227) completed the entire survey. Results reported here reflect self-reported data from all survey respondents.
- Responses by Accommodation Type: The distribution of survey responses by type of property over-represented resorts (46% of total responses, 35% of total distribution) and B&B/historic inns (13% of responses, 8% of distribution), and under-represented hotel/motels (25% of responses, 38% of distribution) and campgrounds (11% of responses, 14% of distribution). Five percent of respondents checked "other, including vacation home rental" as their accommodation type. Vacation home rentals were among 5% of the total survey distribution list that was not represented by a specific accommodation category on the survey.
- Rebalancing by Accommodation Type: Results for most survey questions were rebalanced to minimize the distortion caused by substantial over- or under-representation of respondents in some accommodation types. Weighted average results reflect Minnesota’s distribution of properties by accommodation type (found above under “responses by accommodation type”).
- Responses by Region: The distribution of survey responses across Minnesota’s five tourism regions over-represented the Northeast region (29% of responses, 23% of total distribution). By contrast, survey responses under-represented the Minneapolis-Saint Paul region (i.e., Metro Area – 10% of responses, 16% of distribution) and the Southern region (16% of responses, 19% of distribution). Representation of survey responses was approximately equal to the actual regional distribution of properties for the Central region (24% of responses, 23% of distribution) and the Northwest region (21% of responses, 20% of distribution).
Summary statistics for the survey can be viewed online.