Minnesota’s Lodging Recovery Continues through 3rd Quarter

Release Date: Oct 24, 2011

This article and graphs are provided under permission granted by STR (Smith Travel Research, Inc.), the source of the data.

Minnesota’s lodging industry continued its recovery through the 3rd quarter of 2011, including growth in all six reported lodging metrics. Two sets of graphs illustrate this. The first set of graphs shows lodging metric changes through the 3rd quarter of 2011 compared with changes through the 3rd quarter of 2010 among various geographic areas, including Minnesota. Minnesota’s changes were all in positive territory, and were similar to U.S. changes for all six reported metrics. Minnesota year-over-year growth through the third quarter included: occupancy (4.7%, compared with 4.6% for the U.S.), room rates (4.3%/3.6% U.S.), revenue per available room (i.e., RevPAR; 9.1%/8.3% U.S.), room revenue (9.7%/9.1% U.S.), room supply (0.5%/0.7% U.S.) and room demand (5.2%/5.3% U.S.). Minnesota also surpassed the 7-state West North Central region in growth for all metrics except room supply. The Minneapolis-St Paul Metro market experienced stronger growth than Greater Minnesota overall, but there was substantial variation among the five Metro areas and the five Greater Minnesota areas.

Duluth was the only Greater Minnesota area whose revenue and demand growth ranked among the top five of Minnesota’s 10 areas. However, Rochester was among the top five Minnesota areas for RevPAR (again, revenue per available room) growth, a single measure that takes into account the combined impacts of demand, supply and room rates. Supply was the only metric that was negative for some areas – the Minneapolis North area and the St Cloud/I-94 Corridor. Negative supply change indicates that any addition to the number of available rooms in an area was not enough to offset the number of rooms removed from service.

The second set of graphs shows Minnesota’s monthly year-over-year change in lodging performance for each of the most recent 12 months, along with change through the 3rd quarter of 2011 compared with the first three quarters of 2010. One of the six graphs in this set is shown below, illustrating a 12-month time line of growth in Minnesota’s lodging RevPAR. The pattern of growth in recent months shows evidence of a temporary impact from the Minnesota state government shutdown in July, with stronger growth resuming in August for most metrics. The one exception to this pattern is room supply. Starting in July and continuing through September, year-over-year monthly room supply growth has dropped to near zero. At the same time, Minnesota’s room rate growth regained its pre-shutdown momentum in August and September, with 5.5% and 7.0% year-over-year monthly growth, respectively. The higher room rates helped keep revenue and RevPAR growth at higher levels, despite more modest growth in demand and occupancy during August and September.

• Click here for graphs of year-to-date lodging metric changes through the 3rd quarter of 2011.
• Click here for graphs of Minnesota's monthly year-over-year changes in lodging performance through September 2011.