Duluth tourism expected to improve but not fully rebound in 2021

DULUTH – The city is expecting an improved but slower than normal tourism economy in 2021 as the prospect of the pandemic's gradual end gives more certainty visitors will eventually flock to the region at previous levels.

Duluth Mayor Emily Larson said Tuesday the city expects to collect $9 million in tourism taxes from hotels, bars and restaurants next year, a 25% decrease from last year's pre-pandemic projections that acknowledges a full recovery could take years.

"I do fully believe we're going to rebound," Larson said during a news conference. "I believe we going to be stronger than before. It is going to take us awhile, however."

Earlier this year officials feared tourism tax collections would be cut in half, jeopardizing support for institutions like the Lake Superior Zoo and Visit Duluth, the area's tourism bureau. That outlook improved as lockdowns lifted and visitors trickled into Duluth this summer and fall. Still, the year's tourism tax collections were 27% less than expected through October, according to the most recent city data available, which has meant smaller payments to the organizations that were promised money this year.

Anna Tanski, CEO of Visit Duluth, said recent studies show next year will be "the beginning of recovery for the national visitor economy, which is not expected to reach pre-pandemic levels until 2024."

"The rollout of promising vaccines will take time to implement, extending the recovery timeline for meetings, conventions, sports and special events," Tanski said. "While we don't expect 2021 will be a 'normal' year for tourism, we remain confident Duluth's outdoor amenities will continue drawing visitors to travel in a safe, responsible manner. As case numbers eventually decline, and restrictions are eased, Visit Duluth and our industry partners stand prepared for a gradual increase in travel and a healthier outlook for 2022."

Nine organizations won't receive any tourism tax money next year under the mayor's spending plan even as more money goes to Spirit Mountain. Larson proposed spending $500,000 on Spirit Mountain operations, up from $275,000 approved for this year.

The public ski hill needed a $235,000 bailout from the City Council last year following a major storm that caused the cancellation of a Snocross event. An additional $300,000 in tourism tax money went to the mountain to help it reopen this winter after being closed this summer.

A task force studying the mountain's finances and future — including a possible sale or change in ownership structure — will make a recommendation to the city early next year.

Last year the city raked in a record $12.4 million in tourism taxes, which are paid throughout the year. If current trends continue, the city will have collected less than $9 million by the end of 2020.

A majority of Duluth's tourism tax spending goes toward debt on Amsoil Arena and Spirit Mountain as well as state-mandated spending on advertising and publicity, leaving little room for discretionary spending as revenue decreases. Other major proposed expenditures include $510,000 for the Lake Superior Zoo and $270,000 for the Great Lakes Aquarium.

Those losing funding next year include North Shore Scenic Railroad, which was supposed to receive $50,000 this year, and Hawk Ridge Bird Observatory and the Duluth Children's Museum, which were each allocated $20,000. Visit Duluth will receive $1.5 million for advertising, $500,000 less than they were set to receive in 2020.

The City Council will take up the allocations on Monday.