Duluth tourism rebound 'the recovery year we needed'

DULUTH – This summer's tourism traffic here picked up where 2019 left off as hotels filled up and visitors embraced the return of major events and weekend getaways. And with fall colors yet to peak in northern Minnesota, the crowds aren't thinning just yet.

"It was the recovery year we needed," said Brandon Porter, general manager of downtown Duluth's Holiday Inn. "We had a pretty strong September and are going into a pretty strong October, too."

Hotel revenue easily surpassed pandemic-dampened 2020 levels and increased significantly compared with 2019 this summer — including a nearly 20% jump in July, according to data from Visit Duluth. In August, 81% of area hotel rooms were booked, bringing in $17 million in room revenue.

"Demand for Duluth is back and stronger than ever," said Brian Daugherty, president of Grandma's Restaurant Co., who noted some Canal Park hotels are having record-setting years.

While hotel demand has largely been on pace with 2019, a limited number of rooms were available due to an ongoing staff shortage. That caused prices to spike, especially on big weekends like Grandma's Marathon and the Duluth Airshow.

"The biggest thing that held us and the hotel industry in Duluth back this year is the lack of labor," Porter said.

Visitors also returned to the North Shore in droves this summer as many travelers continued to favor car trips over flights.

"People are tired of being cooped up and don't want to fly to Florida right now," said Aaron Bosanko, director of marketing at Odyssey Resorts. "It has definitely been a blessing, and a lot of guests new to us or new to the North Shore have been interested in returning."

What's good for the industry is good for Duluth's city finances, as this year's tourism tax collections are 32% ahead of budget estimates through August and should easily exceed the $9 million predicted for the year.

Duluth hauled in a record $12.4 million in tourism taxes in 2019 only to see collections plummet last year as pandemic restrictions kept travelers away for much of the year.

"A lot of what we've seen is the natural return to this lake and to a city this region loves," said Duluth Mayor Emily Larson. "I'm completely unsurprised, since the past year and a half has been so difficult and traumatic, and when life turns you upside down you turn to something that can ground you."

Duluth is also the only Minnesota city that relies on sales taxes for part of its general fund, making local spending a crucial part of the government's ability to provide basic services.

"We're not a tourist town, we are a fully dynamic city that has tourism as a strong foundation of what we do," Larson said.

Many hotels, attractions and restaurants remain short-staffed, which has resulted in limited hours at breweries and occasional closures at cafes and shops to give staff much-needed days off.

In August 2019, the leisure and hospitality industry employed nearly 16,300 people in the Duluth metro area. This August, that figure had dropped to 14,400, according to state data.

Daugherty said Grandma's and its sister restaurants typically staff 600 people during the summer, but this year employed a peak of 400. Wages went up to attract more workers, but with pandemic pressures "every day is filled with uncertainty," he said.

Porter said the downtown Holiday Inn raised its minimum wage this year and was able to return to "essentially fully staffed."

"The largest issue wasn't necessarily a desire to work — it's paying people the right wage," he said. "People were tired of working their tails off for $10 an hour."

Brooks Johnson • 218-491-6496