Oct 17, 2025
3 min read
During the peak summer season, Minnesota's tourism and hospitality businesses saw a drop in profits compared to last summer.
During the peak summer season, Minnesota hospitality businesses reported lower customer traffic and lower profits than last summer, according to a survey by the Minneapolis Fed and Hospitality Minnesota.
The September survey received 135 responses from across the state.Business owners reported that high prices and high labor costs were the biggest challenges.These problems have been largely consistent with companies in recent years.
Despite facing these challenges, many respondents said they were still in good financial health overall.Most said they were hiring to cover turnover and very few were reducing their staff.
Summer is the low season
Less than half of respondents reported that customer traffic decreased this summer compared to last year (see Figure 1).With fewer people in the state dining out or booking getaways, most businesses haven't seen an increase in revenue during peak season.
“With rising prices and job losses, vacations can always be taken out of the budget,” observed owner Minando, of northern Minnesota.Profits were seriously affected this summer.Eighty-three companies report declining profits for the year, while 17 account for 17 percent of what was reported.
"Some businesses, mostly in northern Minnesota, were affected by the Canadian tourism exchange. Of the 65 percent that saw the change in Canadian tourism traffic, most of them experienced a moderate decrease in decline. Canadian tourists, who are normally a high earner for our city, were not there this year."
Expectations for the current autumn season showed little improvement compared to this summer: a small proportion of businesses expected a drop in revenue and profit.However, only a small proportion expected an increase.
"Our summer season was better than expected, but there are signs of a significant slowdown in the fall," wrote a central Minnesota hotelier.
Costs will continue to put pressure on businesses
The biggest challenge for hospitality in Minnesota this summer is high prices (see Figure 2).Many companies say that the impact of inflation has two advantages.
"The increased prices of consumer goods eat and eat the disposable income of the consumer," wrote the owner of an entertainment venue in the Twin Cities.
The new tariffs also affect business.About 60 percent of respondents reported experiencing some negative impact from proposed or implemented trade policies.
Some consumer demand has been hampered by economic uncertainty."We haven't felt a big direct impact from higher tariff prices, but we're working with a lot of customers who have had their purchasing decisions affected," noted the owner of a Minneapolis catering company.
Others suffered from rising commodity costs.The owner of a North Shore brewery wrote that the only increase in admission prices was on tariffed items.
Almost half of the respondents estimated that their prices 5 or more this summer from last summer (see figure 3).Respondents are still reluctant to pass these cost increases on to their customers, but sales prices have seen an increase since my survey.
Increasing workers is also a challenge for business.Many have had their salaries raised.Some said their salaries were driven by low city and state wages to increase their ties to promotion.
Looking ahead, some respondents expressed concern about the upcoming policy of paid leave and the increase in the minimum wage in 2026. The cost of labor increases from the law "will have a negative impact on the protest of low benefits."
A cool look for fall and winter
Although many businesses are concerned about the cost of labor, many of them still hire in some way.As the summer season approaches, 45% of businesses have been working to change frequency;However, only 1 out of 10 new workers died, and eight percent controlled the head count.
Labor availability showed signs of continued improvement, and some positions were easier than others."It's very easy to hire part-time employees."Explains the owner of the company following the owner of the catering company.
Despite challenges from rising costs and some hiring issues, the overall financial health for Minnesota businesses was still more positive than negative.Some reported a strong improvement, but only a 12 percent decrease.
Slow business and continued economic uncertainty have translated into a somewhat bleak outlook.More respondents were pessimistic about the next six months than those who were optimistic.Almost 40 percent were neutral.
Continued concerns about high costs are dampening expectations, even for those having a good summer.
"Economic uncertainty and reduced disposable income will have a lasting impact on the hospitality industry," added another restaurant owner in the Twin Cities metro.
The Minnesota Tourism & Hospitality Survey was conducted from September 3 to 24, 2025. The online survey received 135 complete responses from a convenience sample of hospitality and tourism industry business contacts in Minnesota. Forty-six percent of respondents were from the Minneapolis–St. Paul metro area, and 54 percent were from across Greater Minnesota. The survey was distributed in partnership with Hospitality Minnesota. Results are not representative and should be considered a snapshot of current conditions.
Haley Chinander is an analyst and writer at the Federal Reserve Bank of Minneapolis.In her role, Haley monitors and reports on the economy in the Ninth District with a focus on labor markets and business affairs.Follow her on Twitter @haleychinander.
