Hotel occupancy in St. Louis Park and Golden Valley plummeted in 2020, forcing tough changes for destination marketing organization Discover St. Louis Park.
Occupancy rates in the nine hotels the group markets fell from 70% in 2019 to 27% in 2020. Revenue per available room fell from $91 to $28.
Because a lodging tax funds Discover St. Louis Park, cuts quickly became necessary when the pandemic hit last year.
President and CEO Becky Bakken called 2020 devastating. The forecast for 2021 shows some improvement, but she described it as “light.”
The lodging tax in St. Louis Park fell from more than $1 million in 2019 to less than $280,000 in 2020 – a nosedive of nearly 73%. The tax is expected to bring in about $383,000 this year.
“It’s not a huge increase, but it is an increase, and I think that is the positive message,” Bakken said of the forecast for 2021.
Of occupancy rates in general, Bakken said, “The experts are suggesting that it will take until 2024 for the recovery to get back to what our 2019 numbers were.”
Discover St. Louis Park staff expected a “really hearty year” in January and February 2020, Bakken said.
“March was tracking along okay until the bottom fell out, which literally happened overnight for this industry,” she said.
The organization responded by getting out of contracts and cutting spending immediately. Of five employees at the time, Discover St. Louis Park furloughed two employees April 1 and a third employee in October. The two remaining employees moved to part-time for the last quarter of 2020.
Given the state of the industry, Bakken said she has been asking, “What is our purpose? What’s our meaning?”
The organization’s website, discoverstlouispark.com, pivoted to provide COVID-19 information. Last week, the website said, “Roses are red/ Violets are blue/ I’m wearing my mask/ How about you?” A section called “Travel Confidently in Minnesota” details the state’s mask mandate, business requirements, municipal information, preparedness measures and resources.
Discover St. Louis Park kept a running tally of restaurants and stores in St. Louis Park and Golden Valley offering take-out and delivery. The organization offered a virtual jigsaw puzzle created with artwork by St. Louis Park resident Adam Turman and provided videos about outdoor activities community members could do safely, like taking a vacation with one’s dog. A post about Clays Galaxy Drive In last June went viral, with an organic reach of 250,000.
Using a $21,000 grant from state marketing organization Explore Minnesota, Discover St. Louis Park used digital marketing to promote “a sweet and safe getaway” to St. Louis Park for Minnesotans located elsewhere in the state.
Discover St. Louis Park’s social media followers increased, with new followers on Facebook and Instagram.
“A message of hope for me is we have been proud of our bold action,” Bakken said. “We provide info without pressuring. That’s been our motto of the year. Our message is we’ll be here when you’re ready.”
She looks forward to the day when live music, sports events and pre-pandemic-style dining return.
“When these things slowly start to happen, things will shift, and hopefully they shift quickly,” Bakken said.
She highlighted the efforts of hospitality workers during the pandemic.
“They are the people who keep the promises we make,” she said.
Mayor Jake Spano called the report “sobering, not surprising.”
Councilmember Larry Kraft said a prediction from an Explore Minnesota and Minneapolis Federal Reserve Bank survey that 60% of Minnesota hotels could face insolvency by this summer is both sobering and shocking. Councilmember Rachel Harris called the news unsettling, startling and saddening.
After Kraft asked about Discover St. Louis Park’s own financial position, Bakken said the organization’s situation is better than had been feared at this point.
“Because we made the decisions we made very early on, we were able to sort of stop the bleed, for lack of a better word,” Bakken said. “Now our income is certainly challenged. … But we reacted immediately. We have a reserve, and we were able to preserve much of that reserve.”
CARES Act funding obtained recently through the city has helped, she added.
“We know that the income is going to be severely affected still, but it allows us to put some money into the budget when the time is right to market again – to aggressively market again,” Bakken said.
She added that many St. Louis Park businesses are struggling, though, like West End restaurants.
“It’s just a really tough time for those industries, and I don’t think they’ve seen the light yet,” Bakken said.
Harris said Bakken demonstrated strategic thinking and foresight by taking action early to stem the cash problem early on.
“What a heartbreaking year for you,” Councilmember Tim Brausen said about the staff cuts. “That’s just a tragedy because you’d built up a very successful organization and it was fulfilling its primary purpose, which was to continue to keep the hotels in St. Louis Park. You just have my greatest sympathy for the work you’ve had to do this year and you’re going to have to do in the next year or two.”
He asked how the city could help. Bakken suggested that the council continue to provide grants for small businesses in the community.
Bakken said, “Just having your support and knowing you’re there for the business community is huge.”
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