Bruised by the COVID-19 pandemic, the Minneapolis Convention Center expects a slow recovery

It could take three years before business returns to pre-pandemic levels at the Minneapolis Convention Center.

Efforts to stop the spread of the deadly coronavirus have nearly shut down the global business travel and trade show industries for the past two years. The impact has certainly been felt in Minnesota, where planned conventions have been replaced by virtual gatherings and shows like the popular Twin Cities Auto Show closed in early 2020 and moved outdoors in 2021.

The sprawling convention center on the outskirts of downtown Minneapolis has seen revenue drop at least 70% in 2020 and 2021 from pre-pandemic levels. Meanwhile, the local hospitality industry has lost thousands of workers and millions in tax revenue.

“These are pretty big challenges,” said Jeff Johnson, the center’s executive director. And not just for the convention hall, but for the people who work there and whose jobs in nearby hotels and restaurants feed its visitors, he said.

Business is moving in a positive direction. Revenues increased in 2021 compared to the previous year. There were tens of thousands visitors to the center earlier this month for the festivities surrounding the NCAA Women’s Final Four Championship. And a few conventions are on the calendar.

But convention center officials expect a long, slow recovery and have launched a three-year plan to get there. Their success depends on easing staff shortages and returning business travel and corporate meetings. The downtown council and area businesses say addressing public safety issues and getting office workers back downtown are also critical.

“The convention center, historically, has been one of the great economic engines of downtown,” said Steve Cramer, president and CEO of Minneapolis Downtown Council. It hosts around 400 events a year and most of them are booked around a year in advance.

How good has it been?

Owned by the City of Minneapolis, the convention center is an economic anchor for downtown. It attracts visitors who fly into town, rent cars to get around, book hotel and restaurant reservations, and perhaps attend a concert or show, all while paying taxes.

The city relies on these revenues to pay for debt services at the Convention Center, Target Center, and U.S. Bank Stadium with a mix of hospitality sales taxes, including a 0.5% sales tax at the tax, a 3% downtown liquor tax, a 3% lodging tax, and a 3% downtown restaurant tax. Funding also comes to the city through a 3% entertainment tax on tickets to live events.

But for the past two years, the convention center has remained virtually empty. The impact:

  • The convention center was generating more than $20 million a year in revenue before COVID. This figure fell to $6 million in 2020. Revenues increased to $7 million in 2021.
  • Hospitality tax revenue was down $40 million in 2020 from 2019, Johnson said. Business improved in 2021, but was still down $32 million from 2019.
  • Minneapolis’ hospitality industry has lost about 17,000 of its more than 30,000 workers during the pandemic, convention officials say.

The center shifted many of its employees to election- and pandemic-related work to avoid layoffs and keep the lights on. The hall served as the distribution site for all mail-in ballots for the 2020 presidential election; and for the past two years it was one of Minnesota’s largest COVID-19 vaccination and testing sites.

“We may not have been able to do the work that we love and do every day, but we were still able to serve,” Johnson said. “And we were able to keep a good part of our staff employed.”

Although the convention hall has been fully reopened in recent months, business is still down about 40% and the center is struggling with a staff shortage.

“There is no choice” but to recover from the pandemic, Johnson said. “I think we will.”

Recovery plan launched

Minneapolis may not see a full recovery of its tourism industry until 2025, with conventions expected to be slow to return to normal, said Kevin Kurtt of Meet Minneapolis, which helps book meetings and events. And business travel won’t see a full comeback until 2024, he said.

Meet Minneapolis has stepped up its efforts to help revive the city’s hospitality industry with a three-year recovery plan that will cost more than $6.5 million.

The center received $1 million in pandemic relief funds across the city, half of which was aimed at “marketing the city in a different way” and bringing tourists and visitors back.

The objectives of the recovery plan include:

  • Increase hotel room occupancy by more than 600,000 by 2024.
  • Increase revenue from the convention center and accommodation tax for the city.
  • Double the hotel workforce to pre-pandemic levels.

Meet Minneapolis is also working with a local public relations firm to get more people to visit Minneapolis, especially those who live within 50 miles of downtown.

The center plans to host around 300 events this year. But Johnson said they were unlikely to achieve that goal. So far, they’ve booked at least 17 major events for 2022, including the Minneapolis Home & Garden Show, the NCAA Women’s Final Four fan festival, and the North American Society for Trenchless Technology No-Dig Show, the largest conference on trenchless technology in the world.

“What we see is that human beings want to be together, they want to meet,” Johnson said. “Having all attended Zoom and Teams meetings for the past two and a half years, we understand the benefit of being able to be with other human beings.”

COVID still a problem

New variants of COVID-19 continue to be a concern and have prompted several groups to cancel recent events at the convention center.

The Music Teachers National Association was scheduled to hold its national conference in late March in Minneapolis, but opted to make it virtual. Group executives said the decision to cancel the in-person event was “for the health and safety of everyone involved”. The conference hosts over 100 sessions and attracts artists and music educators from around the world.

The Evangelical Lutheran Church in America was scheduled to hold its youth gathering at the convention center in July, but announced on its website that it had been canceled “due to the ongoing pandemic, the recent surge of COVID- 19 and public health considerations”.

And The United Methodist Church canceled its early September general conference at the convention center for similar reasons.

“It will be a climb for us to get back to a more normal state, and it won’t happen overnight,” Johnson said.

sign of hope

Still, the past few weeks have brought signs of hope. The center saw a busy three weeks with events like a youth volleyball tournament, the Women’s Final Four and the Bollywood and Mary Kay conferences.

“We were as busy as we have been in two and a half years,” Johnson said.

Hotels had two of their best days since the pandemic began the week of March 14. Occupancy rose to nearly 50% from 20% in 2021 the same week, Johnson said.

At the Hyatt Regency in Minneapolis, its packed restaurants signal that the road to recovery isn’t too far. John Yeadon, general manager of the hotel, said they expect a busy spring, summer and fall, comparable to pre-pandemic levels in 2019.

Hyatt Regency is the second largest hotel downtown and is two blocks from the convention center. Yeadon said he hopes his guests will also fill downtown restaurants, museums, theaters and attractions.

“We are all interconnected, and the ripple effect from the convention center and hotels is felt in so many downtown businesses,” Yeadon said.

Some restaurants and bars are also seeing their business improve.

Shane Higgins, general manager of Brit’s Pub, said he does business with nearby hotels, such as the Hyatt Regency and the Hilton. Sales should also improve in the summer, but for restaurants to survive, downtown Minneapolis must fully recover from the pandemic, Higgins said.

“We hope for some normalcy,” he said. “We hope it all comes back.”

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