Michigan State University Extension
Tourism Educational Materials - 33419745
06/06/02
Minnesota Hotels and Motels: A Profile of the Industry
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Source: University of Minnesota
Authors: MacKay, Donald G.; Lime, David W.; Simmons,
Patrick; and Limback, Linda
ID: AG-FO-6100-C
Year: 1993
"Archived Document: This Extension bulletin is no longer
available from the publishing State and may contain
outdated information."
Minnesota Hotels and Motels: A Profile of the Industry
Research Summaries
No. 14
Minnesota Extension Service University of Minnesota
Summary
The largest hotels and motels in Minnesota are in the
Metro Region. In 1990, 35 percent of hotels and motels in
Minnesota had more than 40 rooms. Hotels and motels with
more than 40 rooms offered 80 percent of the rooms
available in the state. The mean and median number of
rooms per hotel and motel in 1990 were 57 and 25,
respectively.
There have been relatively few changes in the hotel and
motel industry in Minnesota between 1986 and 1990. Mean
nominal prices have increased during this period, but the
daily minimum rates have increased less than the rate of
inflation. The mean and median number of rooms per hotel
and motel have increased slightly. Certain amenities, such
as non-smoking rooms, are increasingly being offered by
hotels and motels.
Hotels and motels in Minnesota represent a diverse mix of
business establishments. Larger, high-rise hotels are
located predominantly in the downtown areas of Minnesota's
larger cities. These establishments tend to offer a wide
variety of amenities. They may cater to upscale business
travelers or to pleasure travelers enjoying urban sites
and activities. Motels, which tend to be smaller than
hotels, can be found in smaller cities and rural areas as
well as in the outskirts of the larger cities. Motels tend
to offer fewer amenities than are provided by hotels.
Motels in some locations cater to pass-through travelers
who are looking for little more than a place to sleep.
Survey Methods
This profile of hotel and motel accommodations was
developed from surveys conducted by the Minnesota Office
of Tourism. A survey is sent every two years to all hotels
and motels in Minnesota of which the office has record.
Operators of the surveyed facility have an incentive to
respond, because the data becomes part of the office's
computerized accommodations listing. The listing is used
by travel counselors to help tourists find accommodations
in the geographic area they plan to visit. The office
tries to contact every establishment that does not return
a survey to improve the rate of response.
This research relies on data from 1986 and 1990. While the
information does not represent a census of all Minnesota
accommodations, nor a random sample, it is likely that the
information is representative of the majority of
establishments, particularly accommodations that are
interested in attracting tourists. Using 1990 Minnesota
Department Of Revenue data, the Minnesota Office of
Tourism estimates that 67 percent of hotel and motel
establishments are included in the database. The number of
hotels and motels in this database is 636 for 1986 and 660
for 1990.
For the survey, the Minnesota Office of Tourism defined a
hotel or motel as:
"A facility with indoor lodging, where sleeping
accommodations are offered for one night or more to
transients. Hotels and motels may include minor facilities
such as swimming pools, saunas, etc., but, unlike resorts
are not specifically designed to support a variety of
recreation activities. The hotel/motel facility type is
intended primarily as a transient oriented lodging
facility.
Hotels and motels that also identify themselves as bed and
breakfast establishments or as historic inns were excluded
from this study because they represent distinct segments
of the lodging industry that are substantially different
from traditional hotels and motels. Information about the
bed and breakfast industry in Minnesota can be found in
Research Summaries, No. 2, A Profile of Minnesota's Bed
and Breakfast Industry -1988, by Barbara Koth (1989).
Size of Minnesota Hotels and Motels
Minnesota hotels and motels vary in size by region
(Vis. 1). A hotel or motel room is an independent sleeping
accommodation. This definition includes detached units, a
room within a lodge, or a condominium. The range in size
of Minnesota hotels and motels in 1990 was from 2 rooms to
686 rooms. The mean and median number of rooms per hotel
and motel in 1990 were 57 and 25, respectively. Comparing
1986 and 1990 data reveals that there has been a slight
increase in the number of rooms per hotel and motel in
Minnesota. The mean and median number of rooms for 1986
were 54 and 23, respectively. Fifty percent of Minnesota
hotels and motels had 25 rooms or more in 1990, and only
10 percent had more than 150 rooms. The Metro Region
reports the largest facilities; mean and median sizes were
129.5 and 100 rooms, respectively. The 1990 data shows
that small hotels and motels are most prevalent in the
northern half of the state. The Northcentral Region
reports the smallest mean and median sizes (Vis. 1).
Figure 1. (Vis. 1)Number and Size of Hotels and Motels by
Region (Minnesota, 1990)
Only a small percentage of all hotels and motels are
classified as "large," but they account for a majority of
the rooms available to travelers in Minnesota (Figure. 2).
While hotels and motels with 41 or more rooms make up only
35 percent of the total number of businesses, these
relatively large hotels and motels account for 80 percent
of all rooms available."Small" hotels and, motels, with 15
or fewer rooms, make up 33 percent of the total number of
properties in Minnesota, but contribute slightly less than
6 percent of all rooms available.
Hotels and motels sometimes are affiliated with other
types of accommodations, such as resorts and campgrounds.
Ten percent of the 660 hotels and motels in 1990 also
reported resort facilities (Figure 3). Resort facilities
are specifically designed to offer recreational activities
and are primarily vacation oriented. However, the
distinction between Minnesota's hotels and motels and its
resorts is becoming increasingly blurred. Some luxury
accommodations in non-urban settings are configured in
multi-level hotel facilities and offer amenities typically
associated with hotels; these luxury accommodations may,
at the same time, provide recreation-oriented amenities
that are more similar to traditional resort offerings than
to hotel or motel offerings. At the other end of the
spectrum, motels in rural settings offering few amenities
may serve recreation-oriented visitors using the motel as
a home base for use of nearby outdoor-recreation areas
such as state parks, fishing lakes, or snowmobile trails,
Information about the resort industry in Minnesota can be
found in Research Summaries, No. 13, Minnesota Resorts: A
Profile of the Industry, by Donald G. MacKay, David W.
Lime, Patrick Simmons, and Linda Limback (1992).
Six percent of hotels and motels reported campground
facilities. The mean number of campsites at these hotels
and motels for 1990 is 17; the median is 12. Therefore,
most campgrounds at hotels and motels in Minnesota are
small. Nevertheless, there also are some large campgrounds
at hotels and motels. Of hotels and motels with campsites,
approximately 10 percent have more than 25 campsites.
____________________________________________
Figure 2. Distribution of Hotels and Motels and Rooms by
Size Class (Minnesota, 1990)
1-15 (Small) 16-40 (Medium) 41+ (Large)
33% size,with 32% size, with 35% size, with
6% of units 14% of units 80% of units
N = 660 Hotels and Motels
(37,789 rooms)
__________________________________________
Figure 3. Campground and Resort Facilities at Hotels and
Motels (Minnesota, 1990)
No Campground or Resort Facilities - 88%
Only Campground Facilities - 2%
Only Resort Facilities - 6%
Both Campground and Resort Facilities - 4%
N = 660
____________________________________________
Regional Profile of Hotel and Motel Accommodations
There is not a wide variation in the number of hotels and
motels in the six regions of the state (Vis. 1). However,
nearly half of the hotels and motels in Minnesota are in
the Northeast and Metro Regions (Vis. 1). The Northeast
Region contains 24 percent of the hotels and motels in the
1990 sample, followed in size by the Metro Region which
contains 22 percent of the sample. While the Metro Region
has fewer hotels and motels than the Northeast, the Metro
Region contains half of the hotel and motel rooms
available in Minnesota (Vis. 1). The Northeast Region and
Southeast Region contain 14 and 13 percent of the
available hotel and motel rooms, respectively. The
Southeast Region has the second highest mean size of
hotels and motels due to large establishments in the
Rochester area.
Seasonal Patterns for Minnesota Hotels and Motels
Most hotels and motels in Minnesota operate year-round,
but some are open only part of the year. Ninety-three
percent of the 1990 sample hotels and motels are open
year-round. This is an increase of 2 percent over 1986.
Seven percent of hotels and motels close for the winter
months. Fifty percent of these seasonal hotels and motels
open by May 1 and more than half are closed again by
October 15. Of these seasonal hotels and motels, 59
percent are located in the Northeast Region; 30 percent
are in the Northcentral Region. These seasonal hotels and
motels are small; in 1990, the mean size was 10 rooms and
the median size was 10 rooms. Forty-one percent of these
seasonal hotels and motels also identified themselves as
resorts.
Amenities Offered at Minnesota Hotels and Motels
Minnesota hotels and motels offer a variety of amenities
for travelers. Table I lists room-oriented amenities, and
Table 2 lists amenities available outdoors or in the
facility. Both tables indicate the percentage of all
hotels and motels in Minnesota that had the amenity on-
site in 1986 and 1990. Some room oriented amenities may
not be available in every room (for example, kitchens).
_____________________________________________________
Table 1. Minnesota Hotels and Motels Offering Various
Room-Oriented Amenities in 1986 and 1990
Amenities 1986 1990
Percent Percent
Pets allowed in rooms 62.3 56.2
Non-smoking rooms 38.4 56.2
At least one room is usable
by guests in wheelchairs
(including bathrooms) 48.9 51.7
Kitchens in rooms 34.0 33.0
Patio or balcony in rooms 12.6 15.9
Whirlpool in room 3.9 8.5
Fireplace in room 4.1 5.3
__________________________________________________
Selected highlights:
* Pets are allowed in rooms at more than half of the
hotels and motels surveyed, but the percentage of hotels
and motels with this option is decreasing rapidly.
* A rapidly growing percentage of hotels and motels offer
non-smoking rooms. Nevertheless, only about half do so.
* Only about half of Minnesota's hotels and motels have at
least one wheelchair-accessible room.
* Nearly one-third of the hotels and motels have at least
one room with a kitchen.
_____________________________________________________
Table 2. Minnesota Hotels and Motels Offering Various
Facility and Outdoor Amenities in 1986 and 1990
Amenities 1986 1990
Percent Percent
Restaurant 31.2 29.4
Frontage on a lake or river 24.2 23.5
Sauna 19.1 20.0
Indoor pool 16.5 18.0
Laundry 14.0 17.6
Day care or babysitting 14.8 10.9
Playground 9.1 8.3
Swimming beach 8.0 8.2
Fishing boats 7.2 7.7
Hiking trails 4.7 7.6
Canoes 4.4 4.8
Bike trails 3.6 4.7
Outdoor pool 4.4 4.1
Tennis courts 3.3 2.7
Bike rental 0.9 1.4
_______________________________________________
Selected highlights:
* Nearly one-third Minnesota hotels and motels offer
restaurant facilities.
* Nearly one in four hotels and motels have frontage on a
lake or river.
* Saunas are offered by one-fifth of hotels and motels,
and indoor pools by nearly one-fifth.
* Fewer hotels and motels are offering day care or
babysitting or playgrounds.
* Trails for hiking and biking are increasingly being
offered at Minnesota hotels and motels, but the percentage
offering trails is small.
REGIONAL DIFFERENCES IN AMENITIES AT MINNESOTA HOTELS AND
MOTELS
Certain regions of Minnesota have a higher percentage of
particular amenities than others. One way to view regional
differences in amenities is to determine where hotels and
motels offering a particular amenity tend to be located.
Northeast Region hotels and motels tend to have more
outdoor-oriented amenities and also many room-oriented
amenities. For example, 64 percent of all hotels and
motels in Minnesota with hiking trails are in the
Northeast Region, as are 44 and 43 percent, respectively,
of the hotels and motels with playgrounds and swimming
beaches. The Northeast Region contains 66 percent of
hotels and motels that have a fireplace in at least one
room.
Metro Region hotels and motels tend to have many
room-oriented amenities. Thirty-three percent of the
hotels and motels with non-smoking rooms are in the Metro
Region, as are 34 and 27 percent, respectively, of hotels
and motels with a handicapped-accessible room and
waterbeds; in at least one room. The Metro Region contains
45 percent of the hotels and motels in Minnesota that have
a whirlpool in at least one room.
Another way to view regional differences is to look at
each region separately and determine the percentage of
hotels and motels that offer certain room amenities within
the region (Vis. 4). For instance, 15 percent of hotels
located in the Northeast Region have a room with a
fireplace. Only 3 percent of hotels and motels in the
Metro Region have a room with a fireplace. Of hotels and
motels located in the Metro Region, 82 percent have a
non-smoking room. In the Northeast Region, 38 percent of
hotels and motels offer a non-smoking room. Regional
differences also occur in the percentage of hotels and
motels offering certain types of facilities and outdoor
amenities. (Vis. 5). Twenty percent of Northeast Region
hotels and motels have hiking trails on the premises,
compared to 3 percent in the Metro Region. Of hotels and
motels located in the Metro Region, 39 percent have an
indoor pool compared to 11 percent in the Northeast
Region.
Figure 4.(Vis. 4) Frequency of Room Amenities in Each
Region (Minnesota, 1990)
FEATURES AT THE LARGEST HOTELS AND MOTELS
Large hotels and motels in Minnesota are more likely to
have certain features than small ones. Hotels and motels
with 150 or more rooms are among the largest, but these
represent only 10 percent of Minnesota's hotel and motel
facilities. Seventy-six percent of these facilities are
located in the Metro Region, and 9 and 6 percent are in
the Southeast and Northeast, respectively. Ninety-seven
percent of these largest hotels and motels offer
non-smoking rooms, and wheelchair-accessible rooms are
available in 88 percent of them. Restaurant facilities are
offered by 89 percent; laundry facilities by 47 percent.
Certain other recreation and leisure amenities also are
offered more commonly at larger hotels and motels; 79
percent offer indoor pools and 77 percent offer saunas.
Rates at Minnesota Hotels and Motels
Operators of the hotels and motels are surveyed about
their rates for individual rooms. The survey asks each
respondent to list their lowest and highest daily rates
using their highest (in-season) summer rates, assuming two
guests and two beds per room. Respondents are asked not to
include charges for optional services. Table 3 shows the
mean and median rates for the entire state in both 1986
and 1990.
Over the 1986 to 1990 period, the travel price index
increased 20.6 percent and the lodging component of the
travel price index increased 21.5 percent (U.S. Travel
Data Center 1990). While the mean nominal daily minimum
rates for individual rooms in Minnesota increased 15
percent from 1986 to 1990, the increase was lower than the
inflation rate for lodging. On the other hand, the mean
nominal daily maximum rate increased 24 percent, more than
2 percentage points higher than the inflation rate for
lodging.
Discussion
The hotel and motel industry in Minnesota is mature. Its
health depends on its ability to stay abreast of travel
trends and to target its marketing efforts in productive
markets. Operation costs are rising while the customers'
ability to pay may be declining. Competitive pressures are
increasing and frequently prevent the room rate increases
needed to sustain a reasonable profit margin. Seasonal
variables, such as lack of snow near ski destinations or
an unusually cool summer, can cause temporary displacement
of normal travel patterns and upset the delicate balance
of a marginal operation.
Figure 5. (Vis. 5)Frequency of Various Facility or Outdoor
Amenities In Each Region (Minnesota, 1990)
Lodging businesses must carefully choose their capital
investments. They cannot afford an upgrade that will not
improve business. Owners must understand their existing
and potential clientele well enough to choose the right
"attractor" amenities. A destination clientele generally
expects a much higher level of amenities than a pass-
through clientele. Both types of clientele will go back to
businesses that meet their needs at a fair price and
provide high quality service.
________________________________________________
Table 3. Mean and Median Room Rates at Hotels and Motels
In Minnesota in 1986 and 1990
Room Rates 1986 1986 1990 1990
Mean Median Mean Median
Daily Minimum $34 $30 $40 $35
(% responding) (92%) (92%) (95%) (95%)
Daily Maximum $43 $37 $53 $54
(% responding) (82%) (82%) (85%) (85%)
These rates are nominal rates and they have not been
adjusted for inflation.
1986 n=636; 1990 n=660
________________________________________________
Selected highlights:
* Mean nominal daily minimum rates have increased by 15%
from 1986 to 1990.
* Mean nominal daily maximum rates have increased by 24%
(based on the figures before rounding; figures in Table 3
have been rounded) from 1986 to 1990.
Some smaller lodging establishments have had great success
entering the meeting and convention segment of the market,
even though this segment has been dominated by larger
hotels and motels. Breaking into this business can help
balance seasonal variations in occupancy. Many small
businesses and organizations have the same needs as larger
ones for occasional meeting space at affordable cost. By
creatively adjusting space and acquiring or renting
meeting-type equipment, quality meeting space can be
created with minimal investment.
Marketing is essential for increasing occupancy but is
seldom given an adequate investment. Few lodging
businesses in Minnesota have the amenity concentration to
be destinations in and of themselves. For most hotels and
motels, it is far more effective to participate in the
marketing efforts of area-wide, destination marketing
organizations than it is to launch an individual
advertising campaign. Joining a lodging association is
another way for a hotel or motel to increase the power of
its advertising dollar; pooled advertising funds are able
to purchase advertisements that few places could afford to
buy alone. Building awareness of a facility among local
businesses, such as local attractions, restaurants, and
service stations, may bring in new referral business at no
cost or limited cost.
Research is necessary for effective marketing.
Straightforward survey methods can be designed to collect
data on-site. Lodging establishments have direct contact
with their customers at the registration desk where they
can gather data about their customers' purpose,
destination, and frequency of travel in the area. They can
also discover how customers learned about their site and
how satisfied they were with the rooms and the service.
They can measure the success of target advertising or test
a new idea such as adding coffee and soft drink services
without any added expense to the customer. Whether a
facility caters to pass-through travelers or a destination
market, knowing the customers is important to building a
flourishing business.
Literature Cited
Koth, B.A. A Profile of Minnesota's Bed and Breakfast
Industry-1988. Research Summaries, No. 2 (1989). Tourism
Center, University of Minnesota. 8 pp.
MacKay, D.G.; Lime, D.W.; Simmons, P.; and Limback, L.
Minnesota Resorts: A Profile of the Industry. Research
Summaries, No. 13 (1992). Tourism Center, University of
Minnesota. 8 pp.
U.S. Travel Data Center. The 1989-90 Economic Review of
Travel in America. Washington, DC: U.S. Travel Data
Center, 1990.
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