How May We Help You? – The Leisure and Hospitality Sector in the Twin Cities

By Rachel Vilsack
October 2011

Whether you take advantage of a campground near one of our 10,000 lakes, a bed and breakfast in Duluth, or a four-star restaurant in Minneapolis, the leisure and hospitality industry is big business in Minnesota. This sector enjoys $10.5 billion in annual sales and generates 15 percent of Minnesota’s tax revenue.[1] The industry also accounts for one in every 10 private sector workers in Minnesota.

Welcome to the Twin Cities

The state’s leisure and hospitality sector is concentrated in the Twin Cities region, which is home to 48 percent of the state’s employers and 61 percent of the state’s employment in this sector. The Twin Cities’ leisure and hospitality industry numbered 6,710 business establishments in 2010, employed nearly 143,000 people, or one in every 10 private sector workers in the region, and paid almost $3 billion in total wages in 2010.

Table 1 highlights the three sectors of the industry – accommodation, food services, and arts, entertainment, and recreation. Average employment declined in almost all sectors between 2008 and 2010. Employment in special food services (including caterers and mobile food services), RV parks and recreational camps, and rooming and boarding houses increased slightly.

Over the decade, however, employment expanded in the arts, entertainment, and recreation industry, with a particular concentration in the performing arts and spectator sports sector, and in food services and drinking places. Jobs in traveler accommodation declined by nearly 31 percent over the past 10 years.

The arts, entertainment, and recreation sector is a distinguishing industry in the Twin Cities, with a higher than average concentration of industry employment relative to the nation. The Minneapolis-St. Paul metropolitan region often ranks among the largest U.S. metro areas in recreational opportunities, professional sports, amusement parks, and performing arts venues. The region is also home to all five major league sports teams: the Lynx (WNBA), Timberwolves (NBA), Twins (MLB), Vikings (NFL), and Wild (NHL).

Average weekly wages in the leisure and hospitality sector ($389) are significantly lower than the regional average for all industries ($1,023). Only one sector – performing arts and spectator sports – had an average weekly wage higher than the regional average, but included higher paid occupations, like directors, producers, and athletes.

The leisure and hospitality sector weathered the recession better than average. Where total employment in the Minneapolis-St. Paul MSA contracted 5.1 percent or 91,200 jobs, the leisure and hospitality sector declined by 3.5 percent or 5,700 jobs between December 2007 and June 2009 (see Figure 1). As of August 2011, employment in the sector has increased by nearly 6,000 jobs.

Consumer spending is a big driver of success in the leisure and hospitality sector. The Minneapolis-St. Paul metropolitan region had higher average annual expenditures on entertainment, $3,417 versus $2,764 nationally, and food purchased and consumed away from home, $2,945 versus $2,658 nationally, in 2008-2009.[2]

 (Don’t) Take a Vacation

Like recent job growth, the number of opportunities for Twin Cities’ job seekers is also expanding in the leisure and hospitality industry. Figure 2 displays the number of job openings over the past 10 years in this sector. There were nearly 3,300 vacancies recorded during the second quarter of 2011, representing more openings than the previous two years and slightly more openings than the second quarter of 2007, just prior to the start of the recession.

Leisure and hospitality jobs are largely concentrated in food service occupations. Table 2 lists some of the top occupations in the leisure and hospitality sector, with employment and recent wages in the Twin Cities. Excluding the supervisory and managerial occupations, many of these jobs offer entry-level, part-time, and
seasonal opportunities for new entrants. Some skills are common to the leisure and hospitality sector, including communication and customer service.

 Who is Serving You?

Because of the lower-than-average wages for jobs, it is not surprising that the age distribution of leisure and hospitality sector workers is younger. Figure 3 graphs the age distribution of workers in the leisure and hospitality sector versus all industries. In third quarter 2010 more than 30 percent of leisure and hospitality industry workers were age 24 and under, compared to only 15.5 percent of the total regional workforce. On the other end of the age spectrum, only 18.6 percent of leisure and hospitality workers are 45 years of age and over, compared to 41.9 percent of workers in all industries.

Certainly younger workers are attracted to this industry for its entry-level opportunities. The food services sector, in particular, provides many young people with their first jobs. Nationally, two out of five employees in this sector work part-time, more than twice the proportion for all industries.[3]  High turnover rates also make job openings readily available, as employers need to find replacement workers.

However, this disproportionately younger workforce may have long-term consequences for the leisure and hospitality industry. As our population continues to age, the number of younger workers projected to enter the labor force will decline. Between 2010 and 2015 the Twin Cities labor force age 24 and under is projected to decline by 9,650 participants or 3.9 percent, and by 2020 there will be 21,570 fewer labor force participants age 24 and under.[4] Looking long-term, the labor force age 24 and under will remain virtually unchanged between 2010 and 2035, according to the State Demographic Center. This shift in the availability of younger workers will mean that many leisure and hospitality employers will see the average age of their workforce grow.

While the leisure and hospitality sector attracts workers looking for flexible schedules, the lower wages offered for many leisure and hospitality jobs may not attract an older workforce, particularly those who’ve been laid off or dislocated from jobs that paid high wages, even if a transferable skill set is present between jobs.

As the regional population ages, it will also grow more diverse. During the past decade, all Twin Cities counties have seen growth in the minority population, and in 2010 nearly one in four Twin Cities residents was a member of a minority group.[5]  By 2035, 34.8 percent of the regional population will be nonwhite or Latino.

This diverse population will translate into a diverse labor force, a characteristic already present in the leisure and hospitality industry in the Twin Cities. Approximately 22 percent of workers in the leisure and hospitality industry were non-white or Latino, compared to 16 percent of workers in all regional industries in the Twin Cities region (see Figure 4). A diverse workforce may be important for many leisure and hospitality employers who want to attract a diverse clientele from here in Minnesota, across the United States, and even internationally.

Stay and Play

Undoubtedly the leisure and hospitality industry plays an important role in Minnesota and in the regional economy. As consumer spending fluctuates with economic conditions the strength of the economy will largely dictate future employment growth in the leisure and hospitality sector.

The industry is projected to expand in the Twin Cities by 9.5 percent, 14,100 new jobs, between 2009 and 2019. This rate of growth will be slightly higher than the regional average of 8.5 percent. Table 3 highlights the employment projections for individual leisure and hospitality sectors in the Twin Cities region.

Employment growth in arts, entertainment, and recreation is estimated to be above average, with an additional 4,010 new jobs projected to be added in the region. Employment in drinking places, which declined by nearly half between 2000 and 2010, will continue to contract between 2009 and 2019, losing more than 1,500 regional jobs.

Overall, job seekers will continue to find ample job opportunities in the leisure and hospitality industry, and individuals with a dedication to customer service will find a host of willing employers.

[1]Hospitality Minnesota, www.hospitalitymn.org
[2]Bureau of Labor Statistics, Consumer Expenditures for the Minneapolis-St. Paul Area: 2008-09, www.bls.gov/ro5/cexmpls.pdf
[3]Bureau of Labor Statistics, Career Guide to Industries, www.bls.gov/oco/cg/cgs023.htm
[4]Minnesota State Demographic Center, www.demography.state.mn.us
[5]U.S. Census, 2010 Census

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