Michigan’s $40B Hotel and Restaurant Sector Releases Economic Impact Data

The Michigan Restaurant and Lodging Association in Lansing today released its “Don’t Leave Michigan’s Hospitality Industry Out in the Cold” campaign, including a list of common-sense public policy solutions to help restaurants and hotels survive the transition to a colder, less predictable fall season.
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plate of gourmet food at restaurant
The Michigan Restaurant and Lodging Association’s “Don’t Leave Michigan’s Hospitality Industry Out in the Cold” campaign includes public policy solutions designed to help the industry survive the transition to a colder, less predictable fall season. // Stock photo

The Michigan Restaurant and Lodging Association in Lansing today released its “Don’t Leave Michigan’s Hospitality Industry Out in the Cold” campaign, including a list of common-sense public policy solutions to help restaurants and hotels survive the transition to a colder, less predictable fall season.

The MRLA also released new economic impact data outlining the devastation that will be caused to Michigan’s hospitality industry, the state’s second largest employer, as colder months approach if no action is taken and mandated capacity reductions remain.

While expanded outdoor patio seating, great weather, and federal stimulus funding helped to sustain the industry throughout the summer, more than half of the hotels in Michigan remain unprofitable and nearly a quarter of the state’s restaurants do not anticipate being in business in six months.

“The hospitality industry in Michigan finds itself in a precarious position this fall as dropping temperatures and mandatory capacity restrictions indoors threaten its very existence,” says Justin Winslow, president and CEO of the MRLA.

The MRLA is launching the campaign to educate elected officials and the business community of the economic impact to Michigan’s overall economy as the state’s second largest private employer loses leisure travel and outdoor dining with no way of mitigating those losses indoors given current Executive Orders.

Don’t Leave Michigan’s Hospitality Industry Out in the Cold Proposals include:

  • Allowing Michigan’s meetings and banquets centers statewide the same access to market as restaurants at 50 percent capacity indoors with appropriate social distancing and sanitization standards
  • Allowing restaurants to retain the expanded capacity they gained via patios and other outdoor solutions this summer by allowing them to safely winterize those spaces while extending their temporary alcohol service permits as well
  • Allowing for expanded indoor capacity, both at restaurants and banquet centers if the data reported by the Michigan Department of Health and Human Services falls below a three-percent positive test rate over an extended period
  • Restoring Pure Michigan funding to encourage the restoration of safe travel
  • Promoting and subsidizing the requisite education and training necessary to earn credentials associated with the MRLA ServSafe Dining Commitment

“Michigan’s hospitality industry, through innovation and outright grit, has risen to the challenge of providing safe service for its guests and employees. The state’s own contact tracing data validates the relative safety of our operations,” Winslow adds.

“We have provided realistic solutions and stand ready to work collaboratively with the governor, the legislature and local leaders across the state to help safely transition this industry indoors as the season changes. We must act quickly as nearly 5,000 small businesses and well over 100,000 jobs hang in the balance.”

Notable survey results include the following:

  • 23 percent of Michigan operators (approximately 4,000 locations) say it is unlikely their restaurant will still be in business six months from now.
  • Nearly 2/3 of hotels remain below 50 percent occupancy, which is the commonly understood profitability threshold.
  • 62 percent of restaurant operators report increased operational costs since the onset of COVID-19, mostly due to new Personal Protection Equipment and sanitization standards.
  • Hotel unemployment remains at 38 percent, meaning that four in 10 hotel employees who worked in the industry in February do not now.
  • Despite leading the statewide employment gains this summer, restaurants in Michigan are operating with 1/3 fewer employees than they otherwise at this time of the year.
  • Michigan hotel occupancy rates are down 23.5 percent compared to last year
  • 74 percent of Michigan operators say they don’t expect their restaurant’s sales to return to pre-coronavirus levels within the next six months.
  • Detroit and Grand Rapids have experienced more dramatic drops in hotel profitability than the state as a whole as the near total lack of business travel and convention business have decimated those larger properties.

For more information on the campaign, visit mrla.org/outinthecold.

The Michigan Restaurant and Lodging Association, founded in 1921, represents more than 5,000 Michigan foodservice and lodging establishments. The industry plays an integral role in Michigan’s economy, employing more than 595,000 people and creating nearly $40 billion in annual sales.

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