Trends in the Vibrant Tourism Economy

Tourism is a hugely important industry in Minnesota and the Dakotas, accounting for billions of dollars in revenue every year

By Sam Easter For Prairie Business

Bemidji Woolen Mills – maybe the most famous cold weather-gear company in northern Minnesota – has been in business for a full century this year.

It’s long enough for fourth-generation owner Bill Batchelder to have learned that consistency works. In an interview last month, he read a recent email over the phone from a shopper who never forgot a buffalo plaid jacket from the Woolen Mills that he wore as a young man in the 1950s and ‘60s. The man, about 80 now, told Batchelder that his friends always knew it was him from far across a snowy Iowa State campus, and in his later years, he wanted another buffalo plaid jacket to wear.

"There's a family that vacationed in Bemidji on Cass Lake over 60 years ago, and they never forgot Bemidji Woolen Mills,” Batchelder beamed.

But time has also taught the Woolen Mills that it has to adapt to survive. Batchelder remembers the days when an AM radio ad could make all the difference – now faded – and remarks that his inventory has had to keep up with Bemidji’s decades-long shifting interest toward “silent” sports like canoeing, hiking and bicycling.

And as market forces shape Bemidji’s tourism industry, as the age of the internet reinvents advertising and as younger travelers spend their money in new ways, his business is hardly alone. Throughout the upper Midwest and around the country, local tourism economies – from hotels to state boosters – are reorganizing around a brave new, online world, poised to cater to a new generation that spends its money in markedly different ways.

Teri Schmidt is the executive director of the Sioux Falls Convention and Visitors Bureau. She can run through a lengthy list of those kinds of big changes, like the effects of millenials’ tendency to take more spur-of-the-moment, experience-driven trips than their parents, or the ways that the rise of social media have forced a reckoning with a new advertising style.

"We have to adjust all of our marketing, we have to adjust all of our sales, so that we are front-and-center when (travelers) are searching for what's going on," Schmidt said. "If we're not on a social media platform when they're looking – if we're not up to date – if we're not five or six steps ahead of them, we're not going to get business."

And according to Krista Orsack, the Sioux Falls CVB’s marketing director, their digital advertising budget has surged over the past seven years – increasing, by her off-the-cuff estimate, as much as 40%.

Tourism is a hugely important industry in Minnesota and the Dakotas, accounting for about $4.1 billion in visitor spending in South Dakota alone during 2019, up 2.8% from the prior year. Vibrant tourism industries are also a big boon for adjacent state issues – like how attractive local communities are to out-of-state workforce talent.

“When it comes to North Dakota in general, having great parks, great attractions, things like that, they tend to make North Dakota a great place to work, but also live and play,” Arik Spencer, CEO of the Greater North Dakota Chamber, said in September. “And that’s important when trying to attract a workforce.” continued on page 15

South Dakota, like states around the country, have also seen drastic shifts in how those tourists visit and stay. According to state records, there were 561,000 room-nights booked on Airbnb or HomeAway, two sites that allow users to book open rooms in condos, apartments and houses around the country – giving guests a chance to visit more like a resident and less like a tourist.

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But if the new service is a boon to travelers, it’s something of a headache for the hotel industry, and represents yet another front on which the more traditional tourism model is being transformed. Home-stays rented through Airbnb and its ilk are often less regulated – a favorite talking point of the hotel industry – but consequently less expensive, making them nimble competition.

“If we’re looking at the millennial generation, there’s no question that they have really focused in on authentic experiences when it comes to travel and tourism,” said James Hagen, South Dakota’s tourism secretary. “When they get to a destination, they want to live like a local lives, and they want to eat like a local lives and experience those same sorts of things.”

Tim Johnson owns hotels scattered across South Dakota, including Sioux Falls, Rapid City, Keystone and beyond. To hear him describe it, the rise of internet-booking sites like Airbnb has been a double-edged sword: he now has to think creatively about how to advertise online, for one, like in one hotel that has a 10-foot chair in the lobby – letting guests take a photo, joke to their friends about it and boost the hotel’s profile on social media. But that model also lets him cut back on more expensive, traditional advertising and pursue international tourists.

"The internet has changed the world in our industry,” Johnson said. “The consumer now shows up, and they know everything about your property – whether they have a reservation or not, they know the condition of your hotel, because they know what everybody is saying about it."

Johnson’s experience is just a small part of how businesses are trying to stay ahead of the quickly shifting industry curve. But observers throughout the industry know that there are still plenty more changes on the way – especially as the younger set ages into a larger and larger share of the market.

“And there are lessons there, too, to say, what else should we be thinking about? How else will travel and tourism change as a result of millenials and those who come after millennials? We have to be on our toes,” Hagen said. “We don’t have the luxury of just resting on our laurels and doing business the same way we’ve always done it. And that’s the challenge.”