Hospitality industry wants fewer regulations from Minnesota Legislature this session
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The trade association Hospitality Minnesota is calling on legislators to remove some regulations on hotels and restaurants this session. The organization wants a hospitality industry exemption from the junk fee law, which went into effect Jan. 1.
The law requires businesses to include all mandatory fees in the advertised price, rather than charging a service fee in the final bill.
President and CEO of Hospitality Minnesota Angie Whitcomb said the appearance of higher prices could drive customers away, and the hospitality industry is bracing for tariffs to drive up prices even more.
“We’re facing some very strong headwinds,” Whitcomb said. “We need the state and the legislature to work with us to ease some of these burdens.”
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Service fees have been increasingly common on restaurant and bar tabs in recent years. Supporters say the law ensures price transparency. Whitcomb said it forces businesses to raise prices in order to cover all of their expenses.
“They use that money to offset the additional costs that come with some of these mandates and to cover things like employee benefits,” Whitcomb said. “So for those who choose to use those service fees, there’s a reason behind it.”
Whitcomb said Minnesota is the only state that doesn’t exempt the hospitality industry from service fee bans. It’s one of four states that doesn’t allow tip pooling, another regulation Hospitality Minnesota would like to see eased.
Minnesota’s $392 billion hospitality industry still hasn’t recovered from the pandemic, according to a report released by Hospitality Minnesota. Minnesota tourism surged in the summer of 2021 as people vacationed outdoors during the pandemic, but numbers have declined since then. Hotel bed occupancy is down 7 percent since 2019.
Hospitality Minnesota’s report ranks Minnesota last in the Midwest for hotel occupancy rate recovery since the pandemic, and it found 51 percent of hospitality businesses reported lower customer traffic in 2024 than 2023.
Additionally, hospitality businesses said they are struggling to hire enough employees and facing continuously rising prices. Although there are 6 percent more restaurants in Minnesota than there were in 2019, employment has shrunk by 3 percent, according to the report.
“Like many in this industry and other sectors, we struggle to fully staff our operations,” said Robert Kisabeth, the chief operating officer for TPI Hospitality, which owns hotels, restaurants and event centers in Minnesota. “Even though wages are up 27 percent since 2019, there are significant job openings across all of our businesses.”