Lakes area resort owners and state officials appear to be on opposite sides of a serious economic issue in the lakes area, but both groups agree with at least one point -- it's a problem of perception.
While reports indicate this summer's family and vacation business has been good, large area resorts are facing a combination of events negatively affecting the industry.
Terrorism at home, the war in Iraq, the stock market and a bad economy all have created losses in the tourism industry beginning with the events of Sept. 11, 2001.
But resort owners say another blow hit them in May. In response to the state budget problems many agencies canceled conferences at outstate resorts.
It is a blow resort managers say is unfairly based on a knee-jerk reaction to the state budget crisis that may actually cost taxpayers more money. On the other side of the issue, state officials are saying they are being more responsible to taxpayers by re-evaluating those meeting expenditures. At least one department has put a no resort conference policy in writing.
This spring state agencies, notably those with outstate offices, canceled scheduled meetings at resort conference and convention centers.
Flowers line the walks at Ruttger's Bay Lake Lodge on Bay Lake. Resorts in central Minnesota are experiencing the stresses of post 9-11 America. (Dispatch Photo by Steve Kohls)
Resort managers said state agency leaders are telling them the decision was based on appearances with a goal not to meet at resorts -- particularly those with golf courses -- regardless of a competitive low bid process. The appearance would be that those agencies are at the resorts to play, not to work.
Doug Gray, from the Department of Education's communications office, said a policy came into play with new Commissioner Cheri Pierson Yecke, which she recently talked about during an interview on KARE 11.
Gray said the department has faced budget cuts and is making decisions based on helping taxpayers.
"Our policy is not to hold conferences at resorts," Gray said.
Resorts -- by the numbers
Brainerd lakes area's largest resorts by total units:
Madden' Resort on Gull Lake -- 297.
Grand Casino Mille Lacs Hotel -- 284.
Cragun's Resort and Conference Center -- 281.
Breezy Point Resort -- 230.
Grand View Lodge -- 182.
Ruttger's Bay Lake Lodge -- 167.
Izaty's Resort -- 88.
(Source: Business Journal)
Gray said there is no statewide bidding process for conferences, which are considered special expenditures. Each agency is free to set its own process.
"At this time, given the budget situation, we don't feel in the public view state conferences would be an appropriate thing to do at a resort."
Ruttger's Bay Lake Lodge in Deerwood recently put together a price comparison on meeting facilities looking at Ruttger's versus five metro facilities. Several other resort managers in the area pointed to those numbers where the average costs were much lower in the lakes area.
Tom Day, Hospitality Minnesota vice president of government affairs, has been with the organization for 12 years. Hospitality Minnesota is the umbrella organization for the Minnesota Restaurant, Hotel & Resort Associations, and is one of Minnesota's largest business trade associations and the leading hospitality organization in the state.
Day said metro-based television news stories with video clips of state employees golfing may make good television, but it is not an accurate depiction.
"It's really a bad rap and that is something the resort association is working on right now," Day said. "The state has made a decision that it is bad perception to be seen at a resort. The problem for the rest of us as taxpayers is that it is cheaper in many respects. ...
"Every conference they do they are forced to put out to bid," Day said. "If they are going to Madden's or Cragun's, that means they are getting the best deal there."
WCCO-TV hasn't had a recent story regarding resort conferences. Keri Miller, KARE 11 reporter, said she is not comfortable speaking for the Twin Cities broadcast media, but is comfortable representing her own story this spring with filming at Madden's Resort.
The story was part of a series that compiled expense reports and expenditures from every state agency. Miller said she understands resort owners' perspectives, but the report was in the context of the series, and state policy issues should be taken up with the commissioner.
Miller said it may seem to area resorters that such stories with golf clips are on metro news broadcasts often, but it is not true they are running even as often as every 18 months. Miller recently reported on Department of Education spending in her series of reports called "Follow the Money."
In an interview with Miller, Commissioner Yecke said she did not like the way it appeared to have meetings at resorts at this time. Using the department's conference center or other options in the metro area were offered as options with a lower cost.
For her report, Miller was covering a meeting at Madden's with more than 650 school teachers, principals and staffers and reported Yecke saying she was mortified when she found out about the scheduled leadership meeting.
Miller reported, "Yecke says taxpayers are buying rooms and meals at a classy resort when the conference could easily be held somewhere cheaper." Miller said she checked prices with Madden's and found the school districts were paying $221.52 per person for two nights in a double room and meals. Counting all the participants, the retreat cost $146,200, not including mileage or a $35 registration fee.
Ted Canova, news director with KMSP Fox 9 in the Twin Cities, said his station hasn't recently aired a story about the cost of state agency conventions at outstate resorts, but he sees the merit in them.
"You get the sense that when we do one story every two years, it's at least questionable what some of these (government) people are doing," said Canova.
Hospitality Minnesota is trying to set up meetings with Gov. Tim Pawlenty's office this month because Day said they are hearing the state has a pledge that state employees cannot be seen at resorts anymore.
But as a taxpayer, Day said if the state is alienating the cheapest rates because of a perception problem, the first thing the state should work on is the perception problem.
"I think our argument certainly speaks for itself," Day said.
Dan Wolter, Pawlenty's communications director, said the governor's office does not have a formal or informal policy about conferences. Department commissioners make the decision, he said.
"There is a perception issue of state employees -- I wouldn't say it's resorts in particular -- of state employees recreating on the state's dime," Wolter said.
Wolter said there have been all kinds of television exposs with real issues regarding the state budget and meetings and money spent on doughnuts, and the reaction was these are tough budget times. Now there is a new governor and different economic times, Wolter said.
"We asked people to live with less from the state," Wolter said. "This is one of the effects of that."
If a bid process is not followed, Wolter said there is a complaint process as a remedy. He said for the state the decision is holding money on spending or laying off employees.
However, Wolter said if conferences are just moving to Twin Cities locations and paying more, that would be a legitimate concern.
"If that is the case we are certainly interested to hear about it," Wolter said. "The goal is to save money and saving money is the best public relations rather than just yanking it out of a resort because of the perception issue."
Lynn Reed, Minnesota Taxpayers Association executive director, can see the arguments from both sides. He said the debate regarding which dollars are spent where is political.
Reed said ideally the decisions should be made with a public that has a clear and full understanding of what the tax price is. He said it can be a hard decision for resort owners who are also benefiting from the spending. And it may be a time to step back and see what level of government dependence resorts can live with, Reed said.
Clear public good that benefits the state is how expenditures should be evaluated, Reed said. He noted Greater Minnesota has fewer voters and most taxes are paid in the metro area. But if a spending decision, such as holding meetings at resorts in the state, is based on perception alone, Reed said he did not like that too well.
"I'd rather have (the state) make the case and defend it and show it is cheaper," he said. "... I don't like the idea of pandering to the perception. I don't think people are going to resent that if they make the case."
Lakes area resorts become their own little cities each year. The large resorts each employ hundreds of workers in seasons that have expanded beyond summers months and part-time college students.
Reed said if money is being spent to prop up resorts, the question may be how dependent resorts are on government dollars, whether that is healthy and what can be done to minimize it. There is another question of whether state spending should be targeted to the Twin Cities, or whether outstate Minnesota is in the mix.
Wolter noted the DNR and MnDOT are two agencies with a Greater Minnesota presence that may pick the lakes area's central location for conferences versus more metro-based agencies. Mileage is another consideration.
"I don't want to minimize the perception issue," Wolter said. He said the so-called exposs have raised legitimate concerns. And now it's a matter of priorities. "There is a change in tone and the governor is very frugal."
If state agencies are avoiding resorts and not looking at the bottom line, Wolter said he is looking for specifics.
"We are all about saving money. That shouldn't be happening if that is the case."
If the resort conference center is the low-cost alternative and makes the most economic sense, the state's responsibility is to the taxpayer in that regard, Wolter said.
"This financial backlash on top of that (decline of the state's resorts from 3,000 10 to 15 years ago to about 1,000 now) makes this the worst financial crisis this industry has ever faced," Day said.
"The hospitality and tourism industry produces the same gross domestic revenue as agriculture in the state of Minnesota."
While state facilities are used for meetings, Day said they cannot always meet the needs of 300 people coming for a conference for three or four days with lodging and food.
There are certainly other factors at play in the area's state of tourism. Greg Ortale, Greater Minneapolis Convention and Visitors Association president and CEO, wrote a letter in March stating since Sept. 11, 2001, the travel business has borne the brunt of the weak economy.
"The fear of terrorism has damaged our industry -- slowing leisure travel, depressing attendance numbers and postponing meetings," he said.
Lack of snow the past two winters has not helped. The days of the two-week vacations appear long gone. Now people make reservations closer to the day of the vacation and stay for fewer days.
Day said smaller resorts and motels in the lakes area appear to be doing fine while larger resorts are suffering the decline of conference center business.
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