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Trading in travel

A growing desire to explore Minnesota means big opportunities for small businesses

Tourism is big business in Minnesota. According to Explore Minnesota, the state's official tourism office, travel and tourism in Minnesota now generates more than $11.8 billion in annual sales, up from $3.2 billion in 1985.

The industry accounts for 240,000 full- and part-time direct jobs, or 11 percent of the state's private sector jobs. According to John Edman, director of Explore Minnesota, when you factor in secondary jobs, the impact is even greater. "Tourism is a huge foundation of our state's economy," he says.

The peak of this spending comes during the summer months, with 37 percent being spent by travelers between June and August. Edman says during these summer months, a diverse set of experiences await those traveling to Minnesota. To capture this, the state recently launched a new spin on the "more to explore" ad campaign.

"We recently completed some in-depth research on what tourists are looking for and how to connect with them," Edman says.

They found that visitors are seeking a more authentic experience to share with their friends, family, and extended family members. This is something at which Minnesota excels, both in major metro areas and throughout rural communities, but it needed to be better portrayed in the state's marketing.

"This research resulted in ads that are more visual and show more variety about how much more there is in Minnesota," Edman says.

Now the campaign includes such phrases as "more to spin," and "more to try," the latter accompanied by the image of a restaurant customer receiving a dish.

The campaign features a variety of television spots, and about 60 percent of the budget goes toward digital marketing efforts.

For Minnesota to remain competitive in the marketplace, additional money needs to be invested overall in marketing the state as a tourism destination. "Our toughest challenge is competition," Edman says. "We've seen other destinations substantially increase their promotional and marketing efforts."

It's easy to see why Edman is concerned. Minnesota currently ranks 30th in the country for its state tourism office budget, which comes out to just $8.4 million per year. Neighboring states South Dakota and Wisconsin regularly outspend Minnesota in luring tourists.

Gov. Mark Dayton has proposed to increase this annual budget to about $15 million. Edman says this type of increase would be a solid investment for Minnesota taxpayers. A study of marketing dollars in 2012 found that for every dollar invested in marketing, $8 was generated in state and local taxes, he notes. The same study found that for every dollar invested in marketing, $22 in income was generated, and an additional $84 was spent by travelers.

Edman credits some of this success to the authentic experiences found throughout Minnesota. "We have resources that others just cannot match," he says.

Below, we take a look at five businesses around the state attracting out-of-state tourists and encouraging in-state residents to stick around and spend their money in Minnesota.

Tee time

When golfers seek to tee off in Minnesota, Madden's on Gull Lake is oftentimes their destination. Dating back to 1926, the 63-hole course enjoys a history that sets it apart from competitors.

"Our courses have been designed over 84 years by multiple architects," says owner and president Brian Thuringer. "Unlike other courses that have one architect who used the same philosophy, we've used several architects over the years and our courses vary."

The end result is a more diverse experience for advanced golfers, and custom-designed courses for intermediate and beginner golfers. For example, as baby boomers age, they don't necessarily want the long drives, so they tend to push their tees forward. At Madden's, there are alternative courses already designed with this in mind. Despite its long, rich history (Madden's had the first 18-hole resort course in the state), Thuringer says golfers familiar with the courses will notice subtle changes each season. "Every year we make some alterations to our courses - we might lengthen a course or alter the bunker." A more subtle change is efforts to restore some of the original natural elements to the courses.

In total, Madden's has four courses totaling 63 holes. The most recent addition, The Classic, dates back to 1997 and is the resort's signature, championship course. Its oldest course is Pine Beach East, while its counterpart Pine Beach Westwas built in the '60s and features a par 67. A "social nine" course rounds out the golfing experience.

Thuringer, who has worked at Madden's on Gull Lake for 40 years, says the diverse offerings and continuous evolution of the course, coupled with its gorgeous location and amenities, make it the best in the state.

Yet golf is just one facet of Madden's on Gull Lake. The lakeside resort sits on 1,000-plus acres, has 287 guest rooms, 42,000 square feet of meeting space that can easily accommodate 600 guests, multiple dining options, and numerous water and land activities for guests.

Human on a stick

In 2001, "Good Morning America" unveiled a machine that was going to change the way people commute to work. When Bill Neuenschwander saw it, he wasn't convinced, but this new way of travel did change his life.

The product was known as the Segway, the two-wheel contraption that self-balances. Neuenschwander was convinced people wouldn't drop $5,500 or more on something they had never tried before, so in 2003 he launched Mobile Entertainment at the Minnesota State Fair. Playing off Minnesotan's obsession with everything on a stick, he offered "Human on a Stick" rides. By 2004, he was offering Segway tours for both travelers and corporate customers.

Today, the company does about 10,000 rides per year, primarily within the Riverfront District of Minneapolis. Neuenschwander says the tours provide the best of walking and bus tours. "Unlike a bus tour, which can be sterile and not get as up close to something as people would like, we can ride right up to something," he explains. Tours can easily cover 6-plus miles as well, something walking tours just can't do in a reasonable amount of time that's comfortable for guests as well. "It is the best of both worlds," he says.

His customer base has evolved over the years. Initially, techies were drawn to the tours, fascinated more by the Segway than by the historical aspect of the tour. But today, it tends to be tourists, or folks living in the Twin Cities who want to showcase the area on a Segway to their friends and family visiting the area.

Looking ahead, the company is taking its tours on the road to nearby communities. While Neuenschwander isn't ready to say where, he says his tours will be in "quite a few" pockets of the Twin Cities this summer.

To ensure the tours will be well received wherever they go, the company is offering progressive pricing, meaning those who book ahead can save substantial money. Since rides typically cost around $80, this is a great deal for those who want to try the Segway without paying full price.

Midwest wine country

When longtime friends Paul Quast, Chris Aamodt, and Peter Hemstad decided Stillwater would be a great spot for a Midwest winery, some folks scoffed. But Hemstad, a grape researcher at the University of Minnesota's Horticultural Research Center, knew the location could be ideal for a winery. It was the early '90s and Midwest wineries were far from popular. In fact, when they opened the doors ofSaint Croix Vineyards in 1992, it was one of three in the state. Today, there are more than 40. With more on the way, these wineries make up a substantial portion of the state's rapidly growing agri-tourism industry.

Saint Croix Vineyards has experienced steady growth since the early '90s, says general manager Matthew Scott. The company started as a family business, but as its popularity and reputation of serving up award-winning wines grew, so did business.

As for what makes Saint Croix Vineyards unique, Scott says it is simple: "We care more about the quality of the grapes we grow. Just because you can grow a grape in Minnesota doesn't mean it makes good wine."

The winery offers more than a dozen varieties of red and white, many of which are medal winners at wine competitions around the country. They also offer dessert wines, including several made of apples and raspberries.

Like many of its competitors, the winery also educates customers about what makes a great wine. Throughout the season, it offers free noontime tours of the vineyards, showing how the grapes are grown and how wine is made, and also offering a $5 tasting.

The tour draws oenophiles from throughout the Midwest. The winery also works with other Stillwater businesses to cross-promote, ensuring tourists know what the city and winery have to offer.

The biggest draw to the winery comes after the official close to summer tourism in Minnesota. Each year, the vineyard hosts an annual grape stomping event the weekend after Labor Day. The two-day event is free, allowing anywhere from 5,000 to 6,000 people per day to tour the vineyard, enjoy wine and entertainment, and be a part of the wine-making process by getting their feet wet if they choose.

Lakeside history

Duluth's big draw tends to be Lake Superior. Add a hotel on the lake and that generally spells success. Yet that wasn't always the case for the historic Fitger's, a lakeside hotel and shopping and dining complex. Prior to being acquired by Scott Vesterstein, the complex sat at 40 percent vacancy, and the once-grand hotel needed renovation and major improvements.

Vesterstein turned things around after purchasing the property in the mid-'90s. Today, the complex is 100 percent full - with a waiting list. Improvements were made to the main entrance and other areas, but perhaps most different is the hotel, which has expanded from 48 to 62 rooms.

Unlike some hotels, each room is unique in design and showcases Duluth's rich history, without scrimping on modern-day conveniences. "People really enjoy the historical aspect of Fitger's," Vesterstein notes.

The hotel also offers in-house room service from the popular Midi Restaurant, complimentary valet parking, nearby access to the Duluth Lakewalk, impressive views of Lake Superior, and a variety of other amenities.

The overall complex dates back to the 1880s. It was built by Michael Fink in 1881, who had purchased Duluth's first brewery from Sidney Luce. August Fitger was hired as the brewmaster, and within a year became part-owner. The brewery went on to have a long history in Duluth, even converting to a candy company during Prohibition, but it closed its doors in 1972.

By 1995, local entrepreneurs Rod Raymond and Tim Nelson were excited to become a tenant of Vesterstein's and open a brewery back up in Duluth. "We feel connected to the building in ways that can't be explained," Raymond explains. "Our brewer's crafty ways of making outright delicious ales, our customers' desire for not only having good food and beer but also experiencing walls that tell a story, and the power of the big lake make Fitger's the only place like it in the world."

In addition to the Brewhouse, shops within Fitger's attract Twin Cities tourists and locals with unique products that offer a local flavor. Shops include an independent book shop, upscale boutiques, and specialty kitchen and pet stores, among others. "This is the strongest tenant list we've ever had," Vesterstein says.

Great wilderness

Come summer, Ely's population explodes. The town of 3,500 hosts an average of 700,000 tourists, many of whom are heading to the Boundary Waters Canoe Area Wilderness.

Piragis Northwoods Company is just one of many outfitters supplying these endless tourists, but it has a well-established history as one of the first outfitters in the region.

The company was established by chance: Steve and Nancy Piragis had moved to Ely, but their jobs had run their course. They started selling wood stoves out of their garage, which soon evolved into canoes. In 1979 they opened a store, and a few years later they were in the catalog business. Over the next 30 years, they kept growing into the $4-million-a-year business they are today.

Several things set Piragis apart from its competition. First, each year it turns over all of its gear, guaranteeing those renting or outfitting through Piragis get new equipment. The company also ensures it has a knowledgable staff that can offer comforting last-minute advice to outward-bound travelers.

"We've had families come up who have never canoed before but have the courage to go out on their own," says Steve Piragis. "We spend some time with them, tell them how to use the gear, and send them out. They always make it back, and they always seem to have fun."

Piragis credits his employees for customers' continually fun adventures: "The people that work for us are genuinely friendly people who know our gear and how to use it. We all go on canoe trips either here or all over the world. We have a love for the outdoors and nature."

In terms of its flagship guided tours, the company caters to a variety of customers, but the core clientele tends to be Midwest baby boomers. A five-day trip starts at around $1,200. Piragis says customers feel they get great value when factoring in the trip planning, quality gear, gourmet food, and knowledgeable guides.