CORRECTION: Maine hotels and restaurants recover to pre-pandemic sales, but shortages blunt profits

Jul. 26—Pent-up demand boosted business to pre-pandemic levels at Maine's lodging establishments and restaurants this spring, signaling a turnaround for those hard-hit industries although higher costs from ongoing supply and workforce shortages are blunting profits.

Monthly taxable sales for both industries were higher in April and May of this year compared with the same two months in 2019, before the pandemic, according to Maine Revenue Services. Restaurant sales taxes were up 2 percent to $258.3 million in May compared with that month in 2019. Lodging sales taxes were up 20 percent to $108.8 million over the two years.

The surge, which reflects growing sales volume, is largely due to built-up demand from Mainers and out-of-state visitors, said Greg Dugal, director of government affairs for the industry group HospitalityMaine, who predicted strong demand will continue into August.

"Consumers are not holding back on eating out, vacationing and celebrating and they are adapting their behavior to the labor shortages," Sheena Bunnell, professor of business economics at the University of Maine at Farmington, said.

Bunnell expects the consumer spending spree to continue, but the workforce shortage is creating a downside to the potential tax and revenue collections for the state, she said.

Many Maine hotels are fully booked until September and are coping with worker shortages as best they can. Laura Bosio, who manages the Glen Cove Inn and The Country Inn in Rockport with her husband, said the duo have to make up for fewer helpers themselves, but it is good to be so busy.

"We're turning people away all the time for rooms," she said.

Bosio said they also have to run to the grocery store to try to find items suppliers don't have, including peanut butter, jelly and honey. Supply shortages are raising prices and some businesses are cutting menu items, Dugal said.

"So the top line is growing, but the bottom line is not," he said. "Still, it's a heck of a lot better than last year and they have the opportunity to operate and generate some funds."

In the early part of last summer many hotels and restaurants were only partially open or not open at all. Restaurant sales tax revenue was down 135 percent last April to $85.6 million compared with April 2019, and the lodging sales tax dropped 540 percent to less than $10 million.

Dugal expects sales taxes for June, due to be released at the end of August, will continue to outpace 2019. However, the uncertainty around the delta coronavirus variant makes it hard to predict sales too far down the road.

"But I would be totally shocked if the June numbers weren't up from 2019," he said.

Correction: An earlier version of this story misstated percentage increases in sales tax revenue.