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How tourist towns might survive the pandemic

Vox.com logo Vox.com 10/7/2020 Terry Nguyen
a close up of a fenced in area: The city of Anaheim is facing a $100 million deficit in the wake of Covid-19. Disneyland, one of its largest sources of tourism, has been closed since March. © Jeff Gritchen/Orange County Register/Getty Images The city of Anaheim is facing a $100 million deficit in the wake of Covid-19. Disneyland, one of its largest sources of tourism, has been closed since March.

The city of Anaheim, residential population 360,000, greets about 25 million visitors each year, give or take. These numbers might be shocking for an Orange County suburb if not for its biggest attraction: Disneyland. When Walt Disney picked Anaheim, a town once populated by orange groves, as the destination for his utopic amusement park, he single-handedly put the city on the map for most American tourists.

In the decades since, Anaheim and its shops and restaurants have generally benefited from this public-private partnership (although Disney has, on more than one occasion, sought to leverage its corporate power to negotiate deals with local politicians). The city has consistently broken visitor and spending records over the past six years, fueled by Disneyland’s ever-expanding magical empire, annual conventions like VidCon and Anime Expo, and live music and sporting events at the Honda Center.

Then, the pandemic happened.

In Anaheim — a city that has structured its economy around tourism — small business owners were hit hard when their largest attraction closed virtually overnight. Disneyland has closed only twice before in its history: the day after the September 11 attacks in 2001 and for President John F. Kennedy’s funeral in 1963. What no one expected in March was for a closure to last beyond the summer and into the fall. While the parks were given the green light to open in early July, California saw a surge of infections in late June, and unlike Florida, which plowed ahead with Disney World’s reopening, Gov. Gavin Newsom ordered Disney’s reopening be delayed again, this time indefinitely.

With many cities instituting caps on lodging and public attractions, tourism-aligned businesses are, for lack of a better word, screwed without visitors. Hotel bookings have sharply fallen, restaurants have lost consistent tourism dollars, and Americans overall have been less inclined to shop and splurge in the midst of an economic crisis brought on by the pandemic. Municipalities could lose up to $134 billion this year and more than $360 billion through 2022, according to an analysis by the National League of Cities. That translates to declining sales tax revenue and inevitable budget cuts at a city level.

“Our city, our businesses, and our people are very dependent on tourism coming through,” said Jay Burress, the CEO of Visit Anaheim, a tax-funded hotel and resort advertising promotion group. “The city has become dependent on those transient occupancy hotel tax collections, which make up over 55 percent of our general fund every year.”

Anaheim, which is set to face a $100 million deficit, isn’t alone in its financial struggles. A Bloomberg data report found that Hawaii’s beach towns, California’s wine country, and some of Colorado’s ski towns have been similarly impacted.

For these local tourism-driven economies, the big, unanswerable question is: What happens to jobs when throngs of people no longer show up? What happens to the local businesses built around the tourism influx, which can’t be sustained for months by local residents?

To say some store owners and managers are worried is an understatement, especially in locations that haven’t seen a strong recovery. There’s a larger looming question in their minds: When visitors do come back, will the businesses still be there to serve them?

a group of people walking in front of a building: Downtown Disney, the shopping district by Anaheim’s Disneyland, reopened on July 9. © Derek Lee/Disneyland Resort Downtown Disney, the shopping district by Anaheim’s Disneyland, reopened on July 9.

“In large cities with a lot of tourism, like New York City or Washington, DC, when travelers stop showing up, there’s still the rest of the economy to pick up the slack,” said Pamela Caskie, an expert in tourism and municipal economic development. “For tourism economies in smaller towns, they’re entirely dependent on visitors coming in.” In partnership with the US Cluster Mapping Project, Caskie, who has spent two decades working as a regional manager from Colorado to Vermont, created an index that measures a county’s dependence on tourism.

According to her index, Orange County is ranked 46th out of 3,140 counties. While the city of Anaheim is primarily dependent on Disneyland and its convention center as tourism “anchors,” the county has a very diverse population and economy otherwise. “I’m sure the city of Anaheim is hurting more than the county,” she said.

“When Disney opens” is a phrase I commonly heard in conversations with hospitality workers and small business owners in the area. A Disney reopening is a potentially dangerous dream: The Daily Beast reported in early September that Disney has been hiding information about coronavirus outbreaks in its Downtown Disney shopping district, only disclosing to unions when their workers fell ill.

To some, a reopening would reflect a step closer to “normalcy,” translating into a bump to business that’s been sorely lacking for the past six months. The fate of the city of Anaheim — and its business owners and residents — is tied to the fate of Disneyland, because the attraction employs about 32,000 workers and is the largest and most influential employer in town. However, the entertainment giant is planning to lay off 28,000 employees across its parks, experiences, and consumer products division, although not all these workers are based in Anaheim.

“We are dependent on large gatherings in a lot of ways with Disneyland and the Convention Center,” Burress told me. “Now that sports and concerts are held off, we’re planning to start our marketing efforts with Disneyland but it depends on when Disney opens.”

While The Ranch Restaurant and Saloon, a fine-dining establishment with a banquet and dance venue, doesn’t exclusively cater to Disney visitors, park attendees account for one-third of their year-round client base, which also consists of corporate convention attendees and Orange County locals with disposable income. Now that conventions have stalled, the restaurant is relying solely on their “loyal customer base” who have the extra money to spend, said Michael Wildey, its director of operations.

Like most service establishments, The Ranch had to furlough part of its 160-people team in the spring, but it is slowly bringing back workers depending on demand. Without their go-to Disney client base in the summer, Wildey is hopeful that things can change in the fall. “We typically see conventions from late September through the end of April, but my feeling is that corporate business isn’t going to come back anytime soon,” Wildey told me. “So we’re trying to attract families who want something special during the holidays.” But he remains hopeful for a potential Disney reopening that would likely bring in extra business.

Local politicians are similarly bullish about how Disney could bring a boost for city revenue in the fourth quarter. Anaheim’s mayor recently called on Gov. Newsom to discuss statewide theme park reopening guidelines, arguing that the move would support “hundreds of small businesses [and] tens of thousands of jobs,” reported the Voice of Orange County.

For Anaheim, though, a suburban hub of now-closed attractions doesn’t seem to offer much to tourists, unlike the national parks, beaches, and mountain towns that travelers are gravitating toward. A few areas, particularly those that are accessible by car and close to public lands, are experiencing an unexpected boom compared to the regions that typically rely on visitors to fly in. Americans are still traveling a significant amount, but towns that attract more guests also risk increasing the rate of infections in the region.

A few areas, particularly those that are accessible by car and close to public lands, are experiencing an unexpected tourism boom

In Telluride, Colorado, which is best known for its ski resorts and seasonal festivals, business has held surprisingly steady through the summer, although locals aren’t sure how long this streak would last. Visitors, some of whom are second homeowners, have flocked to public lands nearby, exploring the area’s trails, rivers, and campsites.

Early on, residents were not just worried about the likelihood of increased infections, but also the lasting damage a sudden influx of travelers could have on the environment. (San Miguel County tested almost all 8,000 Telluride residents in April, and the town has a relatively low infection rate.)

“The area is experiencing ‘steady flow,’ which is the word we’re all using to describe how things lately are quite steady and consistent,” said Daiva Chesonis, co-owner of Between the Covers bookstore. “Before Covid, there was just no way to know how important our festivals were, but what we’re seeing now is even without these festivals, we’re actually surviving with locals or people passing through buying.”

According to the tourism board’s occupancy analytics, bookings are up by 4.8 percent, although owner occupancy plays a large role. “The shift of second homeowners coming more often and staying for longer was a consistent trend throughout the summer,” Telluride News reported, which likely fed into the local economy.

Telluride, with its mountainous views and small-town appeal, has historically relied on external visitors and second homeowners who come for its many cultural festivals (it has hosted events on film, jazz, bluegrass, beer, and yoga) or the winter ski season. In short, tourism is a year-round business, except for a few weeks in the spring during the off-season.

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“From the looks of it, it does seem like Telluride beat the odds, and we did that too back in 2008 during the financial crisis,” said Kristin Holbrook, co-owner of the Two Skirts boutique. “A lot of people are just passing through since our lodging is capped at 50 percent. It looks like houses owned by people who used to live here part-time are being filled up too, and they’re all buying stuff.”

For the hospitality industry, though, the financial stakes are still dire, even though Telluride as a whole appears more crowded. Hotels and other lodging units are still only at 50 percent capacity, and the county expects to cap this amount since demand might decrease through the fall.

Chesonis believes that the bookstore’s current “steady state” is a result of many factors: Shorter business hours, a “skeleton crew” of workers, and consistent book-buying from guests. “We’re down 20 percent in sales, but we’ve been managing because we’re balancing less payroll,” she said. However, she’s unable to anticipate what the winter holds and beyond that, despite working at the bookstore for over a decade. “When we wake up and it’s winter, we don’t know what’s going to happen.”

The striking uncertainty that plagues Anaheim and Telluride, however, has largely escaped Sevierville, Tennessee, a town that’s within a day’s driving distance of multiple states and boasts a range of attractions, from the Great Smoky Mountains National Park to the Dollywood theme park. (It also ranks first on Caskie’s tourism economic development index.) Although Sevier County has recorded more than 2,000 Covid-19 cases, Sevierville has seen a roughly 23 percent increase in bookings compared to 2019, which translates to an average of 60 additional guests a night, Bloomberg reported.

However, there was a moment in mid-March when Jessica Hale, co-owner of Ridge Outdoor Resorts in Sevierville, felt strikingly uncertain about the town’s outlook. She knew that people were going to travel again — eventually — but Sevierville’s unemployment numbers were rapidly spiking. The situation appeared to be nearly as bad as the Gatlinburg wildfires in 2016, which devastated the local economy and caused about $500 million in damages.

“We’re totally dependent on tourists,” Hale told me. The region is typically filled with tourists starting from spring break season in April through New Years’, but this year, the pandemic arrived on the cusp of spring.

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By May, it seemed like Sevierville was on the road to recovery for some businesses. Most of what Hale’s resort offers — RV campsites, luxury tent camping, and tiny cabins — are naturally socially distanced activities, which led her visitor numbers to “grow tremendously.” It helps that the county is car-accessible. Hale commonly hosts guests from Carolinas, Virginia, Ohio, and Florida, but recently, she’s noticed travelers from Washington and even California.

“I’m booked all the way through November at this point, but of course, everything feels different,” she said. With so many tourists arriving and leaving town every week, an outbreak could prove disastrous, but according to Hale, “we can’t eat if we close down.” A minority of locals are worried about the influx of travelers, but tourism is “what feeds Sevierville,” she said.

Most small business owners in the region — who’ve inherited family shops or are long-term residents — feel grateful for the hand the town has been dealt. “It’s almost eerily normal if you looked at the town in terms of visitor rates and number of operating hotels and businesses,” said Bill Lucey, the 20-year owner of Rainforest Adventures and Discovery Zoo. “If anything, there’s a significant number of ‘help wanted’ signs, since we’ve been pleasantly surprised with the number of tourists coming back.”

Lucey kept using the phrase “consistently decent” to describe the bump in tourism that Sevierville has experienced. Local businesses weren’t sure what to expect when tourists started flooding back in, and the pandemic has been uncharted territory. But for every “recovering” town like Sevierville and Telluride, there are still many factors at stake — namely how the US will handle the coronavirus leading into 2021. So far, the federal government’s haphazard management of the crisis in 2020 does not inspire much confidence.

“We can’t predict the future,” said Wildey of The Ranch Restaurant in Anaheim. “A lot of us are hoping we’ll be able to resume regular operations sooner, but we also have to listen to the guidance of experts and the governor to bring the infection numbers down.”

It’s a precarious time for businesses, even if revenue is currently up or holding steady. “I can’t even think ahead to next summer,” Chesonis, the bookstore owner in Telluride, told me. “When Covid just hit, we were thinking hourly. Then it got to weekly and now monthly. But I can’t think that far ahead right now. I mean, how can we?”

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