Summer tourism fears are borne out
City can't break storm's legacy, seasonal drop-off
Wednesday, July 05, 2006
By Jaquetta White
As the Essence Music Festival hit the stage last weekend -- not in New Orleans, its traditional home, but in temporary, post-Katrina digs in Houston -- the absent spending power of the event's thousands of attendees was clear to local restaurants, hotels and retail shops.
"What we're obviously missing right now is the Fourth of July buzz," said Glenda McKinley English, president and creative director of G.Mc + Company Advertising Inc., which handles multicultural tourism accounts for the city and state. "It's a void in our community."
Temporary displacement of the festival, the summer's biggest musical attraction, and the cancellation of other events already have industry analysts comparing summer 2006 to those of the dismal summer of 1985, when just half of the city's hotel rooms were filled.
In June, the city successfully hosted the 18,000-person American Library Association convention, proving that New Orleans is again up to the challenge of megaconventions. But the ALA conference was the only significant tourism event on the city's summer calendar, a traditional down-time for conventions.
As a result, tourism officials, hoteliers and business owners are now buckling down for a possible wave of business closures as marginal shops and services knuckle under before the convention season, which officials say promises to be a healthy one. It kicks off in earnest in the fall.
Hot time in the city
It's no secret that summer has never been kind to the New Orleans tourism industry. Though a third of all travel nationwide takes place in the summer, turning the spirit-crushing humidity of New Orleans into a summer destination has been an uphill battle. The heat-averse travel north. Those who like it hot tend to flock to beaches and theme parks.
"For whatever reason, we've never been able to establish ourselves as a summer destination," said Bill Langkopp, executive vice president of the Louisiana Hotel and Lodging Association.
Not for lack of trying and, before Hurricane Katrina, considerable progress: Last year, summer conventions climbed 50 percent, and Essence Fest attracted a record crowd. Hotel occupancy is usually in the upper 90 percent range during Essence, said Darrius Gray, president of the Hotel and Lodging Association and general manager of the Holiday Inn French Quarter.
"It's a huge draw for the city, generating millions of tax dollars for city coffers," Gray said.
This year's projected tourism numbers remain misty. There's always the possibility that disaster tourism and sheer curiosity about New Orleans' ordeal will be a magnet for some travelers. "But based on bookings at the hotels, we know summer is going to be light," said Stephen Perry, president of the New Orleans Metropolitan Convention and Visitors Bureau.
Michael Valentino, managing partner of Valentino New Orleans, which owns four hotels, said summer tourism will follow the downward trend that prevails every year, but because numbers already are off, the dip will be more challenging.
"It's all the same things exacerbated by the fact that it's the anniversary of the worst natural disaster in the country's history and the perception that the city is crippled," Valentino said.
Perry said this season "certainly parallels" the lows seen 21 years ago when citywide hotel bookings, in a post-1984 world's fair slump, fell to just 52 percent.
Hans Wandfluh, a hotel consultant and former general manager of the Royal Sonesta Hotel, projects bookings at hotels in the first-class market to run in the low 60 percentile. Other markets, he said, will experience occupancy rates in the 40 percent to 50 percent range. That's down 15 percent or 20 percent from past summers.
"Right after the world's fair, that was the last time we faced a major crisis," Wandfluh said. "We saw hotels struggle at that time. We saw some ownership changes taking place. We saw some refinancing taking place. I think similar things are going to happen today in New Orleans."
"From a business perspective," Langkopp said, summer 2006 looks to be "identical" to summer 1985.
Watching for hurricanes
But there's a psychological difference. The industry has to overcome a number of negative perceptions and survive a closely watched hurricane season, obstacles it didn't face two decades ago.
"The biggest challenge is one of perception because the images that are in most people's minds are from the hurricane, even though that was months ago and the French Quarter and other places have been open for months," said Allen Kay, a spokesman for the Travel Industry Association of America, a nonprofit trade group that represents the U.S. travel industry. How this hurricane season shapes up will also be a major factor, he said.
"The critical thing here is, 'What is the perception of this hurricane season?' If the perception is that it is not so bad, I think there are going to be more people who are going to say, 'I really want to go and support New Orleans,' " Kay said. "I think that's worth holding out hope for. But there are no guarantees here. It's a tough situation to be in."
There also is a challenge in communicating to travelers that it's safe to visit New Orleans.
"We're getting the message out but it keeps getting drowned by news of National Guard arrivals, heinous murders, lack of hurricane planning and incomplete levee repairs," Valentino said. "Any time one of these stories surfaces, it demolishes any forward movement we've made."
What's more, the industry has to prepare to take a step back in time in August when the first anniversary of Katrina will no doubt recycle media images of a city under water, residents stranded and lawlessness.
August is going to a "very difficult time," said Sandy Shilstone, chief executive of the New Orleans Tourism Marketing Corp., a public-private agency financed through the city's general fund, proceeds from hotel and RTA taxes and Harrah's New Orleans Casino. "We'll have to relive a lot of negative images because it will be only natural for networks to do retrospectives."
The marketing corporation has made its own "anniversary video" of footage that includes the Convention Center and restaurant reopenings. Shilstone said the video will be made available to local media in August to report on the city's progress.
"We're hoping we can help the national media to provide a more balanced image," Shilstone said.
Still, there is little doubt that summer will leave small businesses vulnerable, particularly retailers on Magazine Street and in the French Quarter as well as bed-and-breakfast operations, Perry said.
"There will be some that will not be able to weather it," Perry said.
Already many of the small caterers, printers and tour companies that relied on tourism to stay in business have not reopened. Fifty-six of the 244 members of the New Orleans Multicultural Tourism Network have not returned, the network's president, Toni Rice, said. Telephone calls placed to several of the businesses listed as members of the network were answered with a disconnection message. The Tourism Network organizes small-group visits to the city, such as family reunions, none of which are scheduled for the summer.
"It's the businesses that rely on tourists that are hurting the most," said Laura Drumm, president of small business advocacy group Second Wind and owner of Tabasco Country Store in the Louis Armstrong International Airport, whose business is down about 60 percent.
"Everyone I know that has a business is worried," Drumm said. "My concern is how long these businesses can wait." Advertisement
Perry said those small businesses with the best chance of survival will be the ones that "conserve costs." Many small business owners are doing just that.
Drumm, for instance, has reopened only one of her shops, and her husband is working in it seven days a week.
Similarly, Linda Friedlander, who owns the Magazine Street antiques shop Objets Trouvés, has cut back to a four-day-a-week summer schedule.
"I'm trying to be fiscally responsible and cut some overhead and still find a way to be open," Friedlander said. "For me, it's a new step. But there are a lot more stores that will be doing it this year. I'm just trying to figure out a way to be here in October."
Robert Florence, owner of Historic New Orleans Tours Inc., echoes Friedlander's sense that summer is trouble but that a revival lies just over the horizon.
"I could be doing something else, if I didn't think things would come roaring back," Florence said. Indeed, large convention bookings this fall stand at about 84,000, about what they were before Katrina wiped out the 2005 season.
"The big thing is we have to get through is summer," Florence said. "I think if we have a hurricane, as long as it just knocks trees and power lines down, then we'll be all right."
Hotels and restaurants, including some of the largest in the city, are also bracing for a tough summer lull.
Valentino said his hotels will relax rates and policies associated with booking and cancellation in order to keep occupancy high. He used the same strategy last year.
"The storm has just exacerbated what was already a problem and made people even more wary about doing any advanced planning to New Orleans," Valentino said. "I think we're going to enjoy a decent volume of visitation but it will be at a very low daily rate."
At the Holiday Inn French Quarter, Gray said, guests will be confined to eight floors instead of the full 15. That will allow the hotel to cut back on costs.
Citywide, he said, now is the time for hotels to begin offering incentives such as breakfast and dinner.
"We've all anticipated that this day was coming, and each hotel is making necessary adjustments," Gray said. "Creating a more value-added feature is going to be the method we'll have to employ to get people in the city.
Ralph Brennan, who owns three New Orleans restaurants, said he is hoping to stimulate traffic by offering early-bird and nighttime specials.
"We had some (business) in June for the librarians," Brennan said. "And it's dropped back down already."
At least one positive to emerge from the slow season will be that staff-strapped businesses will be able to catch their breath.
"We're hoping as far as employees that restaurants can kind of catch up and not work people as hard," said Tom Weatherly, a spokesman for the Louisiana Restaurant Association.
The New Orleans Convention and Visitors Bureau, along with the New Orleans Tourism Marketing Corporation and the state office of tourism, are working on ways to cushion the impact of the summer slump.
The marketing corporation, for instance, has partnered with Travelocity, the Internet giant, to promote New Orleans to leisure travelers. The thinking is that the Internet advertising will appeal to travelers booking a trip on a whim. Most leisure visitors now book anywhere from two weeks to 10 days before their planned arrival date, Shilstone said. The Travelocity partnership is expected to drive business in the summer and early fall, she said. The city and state also are continuing television and print ad campaigns that urge visitors to "come fall in love all over again."
The problem is we will not have the marketing dollars to make much of an impact in the summer, Perry said.
The Louisiana Recovery Authority in April earmarked $30 million for tourism and convention marketing, but the money has not yet been delivered. Lt. Gov. Mitch Landrieu said the money is "on track" and will be distributed as soon as it is received.
"We would have liked to have had that in early April," Gray said. "That would have been the time to put on a nice healthy summer campaign."
Without those funds, the industry is relying on a public relations and communications campaign to generate publicity and get out the message that New Orleans is open and capable of handling tourists. One example is the industry's push to showcase last week's American Library Association conference.
"That was a game-time audition," Perry said. "Every person we get here is an ambassador."
Meanwhile, Perry and others will wade through the summer looking forward to fall, when several large conventions are scheduled, as is the Bayou Classic and the return of cruise ships.
"We're optimistic about the fall," Gray said. "We're going to have two slow months, but the fall will be better.
. . . . . . .
Jaquetta White can be reached at email@example.com or (504) 826-3494.