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May 13, 2020 News » Cover Story

Lost tourism revenue could seriously wound the local economy 

MISSED CONNECTIONS

click to enlarge Garden of the Gods may be less crowded this summer. - VISIT COS
  • Visit COS
  • Garden of the Gods may be less crowded this summer.

It’s no longer a question of whether the coronavirus will trigger a recession. So far, peak unemployment claims during the Great Recession a decade ago pale in comparison to the damage wreaked by this pandemic.

What many economists and public policy experts are now trying to predict is how long the recession will last. No matter how you spin it, the country and world will feel the economic effects of the coronavirus pandemic long after COVID-19 cases begin to recede.

And much of that pain will be felt by the tourism sector.

“A $400 billion decline in travel spending in the US this year will translate into a total economic loss of $910 billion in economic output,” Oxford Economics, a global forecasting company, predicted in late March. “This is more than seven times the impact of 9/11 on travel sector revenue.”

Lost earnings from hotels, airlines, restaurants and recreation will affect every level of the global economy, but to what extent depends on a set of extremely volatile factors. Federal, state and municipal governments have different ideas about when it’s safe to lift stay-at-home orders, and there’s no telling when the general population will feel safe enough to travel again.

In Colorado Springs — which, ironically, made The New York Times’ “52 Places to Go in 2020” list this January — tourism represents a growing piece of the economic pie.

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And while some local officials remain hopeful that this summer and fall will see a resurgence of visitors, the numbers so far don’t look great.

For the week of April 18, Oxford Economics reported that travel spending in Colorado was down 89 percent compared with the same week in 2019, “the lowest dip since the numbers began to freefall in early March,” Colorado Tourism Office spokesperson Abby Leeper says via email.

In other words, tourists spent about one-tenth as much that week as they did last year, incurring a loss of $387 million in revenue for the industry.

In the time of COVID-19, “there are too many variables to predict what will happen over the next few months,” Leeper writes. However, she adds, “There is huge pent-up demand for travel. Many US travelers are ready to go once they believe it is safe.”

With that philosophy in mind, Visit Colorado Springs (the city’s tourism office), is preparing a phased plan in hopes of eventually drawing local, in-state and finally out-of-state visitors to enjoy what the area has to offer.

The phases — “wait,” “ready,” “set” and “go” — were developed by the state tourism office.

There’s no set timeline for each phase; they will change based on the loosening of social distancing requirements, Visit COS spokesperson Alexea Veneracion explains.

Colorado Springs is currently in the “wait” phase, where it will remain until safer-at-home restrictions are lifted, which could be as soon as May 26.

“We’re still not encouraging people to be out and traveling,” Veneracion says, “but we’re focusing on the support of local businesses.” This could include ordering takeout or attending a virtual First Friday art show.

When locals no longer are under orders to practice strict social distancing and meet in groups of fewer than 10 people (likely when the coronavirus’ spread has substantially slowed), Visit COS will transition to the “ready” phase. At this point, Visit COS will shift its marketing strategy in hopes of encouraging local, regional and in-state travelers to explore the area. 

In the “set” phase — when “people are proactively seeking an escape and booking travel again” — the tourism office will focus its marketing on attracting in-state travelers and out-of-state road trippers. (The state tourism office predicts people will feel most comfortable traveling in their own vehicles.)

The “go” phase means a return to mostly normal attitudes about travel, and Visit COS will expand its messaging to domestic tourists. While the governor will decide when the safer-at-home phase ends, El Paso County Public Health will provide guidelines and technical support for businesses as the region reopens to visitors, says Deputy Medical Director Dr. Leon Kelly.

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“Public Health is committed to the success of our businesses and tourism industry as it is a major driver of our local economy,” Kelly says in an emailed statement. “Visitors must be assured that our community is a safe and healthy place to spend their time and dollars.”

Throughout all four of the phases, the tourism office is also sharing messaging to plant the seed with potential future travelers to visit Colorado Springs — posting scenic photos on social media to show off the region’s beauty, for example, without advertising it as a destination to visit right now.

Though the growth rate of new cases in El Paso County has slowed, no one knows when restrictions will lift. But some think the Pikes Peak region can’t afford to wait when it comes to tourism.

In 2018, visitors spent $2.4 billion (including food, lodging, entertainment and more) in El Paso, Teller and Fremont counties. That’s according to numbers shared by Visit COS, which come from a report prepared for the tourism office by the consulting firm Longwoods International. The report also found that the tourism industry employs 20,000 people in the Pikes Peak region. 

COVID-19 cost the area a good chunk of those jobs, though — at least temporarily. According to Worker Readjustment and Retraining Notification Act (WARN) notices posted by the Colorado Department of Labor and Employment, The Broadmoor hotel in Colorado Springs placed 1,411 people on unpaid leave March 29. 

The Broadmoor preceded Great Wolf Lodge, which furloughed 446 workers April 2, and followed Marriott Colorado Springs, which furloughed 101 on March 16.

The Marriott has remained open throughout the pandemic, and the other two hotels plan to reopen eventually, but it remains to be seen whether all the employees will be brought back.Besides the obvious loss of income for thousands of workers in Colorado Springs, hotel closings have a ripple effect that extends to the entire city: lost revenue from the Lodgers and Automobile Rental Tax (LART) fund.

Revenue from the city’s 2 percent tax on lodging, such as hotel reservations, and 1 percent tax on car rentals, is deposited in the fund.

The city’s 2020 budget approved by City Council last year allocated $8.19 million from LART, or about 2.4 percent of the entire city budget, to tourism promotion, visitor attractions and economic development.

“Until this crisis occurred, we had no anticipation that there would be anything that would reduce our revenue,” says Councilor Jill Gaebler, who as a member of the LART Advisory Board helps make recommendations on where to allocate funds. 

“In fact, based on the number of hotels being built in downtown … we had nothing but positive expectations for our LART funding for 2020,” she says.

Indeed, LART revenues increased 5.1 percent in 2019, and 7.5 percent the previous year, reflecting the rise in tourism spending.

The budget projected LART would take in $8.75 million from spending on hotels and automobile rentals in 2020, and that the fund would contain about $1.59 million to start 2021.

Unfortunately, that doesn’t look to be likely any longer.

As of early May, several events that had been selected to receive LART funding had been forced to cancel due to COVID-19, including the MeadowGrass Music Festival and Old Colorado City’s Territory Days. 

click to enlarge Tourism employed 20,000 in the region in 2018. - VISTI COS
  • Visti COS
  • Tourism employed 20,000 in the region in 2018.

“The applications that come in [for LART funds] say, ‘We’re going to use it for this event on this date,’” explains Laurel Prud’homme, chair of the LART Advisory Board. “If that event on that date doesn’t happen, the money doesn’t go to them.”

Among the larger LART allocations that were originally approved for 2020:

  • $134,000 to Hot Apple Productions LLC for the Labor Day Lift Off balloon festival (still scheduled for September);
  • $134,000 to the Pikes Peak Auto Hill Climb Educational Museum Inc. for the Pikes Peak International Hill Climb (postponed until Aug. 30);
  • $155,000 to the Colorado Springs Philharmonic Orchestra for Summer Symphony (normally part of the Fourth of July celebration at Memorial Park — which is still scheduled);
  • $5.2 million total for four contractual agreements with Visit COS, Cultural Office of the Pikes Peak Region, Colorado Springs Chamber & EDC, and Colorado Springs Sports Corporation;
  • an additional $400,000 to the Chamber & EDC for airport advertising;
  • $110,000 to the Organization of Westside Neighbors on behalf of the Old Colorado City Partnership, for lighting and traffic posts on Colbrunn Court;
  • $500,000 to city Parks, Recreation and Cultural Services to build a new restroom facility at Garden of the Gods Park;
  • $150,000 to city Parks for reconstruction of the Silver Lake Trail and Overlook above Helen Hunt Falls;
  • $1 million to the U.S. Air Force Academy Business Improvement District for the Air Force Academy 

Visitors Center and associated infrastructure; and dozens of other events, organizations and capital improvement projects that received smaller funding amounts.

The city is still determining where to cut funds for LART, Prud’homme says, but it’s likely that the four contractual agreements will see the biggest cuts. More event cancellations could also free up money in the fund.

“Truthfully, it’s going to be extremely challenging for the event organizers,” Prud’homme says. “...They don’t know if two weeks from now or two months from now it is going to be a different directive that is given at the state or local level that would impact whether or not they’re able to hold their event.”

Events that have already spent some money before canceling could potentially still receive some LART funds, she adds.Former City Councilor Jan Martin, who served on the LART Advisory Board during the 2009 recession, worries about lost funding for parks.

click to enlarge Cheyenne Mountain Zoo offers virtual experiences. - FAITH MILLER
  • Faith Miller
  • Cheyenne Mountain Zoo offers virtual experiences.

“When we had our downturn, Parks was hit so significantly, and even today, it’s still not back to where they were in 2009,” Martin says. “And they’ve had to fight for everything they could get in those last 10 years.”

Martin, who’s now president of the Garden of the Gods Foundation, also mourns lost revenue from the park’s Visitor and Nature Center. Normally, revenue from the center — which is owned by the foundation — flows back into park improvements, including about $2 million over the past two years, she says. But it’s been closed since mid-March. 

“We’re heading into our busiest time of year, and we’ll have no revenue whatsoever,” Martin says.

Though the visitor center is closed, Garden of the Gods Park itself — one of the region’s biggest attractions — remains open to hikers and joggers, and has reopened for horseback riding and Segway tours.

That’s good for the region’s economy, Gaebler says.

“Fortunately, we haven’t closed any of our parks, which I think is huge,” she says. “We’re seeing a lot of park closures around the country.”

Though there’s less traffic in Garden of the Gods than usual, about half of the vehicles parked there have had out-of-state license plates, says Karen Palus, director of Parks, Recreation and Cultural Services. 

There’s not much the city can do to try to keep out-of-state visitors away, Palus says.

“We just really encourage folks to take that personal responsibility,” she says. That includes wearing masks, recreating with household members only, and maintaining a social distance of 6 feet from other park users.

The city is also exploring whether to use some of its federal coronavirus relief funding to hire park staff who could help “monitor and manage the crowds” and improve sanitation, she adds.

Two large Parks projects set to receive LART funding — a new restroom in the Garden, and trail improvements in North Cheyenne Cañon — have been put on hold due to COVID-19 budget cuts.

The Parks department also has about a dozen full-time job openings, totaling $735,000, that were frozen due to coronavirus budget cuts, Palus says. But the department has found ways to make do with limited resources.

“We don’t have any events or sports activities going on at many of our locations, so the staff that would normally be … doing all the field prep work that’s required, are doing other projects like median restorations and improving the fields themselves, and doing a lot of the kind of repair and renovations that we normally wouldn’t get to,” she says.

At the Colorado Springs Airport, data on passenger enplanements (the number of people who boarded planes) isn’t yet available for the month of April, when the Colorado Tourism Office says the rest of the travel industry was hit the hardest.

However, the numbers from March show a 40.7 percent decrease in enplanements compared with March 2019, according to a statement from the airport. 

And according to initial estimates, the airport saw about 90 to 95 percent fewer people going through security checkpoints in April, and routes were reduced by half for April and May, says spokesperson Aidan Ryan.

Construction on Peak Innovation Park, a 900-acre development planned around the airport, has “remained steady and focused,” according to a recent statement. That includes progress on the massive Amazon fulfillment center and an airtanker base for the U.S. Forest Service.

The airport is set to receive more than $24.3 million from a federal coronavirus relief package passed by Congress. 

“We are starting to see an uptick [in traffic], and we’re very certain that we’ll recover as the country recovers,” Ryan says.

“It will be slow, and it will take the entire community — the business community, the leisure travelers — to all come together and support their local airport.”

click to enlarge America's Mountain - VISIT COS
  • Visit COS
  • America's Mountain

Despite the uncertain outlook, Colorado Springs’ core tourism attractions are still planning for summer visitors.

The Pikes Peak Highway is open to drivers, and Pikes Peak – America’s Mountain is offering a 20 percent discount on one-day passes purchased online with the code “May20,” as an effort to limit interaction between gateway staff and visitors.

Parks is still finalizing a plan for shuttles up to the summit, which normally start around Memorial Day, Palus says. Later in the summer, driving up to the peak is usually prohibited to minimize traffic.

“We were having to work out some of the parameters around how families can travel together in close quarters and how to protect those high-touch surfaces,” she explains.

Guests should keep in mind that the Pikes Peak Summit House, Glen Cove and all picnic areas are closed through June 1, and no restrooms are open at the top of the mountain.

The Parks department and the Colorado Springs Pioneers Museum are still set to receive a combined total of $125,000 in LART funding this year, which will pay for tree-planting and exhibits to prepare for celebrating the city’s 150th birthday in 2021.

Meanwhile, the Olympic & Paralympic Museum and Hall of Fame delayed its grand opening planned for May, but hopes to open its doors sometime in mid-summer, says Peter Maiurro, chief communications and business affairs operator for the museum.

“Our executive leadership team and our board of directors are talking frequently and monitoring all of the COVID-19 recommendations from county health officials, state officials,” Maiurro says. “... We have not firmly decided on a date yet.”

The cancellation of the Tokyo Summer Olympics won’t affect plans for exhibit design or content, though it did affect some proposed events, Maiurro says. 

The museum also has an advantage with implementing social distancing.

“Our plan all along has been that we would have ... timed ticketing, meaning that there would be a set number of visitors per time spot,” Maiurro says. That plan was originally put into place to maximize guest interaction with the museum’s technology.

Camping at nearby state and national parks — another big attraction for visitors to the region — is prohibited for the foreseeable future. As for city parks, though, Palus sees a silver lining for people who’ve been mostly confined for their neighborhoods for the past several weeks..

“I’m getting to hear some of the really positive stories about people exploring new locations, exploring new trails, getting to different parks within their neighborhood,” she says.

And when restrictions lift, she adds, “I guess I’m just cautiously optimistic that folks are still going to come and travel to Colorado Springs.” 

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