Loaded Questions: Local leaders mull over summer 2020 scenarios
Last year at this time, the big issues facing Traverse City as the summer season approached were low unemployment rates and the resulting labor shortage at local hotels, the possible disruptions posed by road construction on Eighth Street, the rise of Airbnb in the region, and the arrival of Ironman.
Today, unemployment rates across the country are nearing record highs, businesses are facing existential threats much greater than any road construction project, Airbnb rentals are temporarily banned, and Ironman’s return to Traverse City is in question.
COVID-19 has left earth-shaking implications in its wake, creating perhaps the most uncertain summer in Traverse City’s history. In light of that uncertainty, following are four burning questions facing the region as summer 2020 approaches.
1. What does local tourism look like without festivals?
A summer town known for its warm-weather tourism and summertime festivals is staring down the barrel of something unprecedented: a summer without festivals. Traverse City’s two tentpole summer events – the National Cherry Festival and the Traverse City Film Festival – are both off the schedule for 2020. Other popular summer traditions – from the Interlochen Arts Festival to the Pride Week festivities hosted by Up North Pride – are also cancelled for this summer. Even the Fourth of July fireworks are off.
The cancellations will lead to much less local tourist traffic over the next few months, something that – while it’s intended to slow or prevent the spread of the novel coronavirus – could also mean a lean year for many local businesses.
“Who even knows what a summer without those festivals looks like?” said Trevor Tkach, president and CEO of Traverse City Tourism. “The Cherry Festival alone has economic activity of more than $25 million. You can’t replace that.”
Summer 2020 won’t be a total loss, Tkach said.
“We’ll have some tourist business, definitely. If people are allowed to travel, there’s going to be some tourism business here,” he said. “But it’ll be a much different type of business than what we’re used to.”
Some will feel the pain more than others, said Tkach.
“The types of vendors that benefit most greatly during Cherry Festival season might not benefit the same way,” he said. “If you don’t have a Cherry Farm Market in the Open Space park and you don’t have some of those main food vendors set up – if you don’t have all that built – you’re not going to have that type of commerce.
Will money still come north?
“Probably, to some extent,” said Tkach. “But it won’t be at the same level and I don’t know where it’s going to get spent.”
The way Tkach talks about travel in the wake of COVID-19 is like a professor talking through a math problem. He starts by cutting the market by 35% – a conservative estimate, he says, of the contingent of would-be travelers who are likely to forego travel until there is a vaccine.
The next cut is most of the population that falls outside of a reasonable driving radius. An April survey by the International Air Transport Association (IATA) indicated that only 14% of travelers would be willing to fly immediately, while just 40% would consider getting on a plane in the six months after COVID-19 restrictions start to lift. From there, it’s about determining which close-by destinations might appeal to travelers.
On that front, Tkach says there’s good news for Traverse City – at least in regard to its status as a travel destination for Midwesterners.
“What some of the national indicators are pointing toward is that, when people do start to travel again, they’re going to want to have a lot of space,” Tkach explained. “They’re going to want to be out in nature. They’re not going to want to go to big metros. They’re going to want to be in more secluded destinations.”
Traverse City’s location is “appealing,” he said.
“I think we have an opportunity to capitalize on what will likely be a smaller travel market this year, because we are a more appealing destination, we’ve got the ability to tell a story probably better than our competition, and our hotels are ready to get back to business,” he said.
Cherry Capital Airport certainly isn’t expecting a big summer. In April, the airport’s arrivals were down 95% compared to the same time last year.
Kevin Klein, Cherry Capital’s executive director, projects that the airport will see flight loads of about 30-40% capacity by the late summer, compared to 85-92% in a normal summer. Klein doesn’t anticipate a full return to the airport’s previous traffic levels until early 2022.
2. What can we expect from the downtown reboot?
In an average summer, downtown Traverse City is intrinsically tied to the area’s status as a bustling tourist destination. Even without festival traffic to plan for, the Downtown Development Authority (DDA) is working to make sure that downtown remains a place where people feel safe spending both time and money.
The DDA has pitched plans to close two blocks of Front Street this summer, from Park to Union streets. That strategy would allow more space for pedestrians to social distance while also providing opportunities for businesses to set up on-street retail and dining. It’s a bold approach, but one that DDA CEO Jean Derenzy thinks is necessary to get customers back downtown to support the businesses there.
“We’re looking outside of the box,” Derenzy said. “Space is going to be important this summer, so how do we get that opened up?”
Closing Front Street in a few sections is one of the ways the DDA is thinking “creatively,” she said.
“Nothing is off the table,” she said. “We just know that, to be able to make sure that people are comfortable coming downtown to help the businesses, we’re going to have to do something different.”
Even though much of downtown Traverse City has been closed since March, the local community has taken significant steps to support the businesses there. Adrienne Brunette of Mama Lu’s says the restaurant was serving 2,000 customers per week after it pivoted to takeout during the first month of quarantine.
The heavy traffic ultimately led the restaurant to close temporarily, in order to encourage social distancing and help flatten the curve. When Mama Lu’s reopened on Cinco de Mayo, retooling its restaurant setting as a “specialty grocery store mixed with a dash of bodega,” the business saw the biggest day of sales in its entire four-year history.
The DDA also saw success this spring with the Buy Local, Give Local campaign, which aimed to raise $10,000 for downtown businesses. The idea of the campaign was to use the money to buy food, merchandise, or gift cards from struggling downtown businesses and donate those items to folks in need around the community. The DDA ultimately raised more than $61,000, which has helped support more than 120 businesses.
Derenzy sees these significant displays of community support as proof that the downtown area will be able to bounce back, no matter how challenging the process proves to be.
“The strength of this community is our continued support of one another,” Derenzy said. “One of the things I really cherish about downtown is that we always work together. Downtown has been rocked and our community has been rocked by this pandemic. But we will restore the heart of our community, in our downtown, by doing this together. That’s something I would call special.”
3. How will the economic downturn hit Traverse City?
More than 1.3 million Michiganders have filed for unemployment benefits since the middle of March. At this point, roughly a quarter of the state’s labor force is unemployed. According to WalletHub, Michigan has seen a nearly 3,700% increase in unemployment claims since the start of the COVID-19 crisis – the 10th highest bump in the country.
According to a survey conducted by the Small Business Association of Michigan, 60% of Michigan businesses have laid off at least one employee, and less than 30% feel “positive” they will survive the pandemic and the economic blows it has dealt.
These figures and others paint a sobering picture of Michigan’s future – not just for the coming summer, but potentially for years to come. The good news is that Traverse City could prove to be more insulated against the economic consequences of COVID-19 than many other parts of the state.
In April, Bridge Magazine took a county-by-county look at how different parts of the state had been hit by unemployment since the coronavirus crisis struck. Grand Traverse County’s April jobless rate was estimated at just under 20% – a marked increase from the 3.5% unemployment rate the area had enjoyed in February, but much lower than most other parts of the state. Three counties, for instance – Lapeer, St. Clair and Cheboygan counties – tracked April jobless rates above 30%. The magazine concluded that “regions with an educated workforce and diversified economy have a smaller percentage of workers affected by unemployment than rural areas and manufacturing centers, based on an initial county-by-county look at coronavirus-related jobless claims.”
Despite these promising findings, only summer will tell the full story of Traverse City’s economic resilience. Area hospitality and tourism businesses have already been hit hard by COVID-19. Tkach notes that larger properties such as Grand Traverse Resort and Spa have been particularly impacted, due mostly to lost conference and event revenue. However, since most hospitality businesses make the majority of their revenue in the summer, Grand Traverse County and surrounding areas may not feel the full blow of the pandemic until 2020’s tourism season has elapsed.
“I think we’re going to see a lot of businesses go out of business,” Tkach said. “Hotels are going to have a really tough time. Most of them have to make their money in the summer to survive the winter, and if they don’t make any money this summer, I think a lot of businesses are going to struggle to get through the winter months.”
Warren Call, president and CEO of Traverse Connect, says his organization will do what it can to support hospitality and tourism-dependent businesses through this difficult time. However, he also sees COVID-19 as a wake-up call for the area to continue diversifying the local economy.
“This crisis is a perfect example of how, when the tourism industry has a cold, our area has the flu,” Call explained. “We need to be broadening town attraction and business development to help diversify and build our economy in new areas, such as technology and the traded industries.”
For his part, Call thinks COVID-19 could actually help bring new businesses and professionals to the area, if only because it’s shown that remote work and telecommuting are a feasible option for most industries.
“The world right now is going through a huge experiment in remote work,” Call said. “What you’re going to find is companies that didn’t embrace it in the past are now forced to, and they’re going to see that it’s not so bad.”
Call says the opportunity is “huge” for the Grand Traverse region.
“Think about all the people in in big cities right now that have some affinity for northern Michigan. Some of those people are going to be asking, ‘How can I start a new business in northern Michigan?’ or ‘How can I move my current job in a remote work capacity to northern Michigan?'” he said.
Call says by embracing remote work, diversifying the economy, and helping hospitality and tourism get back on their feet, Traverse City has an “opportunity to accelerate out of this crisis and maybe be ahead of the game compared to other regions of the country.”
“I’m cautiously optimistic our area can demonstrate a quicker, more robust, and more broad-based economic recovery, because we’re in a good spot and we’re poised to tell a good story,” he said.
4. What about the ‘question mark’ events?
Cherry Festival and Film Festival may be the two biggest tourist draws of the summer for Traverse City, but they aren’t the only ones. At least two major events for the area – Traverse City Horse Shows and Ironman – are still tentatively on the schedule for the coming summer. If these events go ahead, they could provide an influx of tourism dollars to help area businesses get through a lean year. But can they be held safely?
The question of safety is one that organizers for both events are taking very seriously. Traverse City Horse Shows – which consists of both the Traverse City Spring Horse Show and the Great Lakes Equestrian Festival – has postponed its first event (originally scheduled for June 3-7) and is now aiming to begin its season on June 11.
Managing Partner Matt Morrissey says tweaking the schedule is complex – given that Traverse City Horse Shows is planning on 11 weeks of competition this year – but that safety of staff, participants, and the local community is the top priority. Horse Shows is monitoring the COVID-19 situation and working with local and state authorities to determine whether events will be legally permitted to go ahead this summer.
Previously, Traverse City Horse Shows had announced that the general public would not be permitted to spectate at events through at least the end of July. Now, Morrissey says the national and international governing bodies for equestrian sport have instituted new safety protocols – one of which bars all spectators at events for the time being. As a result, there will be no audience members at Flintfields Horse Park this summer for any Traverse City Horse Shows events, even if the competitions move ahead as planned.
In addition, the organization is taking significant steps to make the events safer for staff and competitors. Morrissey says Horse Shows has hired several new personnel, including a safety director and eight staff members whose jobs will be dedicated exclusively to cleaning and sanitizing. The organization will also be contracting local fire departments and EMTs to take the temperatures of anyone entering the park, installing new automatic sanitizer dispensers, trading out Porta-Johns for easier-to-clean bathroom trailers, and instituting a long list of new requirements that all staff and participants must follow.
“It’s going to be a $500,000 swing, at minimum, between lost revenues and increased expenses,” Morrissey said, before adding that such an impact would be minuscule compared to what the equine industry is facing at large.
From riders to horse trainers to equine veterinarians, Morrissey says that most of the equine industry has been either out of work or losing money throughout the shutdown. That fact has generated extra attention and interest for any horse shows on the schedule that look like they might still take place in 2020 – Traverse City Horse Shows included.
“Everyone is ready to get back to work, which is why we really are committed to trying to do all 11 events if it’s safe for the local community and safe for the staff and participants,” Morrissey said. “We’re not cashing checks or taking credit cards yet, but we are taking reservations, and our reservations are on par if not better than last year. If we’re able to go ahead, we anticipate having to turn people away.”
The Ironman race, scheduled for August 30, is also in limbo. Neither Ironman nor Traverse City Tourism, which pays to bring the event to northern Michigan, has yet cancelled or postponed the triathlon race. Tkach says he’s working closely with officials to “be prepared either way,” and predicts that Ironman will make the final decision about two months ahead of race day.
“The nice thing about working with the Ironman organization is that they’ve got races all across the globe, every weekend,” Tkach told the TCBN. “So, in real time, we’re seeing how destinations are responding and how Ironman is responding.”
A representative from the World Health Organization is assisting the organization with safety logistics, said Tkach.
“You couldn’t ask for better advice and we’re very lucky to have that level of expertise in our own hometown right now,” he said. “I’m confident that, if we can have Ironman this year, it will be a very well-thought-out and well-planned event that doesn’t put anybody’s safety in jeopardy.”