The 2019 TCBN Summer Preview: The biggest four issues that will dictate how this summer’s tourism season goes
Summer is upon us, and that means a busy time of festivals, tourist crowds and peak traffic for many local businesses. But what will summer 2019 bring that Traverse City hasn’t seen before, and how will this particular summer season affect the local business community? To answer these questions, the Traverse City Business News focused on five different categories, spanning everything from jobs and labor to new events to what the future of the local tourism scene might look like.
The Labor Situation
According to the Bureau of Labor Statistics, Grand Traverse County posted an unemployment rate of 4.5 percent in March of this year. The low jobless rate has some local businesses scrambling to fill positions ahead of the busy summer season.
The effects are being felt in virtually every industry. This spring was a parade of job fairs in northern Michigan, ranging from an industry-spanning mega-event in Gaylord (called “Northern Michigan’s Largest Hiring Event”) to internal job fairs at local businesses. On May 8, Cherry Republic held a summer hiring event at its downtown Traverse City store, seeking 30 new “retail ambassadors” and several store supervisors.
Local hotels are facing challenges, too. Certain Traverse City establishments, such as the Bayshore Resort and the Grand Traverse Resort and Spa, rely on the H-2B visa program to fill jobs in departments like housekeeping. The H-2B program allows businesses to hire foreign workers to perform non-agricultural work on a seasonal basis. But the Department of Homeland Security (DHS) received a record number of H-2B visa applications this year, reaching its limit of 33,000 visas for the summer season in record time.
“We applied for our H-2Bs the very first day, first hour, and were even approved through the first round of the process,” said Melissa Bonham, general manager for the Bayshore Resort. “But [DHS] just approved too many. When they started releasing all those visas, they ran out of their 33,000 cap before they could hit everyone they said yes to.”
Bonham notes that the Bayshore is willing and ready to hire locally, rather than relying on foreign labor programs like the H-2B. But filling seasonal jobs – especially in a low-unemployment job market – has become a major hurdle.
“The positions that we need to fill are pretty seasonal,” Bonham said. “It’s hard to hire someone who is here looking for a year-round job, and to say ‘Hey, come and work for us for four or five months!’ And then, come November or December, my staff basically cuts in half.”
The Big New Thing
Both of Traverse City’s usual summer tent poles – the National Cherry Festival and the Traverse City Film Festival – will of course be back in 2019. This summer, though, a third big event is on the schedule in the form of the IRONMAN 70.3 race. The triathlon is scheduled for August 25 and will host 2,500 competitors racing through a 1.2-mile swim, a 56-mile bike ride, and a 13.1-mile run.
According to Trevor Tkach, president of Traverse City Tourism (TCT), the decision to host an IRONMAN race in Traverse City (and to do so in August) was a very deliberate one. In recent years, Tkach says that TCT has observed a noticeable dip in local tourism after the film festival. Thanks to earlier start dates for schools and colleges downstate and in other parts of the country, everything from hotel occupancy to airport traffic to business at downtown restaurants was tapering off around August 20. Tkach and TCT wanted a way to “maintain business through the end of the season.” IRONMAN was the strategy to do so.
Tkach calls the triathlon a “targeted” event, and not just because its time frame should help liven up end-of-summer tourism in Traverse City. Demographically, he says the race will add a dynamic new element to Traverse City’s ever-growing status as a destination.
“These are affluent guests,” Tkach said. “The average household income for a competitor is $247,000 a year. They are highly educated. They are going to come in and stay for probably longer periods of time than a traditional in-state guest might come in for. They’re coming from farther, so they’re flying in. Clearly, that is an appealing audience for Grand Traverse County, for a lot of reasons. Even beyond tourism, when you think about bringing an affluent audience like this into Traverse City, they’re going to fall in love like everybody else. They’re going to look at this place and say ‘Wow, could I buy a second house here? Could I relocate my family here?’ Or, ‘Maybe my kids want to go to college here.’ Or, ‘Maybe I could move my business here, or start a business here.’ And without this event, they wouldn’t know this place existed.”
The Complicating Factor
If anything is going to throw a wrench into the works for Traverse City’s 2019 summer, it’s the Eighth Street reconstruction project. Initially, the city intended to hold off until after Cherry Festival to commence work on the road, which had fallen into disrepair. To avoid a late-fall completion date, the project had to start last month, which means that one of Traverse City’s key east-west throughways is out of commission for the peak season.
Russ Soyring, the planning director for the City of Traverse City, is optimistic about the closure and doesn’t think it will have much of an impact on the overall tenor of the season. Soyring believes that well-marked detours, the city’s “tight grid of streets,” and the fact that most out-of-towners “will have smart phones or navigation systems in their vehicles” will help avoid confusion or navigation problems that may arise because of the road closure. He even thinks that the closure could help reduce the number of vehicle trips happening in town this summer, a phenomenon called “traffic evaporation” that could help ease gridlock in general throughout the season.
Soyring does acknowledge one sizable concern caused by the construction, however.
“Businesses along Eighth Street will need to find creative ways to keep their customer base coming through their doors,” he said.
Indeed, businesses on Eighth Street between Woodmere and Boardman avenues will be rendered inaccessible by their main entrances until November. Most businesses can use nearby residential streets and alleys as detours. TC Top Comics owners Doug Mead and Mike Akerley say their business is still accessible via Station Street, off Railroad Avenue. In the early stages of the Eighth Street closure, TC Top Comics has had no issue drawing regulars to the store via the alternate route. However, Mead and Akerley do expect that they will lose some of the tourist traffic that typically makes summer their busy season. To counteract the likely lapse in business, the shop is ramping up its online presence and using Facebook Live to promote sales, events, and new products. However, Mead and Akerley will also be keeping their inventory “at a more manageable level,” in anticipation of a slower-than-usual summer season.
The Elephant in the Room
Over the past few years, a debate has raged locally about whether homeowners should be free to rent out their properties to guests. As Airbnb and other similar services have reshaped the way that many people travel and look for accommodations, Traverse City has been grappling with how to regulate these short-term rentals.
Previously, in the City of Traverse City, short-term rentals were limited by restrictive “tourist home” licenses. Regulations required tourist homes be at least 1,000 feet apart from one another, which meant only a small handful of homeowners in the city were legally permitted to rent out their houses in any capacity. After a long back-and-forth between pro-Airbnb homeowners and city commissioners, the City of Traverse City ditched the 1,000-foot-radius rule earlier this year. The rule change will mean that more city residents can rent out their homes this summer – though there are still limitations. For instance, city regulations only allow for “hosted stays,” which means that homeowners must be in town and present at their dwelling when guests are on the premises. Other townships throughout the area have less restrictive policies.
Even with the regulations, Airbnb traffic has grown dramatically in Grand Traverse County in recent years. According to stats released by Airbnb, the service tracked 53,200 guest stays in the area in 2018 alone, equating to $8 million in revenue. Those figures are up from roughly 15,000 guests and $2.6 million in revenue in 2016.
For TCT, Airbnb poses a unique conundrum. TCT is a nonprofit organization that is funded by a five percent room assessment paid by local hotels. TCT uses that money to promote Traverse City and to attract out-of-towners to the area. But TCT doesn’t collect an assessment from Airbnb, or from local homeowners who rent out their properties through the service. Tkach says that, as Airbnb guest stays and revenues continue to grow in the area, something may need to change.
“It feels like we’ve hit a tipping point, where Airbnb is becoming a pretty significant piece of business, and it somehow needs to be more regularly recognized,” Tkach said. “It needs to be acknowledged within the community that this is the new norm. People are relying on Traverse City Tourism to give them some idea of what the growth in Grand Traverse County looks like. But we’re only looking at our own numbers right now, and that’s not telling the whole story.”
From 2017 to 2018, TCT recorded a 2.4 percent increase in Grand Traverse County occupancy and a 3.68 percent increase in assessments collected from local hotels. Tkach estimates that, with Airbnb numbers figured in, those statistics would have jumped by three percentage points each. He’d like to see a shift in the future, where Airbnb or Airbnb hosts start chipping in by sharing occupancy data and paying some sort of assessment to TCT.
“Let’s make sure that everyone is doing their fair share and doing the right thing for the guests, so that we can continue to grow tourism in a healthy way in the Grand Traverse region, and in the state,” Tkach said.
Does Traverse City have a future that is less grounded in tourism?
It’s hard to picture at the start of another summer season – a time when so many of the conversations revolve around festivals, events, and out-of-town guests. It’s also hard to imagine given how much of a lifeblood tourism is for the local economy. According to
Tkach, one out of every six jobs in the area depends on tourism in some fashion.
Still, there is a small but notable backlash against tourism happening in Traverse City. Local businessman Casey Cowell, for instance, believes that the city is not equipped to handle most of the events that dominate the summer season. “When festivals take place that cause tens of thousands of people to descend on our community, all at once and for short periods of time, we’re not really well-equipped for that,” he said.
Cowell insists that he isn’t anti-tourism. Instead, his vision is for an economy driven by businesses that create value year-round, in the form of products, services, and ideas that can be sold elsewhere. In pursuit of this vision, he helped start 20Fathoms, the local startup incubator; and Boomerang Catapult, an investment group focused on building local enterprises. Those ventures aim to boost Traverse City’s business profile, so that more companies will see the area as an ideal spot to set up shop. For that to happen, Cowell believes it’s important to prioritize the health of the community for the people who live here, work here, and raise their families here. By constantly selling itself as a destination, Cowell fears that Traverse City might be diminishing its attractiveness as a place to put down roots.
So how can Traverse City establish that kind of local-first attitude without losing the significant number of jobs that depend on tourism? Cowell’s answer is a different kind of tourism.
“Between Interlochen Center for the Arts, Northwestern Michigan College, the Traverse Bay Area Intermediate School District, parts of Traverse City Area Public Schools, and the many of the other cultural institutions that we have here, it would be a natural for Traverse City to be a destination for learning. You could come – by yourself, or with your family, or with your coworkers or friends – and learn to do all kinds of things,” he said. “I think that’s a brand area we could stake out, because I don’t think anybody else is really doing it. And that’s an opportunity to smooth things out year-round and still fill hotel rooms.”
For his part, Tkach believes that there is a simpler solution to tourism fatigue: recognizing and appreciating the things that draw tourists to Traverse City in the first place.
“I can feel the pain,” Tkach said. “I live in Traverse City, within the city limits. I know what it feels like in the summer, with the traffic and the parking and all that. But it’s part of who we are here. And meanwhile, our guests are sitting on the beach, enjoying life and reveling in what we maybe start to take for granted as locals, and what we should maybe focus in on more in the summertime.”