‘There’s a lot of pain out there’
The impact of coronavirus businesses in both tourism and the stock exchange and the global economy. Financial Stock market crisis. Global economy crash. Covid-19 financial outbreak.
But plans for a Nova Scotian travel industry recovery are already in the works
“Catastrophe” seems almost inadequate to describe it. Social distancing, large gatherings banned, airlines shut down, hotels shuttered, provincial borders monitored, the Canada/U.S. border closed, international travel at a standstill, and millions out of work counting pennies. Even personal travel is severely limited locally.
A few months ago, no one could have imagined it.
An unprecedented global growth pattern has been rudely and abruptly halted. The COVID-19 pandemic has clobbered the travel industry. In Nova Scotia alone, the industry currently sees about 2.4 million visitors each season. These visitors spend about $2.7 billion and support close to 40,000 jobs in around 6,500 businesses, mostly small and locally owned and operated. The industry’s high season usually starts in July.
There’s a great deal of panic, confusion, and nail biting out there. Businesses are scrambling to adjust and innovate, and there’s no shortage of speculation as to how much of the season, if any, can be salvaged. The answer lies in timing. When will the government lift the severe self-isolating measures? When can people congregate in large numbers again? When will the border re-open? When will airlines resume flying?
It’s important to understand that, according to provincial statistics, 50% of Nova Scotia’s tourism activity comes from within the province itself. This accounts for 38% of the province’s overall tourism revenues. Overall, about 70% originates from within Atlantic Canada. So, the border closure and curtailed airline links are less significant than many might presume.
The recovery will start locally and Nova Scotia is in a prime position to take early advantage of that reality. If the province effectively reopens by the end of July, how much recovery is possible?
It depends on the precise circumstances at the time, which industry, and how long it takes for consumer confidence to recover. Even if public health directives end and people are allowed to congregate in crowds, many might continue to distance.
Nova Scotia tourism department officials are convinced there is potential for local travel recovery in 2020. They’ve mapped out a recovery strategy that hinges on local support. It will heavily promote staycations with the themes “It’s time to rediscover Nova Scotia” and “Give Nova Scotians compelling reasons to start travelling within the province again, tap into Nova Scotians’ pride and passion for the province, and maximize visitation for 2020.” The campaign is designed to “create a sense of urgency to support local tourism operators.”
Recovery will be gradual. Even when broader travel restrictions are lifted, there’s the question of how long it will take for consumer confidence to return.
Darlene Grant Fiander, president of the Tourism Industry Association of Nova Scotia (TIANS), describes the current situation as “precarious.” Several retail businesses, restaurants, and accommodations have shut down indefinitely. Some of the larger hotel and motel companies remain open and are seeing some business (mainly from government and health care traffic) but only to the extent of about 10% occupancy.
Fiander says she’s in favour of the prompt formation and delivery of government support programs. Still, she says several involve simply kicking the cash deficiencies down the road which is only helpful short term. The banks, she says, have been disappointing, particularly with respect to credit card fees.
TIANS chair Judy Saunders says businesses must dramatically modify marketing to promote staycations. She says businesses will need to collaborate on innovative products. She predicts a slow recovery to the industry as consumers, many of whom are also hurt financially, will be nervous to travel, particularly on cruises and airplanes.
Halifax Chamber of Commerce president and CEO Patrick Sullivan, says of his roughly 1,700 members, about 80% have fewer than 20 staff. Some of the larger member companies have had massive layoffs. Sullivan says the government’s “impressively fast response” impressed him, but that commercial rent assistance remained an outstanding work in progress and smaller operations, where owner-operators take dividends instead of salary as a tax saving, need help.
While some restaurants are surviving by converting to curbside pickup and takeout, distancing requirements will reduce the number of available tables a when sit-down service resumes. The recovery, Sullivan says, will be slow and challenging. Warmer weather and pent up demand among consumers will help, but he says large gatherings will be forbidden for some time to come. Discover Halifax will also heavily market the buy-local ethic once those restrictions relax.
Gordon Stewart, executive director of the Restaurant Association of Nova Scotia, says his group works (mostly with the government) on behalf of 3,200+ restaurants. He says the sector is particularly vulnerable. It lost about $84 million in business in March compared to the previous year. In April, another $139 million. The projected loss for May is $145 million. As we enter what would have been the start of the tourism industry’s high season, those numbers will rise, compounding problem.
“There’s a lot of pain out there,” Stewart says. He adds most restaurateurs are running out of cash. Single owner-operators with the lowest overhead obligations are the least vulnerable.
About 300 local spots have managed to stay open, mostly for fast food takeout with a high dependence on loyal customers. Others have innovated by converting to takeout and curbside pickup. But operating with 20%–50% of normal business in a low-margin industry isn’t sustainable for long.
Stewart says he expects about 200 restaurants in Nova Scotia may not be able to re-open when the pandemic is over. He says both the federal and provincial governments receive “full marks.” It’s important that trained staff can survive on government assistance so they can return to work as soon as needed.
But simply deferring costs won’t help. Restaurants will face huge challenges when restrictions are slowly relaxed. Some sit-down operations are too small to permit distancing. Larger restaurants must operate with fewer, spaced out tables, and lower income. Stewart says it may take a full year to get close to what was normal.
Reopening is not just a matter of unlocking the door. Food spoilage has been an issue and replacing inventory requires money, Stewart says. Most wholesalers demand seven-day terms. “It’ll be a whole new playing field,” he says.
Halifax operators face the toughest situation. Large urban restaurants have more seats to fill while rural restaurants enjoy less competition and more repeat customers.
Marketer Doug Townsend and his wife, Chef Renée Lavalée, own and operate The Canteen in Dartmouth. They are among those who have shut down their business and converted to support community causes. In mid-March, they temporarily changed the name to The Canteen Community Kitchen. With a skeleton kitchen staff, they started producing around 400 meals a week in partnership with three non-profit organizations helping local families.
Labour is volunteer and funding from the community groups covers basic food costs. The program is expanding. “We had a pretty good run [with the restaurant and a couple of additional projects], so we’re [personally] not in bad shape,” he says. He and Lavalée work for free.
Their story is a bit of good news, but no small business can run that way indefinitely. Small business is the backbone of the Canadian economy. Yet small-business owners are vulnerable to economic variables, and that vulnerability includes their own personal income.
In an emotional sense, giving up a secure position, investing in a business, establishing it, nurturing it, and growing it is more of a passion than a job. For most small business entrepreneurs, the business is not your job—it’s your life.
Seeing factors beyond your control cause everything you’ve built and lived for melt before your eyes will erode morale, enthusiasm, financial resources, and the will to continue. Some may never recover.
This story was originally published in Halifax Magazine.