National GDP for the United States was announced for Q3 today. It was anemic. Sitting at only 2%, Barrons’ headline for the day day read “Today’s GDP Report Was Even Worse Than Expected“. While consumers are stacked with cash, they’re finding it more and more difficult to spend that money, both because of lack of supplies and increasing inflation. Just as the economic news is rough for other industries, the tourism and entertainment industries are not spared.
“In tourist-dependent Las Vegas, visitor traffic dropped 9.2% between July and August and another 2.1% in September.” — Scott Horsley
Meanwhile the Consumer Confidence Index has been hammered in the past three months. While headlines a few days ago were glowing about the CCI having went upwards in October, a quick glance shows the increase was essentially stagnation. Consumers are more concerned about the market today than they have been since 2017 (outside of 2020 when consumers were worried the entire market might collapse).
While not all is doom and gloom, there are significant headwinds for the tourism and entertainment industries going into 2022. Take, for example, the story of a movie theater in Missouri that cannot reopen because they can’t get a new projector. The cause? Supply chain issues mean their broken equipment can’t be replaced until at least December.
“We placed the order that day when we called. They said, ‘okay, we should expect that in a couple weeks,’ a couple weeks rolls around, still didn’t get anything, I called back and they said, ‘we probably won’t be able to get it until October first.’ October first rolled around, still didn’t have it,.” — Derek Boxdorfer, Theater Owner
“But how can supply chain issues hurt hotels and tourist destinations?” you might ask. And while hotel rooms will likely be available, it’s the things to do around the hotels that seem keyed up for difficulty. Restaurants, in particular, and especially local restaurants not part of larger chains, are having difficulty getting the food supplies they need to keep consumers happy. This is resulting in smaller restaurants having to change menus, sometimes losing the items that they are known for. When you see signs at major fast food chains declaring they might not have some supplies, just think about how much harder it must be for local mom and pop restaurants. They’re sometimes overlooked, but they’re also often the flagship eateries in towns dependent on tourism. After all, who wants to go on vacation just to eat at a chain you have two blocks from home?
“Onion rings. Cheese sticks. There’s stuff I just can’t get. If I order it today, it might be here next week or it might be in two weeks.” — Sereta Stephens, Owner Tackle Box 2 Restaurant
One place that is seeing an unexpected boom in tourism traffic? Savannah, Georgia might not seem like a place that would suddenly get more visitors. Except apparently people are flocking to Savannah to see the massive increase in cargo ships delivering shipments. As companies seek ports other than in Los Angeles or Long Beach, places like Savannah and Jacksonville are experiencing sea traffic like never before. Apparently it’s enough to draw onlookers to a city more well-known for its Forrest Gump bench than cargo ships.
“We’re seeing visitation numbers grow with people that are interested in seeing, sort of, the parade of ships that are coming in and out of town,.” — Joseph Marellini, President “See Savannah”
NEW: Savannah, the country's 4th-largest port, is dealing with packed shipping lanes due to supply-chain issues.
But the president of @VisitSavannah told me he believes the backlog of ships is actually drawing in fascinated tourists to the coastal city.https://t.co/vreTKiGakz
— Jake Epstein (@byjepstein) October 20, 2021
The result of all these concerns is that tourism and entertainment industries have more uncertainty than they would like to have at this stage in the pandemic response. In 2020, it was a given that companies would struggle with an unknown future. Now, they’re ready to have understandable paths forward. Unfortunately, that has not yet materialized. It’s even to the point that Coca-Cola is predicting sporadic shortages in their products. One can imagine that if the largest soda company in the world expects shortages, there are likely to be far more problems for those who serve food, drink and fun. But for a tourism industry that has already survived a virus that all but shut down travel, perhaps nothing will be able to keep them down.
While the short term may be very bumpy in the tourism economy, the larger future is still very bright. Most experts agree that supply chain issues should clear up by summer 2022, just in time for the summer vacations. And by that time, hopefully the delta variant, supply restrictions, and inflation will be less of a concern. If not, we might see more companies go under beyond what we saw during the pandemic. And that would be good for no one.
