Wake tourism projected to lose at least $145 million due to coronavirus, study says
In October 2019, Hisine McNeill opened Alpha Dawgs, a hot dog restaurant in southeast Raleigh.
McNeill, 44, had plans to serve hot dogs at N.C. State University basketball games and the North Carolina state fair, but COVID-19 changed those plans.
Now, over eight months into the pandemic, McNeill said his business isn’t operating on a profit. He’s been using his own money to keep the restaurant afloat.
“I’m not making no money. I’m just keeping the business open,” he said. “I don’t want my business to fail.”
Wake County’s restaurants and tourism industry have taken a big hit this year, according to a recent report from Visit Raleigh, which promotes tourism.
Visit Raleigh estimates that Wake County businesses will lose more than $145 million due to nearly 300 canceled meetings, conventions and sports events.
Wake County typically has around 18 million visitors a year, according to Visit Raleigh. Those visitors spend more than $2.9 billion, generating more than $284 million in state and local sales tax revenue.
From the canceled events alone, Visit Raleigh projects that the county will lose almost 370,000 of those tourists.
The $145 million figure is 5% of the total spent by tourists in a typical year, but Jessica Holt, Visit Raleigh’s public relations manager, said that this is only the impact from canceled events.
She said that the pandemic’s total monetary effect on businesses is likely much larger and that the $145 million serves as the minimum impact measured from the canceled events.
The Visit Raleigh report also measured decreased tax collections from specific industries within Wake County.
This year, sales tax collections from restaurants alone in the county are down $6 million from 2019, a 25% decrease, according to Visit Raleigh’s study.
‘Pushed to the side’
The tourism industry employs more than 28,000 people locally, supporting a collective payroll of $836 million, according to Visit Raleigh.
Greg Hatem, 60, is part owner of The Pit, a barbecue restaurant, and The Raleigh Times, a bar in downtown Raleigh, among other businesses. He said, like others, he initially had to furlough employees to keep his restaurants in operation.
“Restaurants are on a tight margin. And they can only go so long in the red before it’s just no longer viable,” Hatem said in an interview. “So many of our fellow coworkers and people in our community work in the service industry. It’s hard. It affects a lot of people,”
Hatem said relief for businesses has been marginal and restaurants need more stimulus to support service workers.
“When we don’t support the businesses that hire them, it just becomes bad for the entire community, and that’s what we’re seeing now,” he said.
Earlier in the pandemic, Congress passed the CARES Act, which included the Paycheck Protection Program, or PPP. The program operates through banks by loaning money to businesses at a reduced interest rate.
If certain criteria are met, the loans are forgiven, according to the Small Business Administration.
But Hatem and McNeill said the application process wasn’t streamlined enough.
Hatem said 13 of his businesses qualified for PPP loans, but larger banks wouldn’t participate with the program, forcing Hatem’s company to rely on his relationships with smaller regional banks.
“It made it very stressful and very inefficient,” Hatem said.
McNeill struggled for PPP loans as well. He said he applied for over 10 loans, and was only accepted for one. He didn’t receive funds from that until August, months into the pandemic.
“Small business is really getting a slap in the face,” McNeill said. “We are the backbone of the economy, and we’re getting pushed to the side.”
Earlier this month, Gov. Roy Cooper announced the Mortgage, Utility and Rent Relief program, or MURR, the N&O reported.
On Nov. 12 though, the state Department of Commerce announced that it’s no longer accepting applications for MURR due to depleted funds.
The MURR program used CARES Act funding to provide qualifying restaurants up to $20,000 in rent and mortgage interest relief.
Restaurants that received funds through PPP loans did not qualify.
Disproportionate effect on Black-owned businesses
McNeill, who is Black, said minority-owned businesses like his have struggled more than others during the pandemic.
“The average minority business owner doesn’t come in with substantial amounts of funds, like from banks or private investors,” he said. “Most minority business owners start with money that they saved up.”
McNeill said this puts minority-owned businesses at a disadvantage compared to white-owned businesses, as they have the resources to withstand economic downturns, he said.
Nationwide, 41% of Black-owned businesses have been forced to close since the start of the pandemic. For white-owned businesses that rate is 17%, according to a study from Stanford University.
The Greater Durham Black Chamber of Commerce estimates that 25% of Black-owned businesses in the city have permanently closed during the pandemic, the N&O reported in September.
“This is hard for me to be one of the few that are still open,” McNeill said. “I feel like I have to do it just to give hope to other people.”
Impact on hotels
Along with the reduced revenue for restaurants, hotel lodging tax collections in Wake County are down $11.9 million from last year, a decrease of 52%.
Hotel occupancy was down 46.1% in September from the same time last year.
The average daily rate for hotel rooms decreased to $79.13 in September, a 29.7% drop from last year. The revenue per available room decreased by 62.1% to $33.02.
In a small sign of recovery, 41 events of the 299 canceled have been rescheduled, which Visit Raleigh projects will bring $30.1 million back into the Wake County economy.
This story was originally published November 25, 2020 at 7:30 AM with the headline "Wake tourism projected to lose at least $145 million due to coronavirus, study says."