N.O. May Lose 30% of Restaurants as Tourism Takes Years to Recover

NEW ORLEANS – On this week’s Biz Talks podcast, tourism expert Stephen Perry of the destination marketing organization New Orleans & Company discusses the unprecedented damage to the city’s tourism industry caused by the coronavirus pandemic.

Perry said that the drop in tourism revenue has been shocking. In 2019, New Orleans welcomed 19.75 million visitors who spent $10.05 billion. Since March, though, the city has lost about $200 million each week in “visitor spend” across all platforms: airlines, transportation, hotels, retail, restaurants, nightclubs, bars, music venues and cultural attractions.

“That’s an extraordinary amount of money to take out of a city this small,” said Perry. 

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Perry said that hotels are projecting to make about 30% of their 2019 annual revenue but that’s mostly due to a strong first quarter before the shutdown began. As you’d see if you walked into any downtown hotel right now, occupancy is still very low.

“During the month of August, we’re looking at about 10% and that’s only among the 58% of hotels that were open,” said Perry. “It is going to be extremely difficult going forward. Hotels are going to survive but there may be some that are sold, particularly smaller properties. The larger ones are obviously better capitalized but hotels as a general rule are significantly more capitalized than the other critical sector of our economy, which is restaurants.”

Perry said the forecast for the restaurants is, in fact, much more dire.

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“The iconic restaurants downtown in the French Quarter and Warehouse District that get 65% to 85% of their revenue from visitors are under extreme duress,” he said. “The Louisiana Restaurant Association is predicting that we could lose anywhere from 30% to 40% and maybe even more of our restaurants depending on how long this lasts. Those most able to survive are going to be the neighborhood restaurants. And if we can get the city open again, we’re hoping it’ll be the same with neighborhood bars.”

Perry said the reason the downtown restaurants will feel the brunt of the problem is that health restrictions have essentially shut down the convention and meeting business, which he says is the “highest-value component of the tourism industry. We’re hoping this fall we can get back to smaller meetings in hotels but our major convention business has been cancelled and we’re already seeing a degradation of the first quarter of 2021.”

Add it all up and the challenge seems insurmountable, which is why Perry is advocating for destination marketing organizations like New Orleans & Company to receive future federal aid. The same goes for zoos and other attractions, which have also been left out of CARES Act funding to date.

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Perry and others estimate it will take until 2024 to reach 2019 levels of tourism income for the city. But, in the big picture, he’s hopeful about New Orleans’ prospects – even though it’s going to be a long road.

“After Katrina, we were broken,” he said. “We had a lot to fix, which we did. The problem is now New Orleans is in great shape with wonderful new assets, but the world is broken. And that’s made it extraordinarily difficult because the things that are broken aren’t things we can fix.”

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