With the coronavirus in full swing. Asheville’s Buncombe County has officially declared a “stay-at-home” ordinance.
Everything feels chaotic and the economic picture seems to worsen each day. With that being said, what’s going to happen to Asheville’s massive tourism industry and how will it affect the larger economic outlook in the region?
In this article, we’re going to talk about:
- Asheville’s tourism industry.
- How COVID-19 could harm Asheville’s economy.
- How Asheville could avoid major economic problems.
Let’s dive in.
Asheville’s Tourism Industry
Asheville boasts a massive tourism sector. With over 27,000 of its 229,000 total employees in tourism-related fields (11% of the labor market), the economic fallout from a bad year could be disastrous.
The city depends on tourism for much of its income each year. Below, you’ll find statistics recorded in 2017 by Tourism Economics:
- 11.1 million visitors.
- 3.9 million overnight guests.
- $3.1 billion in economic impact.
- Tourism is the third-largest employer in the region.
- 30,410 people (on average) visit Buncombe County each day.
- $5.4 million is spent each day.
- Tourism generated $199.2 million in state and local taxes.
- Offset household tax burden by $1,950 per household.
- Without tourism, the Asheville regional unemployment rate would be 15.2%.
If you’ve ever traveled through Downtown Asheville, you probably noticed that every street seems as if there’s at least one hotel or more. There are so many hotels, in fact, that the city government had to enact a one-year hotel moratorium after the construction of the new Kimpton Hotel Arras in September 2019.
So, if the coronavirus nationwide quarantine advisory continues through the summer, or long enough to where no one will be making travel plans this year. The Asheville economy could potentially lose out on a couple billion dollars of income.
However, if the virus’s current implications don’t last past May, then there’s a chance Asheville could pick up at least half of the projected revenue for 2020.
Let’s go more in-depth with these scenarios.
Scenario #1: The Coronavirus Lasts Longer and Harms Asheville Tourism
If COVID-19 is not controlled by May, we have serious issues. Not just nationally and internationally, but locally.
If we’re not back to work by May, that indicates a few things:
- Airlines are still closed and losing money.
- Stigmatism towards traveling gets worse.
- Unemployment continues to rise.
I’m not trying to scare anyone or become a doomsday predictor. I’m simply laying out the plausibility of the U.S. economy’s capitulation if we don’t begin moving forward again soon.
Let’s go over each subtopic.
Airlines Stay Closed
Many airlines across the country and the world have already suspended all flights. They are all losing money right now.
Just look at these three major airlines and their stock prices.
These companies have lost billions of dollars in investments over the past month.
The bright side is that we’re beginning to see a rebound. However, we don’t know how long that’s going to last. If the virus remains widespread and out of control, airline stock could fall again.
If the airlines remain closed, people are not traveling, which, obviously, is bad for tourism. When you have a city like Asheville that earns $5.4 million from tourism alone each day, on average. That’s a lot of lost income.
Businesses in Asheville that rely on tourists, such as hotels, small shops, restaurants, breweries, and summer activities like river tubing, will suffer.
The Stigmatism of Traveling
We’ve already seen a lot of people cancel their plans for the summer, fall, and winter seasons.
One, because we don’t know when the coronavirus is going to end. But two, there’s suddenly a worrisome feeling in some that traveling is unsafe for the rest of the year.
To dive deeper into this subject, I spoke with Isaac Weidie, a Guest Services Agent at the Omni Grove Park Inn. One of Asheville’s most popular tourist destinations.
When I asked Weidie about whether the seasonal trend was off this year, he replied with “The resort has been a ghost town since January, around the time when news about the virus started surfacing. Usually our January’s are slow. But once February comes, things start to pick up. The lobby is full at night, the restaurants are packed, and the guests are very active.”
The Grove Park Inn relies on business conventions to fill its 543 guest rooms throughout the year. Weidie stated, “Most of our conventions were canceled through March and some of the summer conventions were either canceled or on hold.”
Even without knowing the term length of the virus, many are already canceling their travel plans this year. Even going as far as to cancel entire conventions that won’t be occurring until August.
Once again, more bad news for Asheville, as the stigmatism is assuredly going to cut into their tourism income.
With the tourism industry on the rocks for 2020, let’s talk about the ripple effects.
Unemployment Soars
As you read earlier, if the tourism industry were to vanish in Asheville, the total unemployment rate would be over 15%.
Thankfully, Asheville isn’t going to lose its entire tourism industry.
On top of that, there’s an employment cushion. Buncombe County has the lowest unemployment rate out of all 100 counties in North Carolina, sitting at 3.1%.
However, if tourism gets hit as hard as it could this year, we could see mass layoffs from major attractions and hotels, such as the Biltmore Estate and the Omni Grove Park Inn.
The problem is that, despite low unemployment ratings, it also means there are fewer jobs to get hired at. And, with all businesses being negatively affected by the coronavirus, hiring employees isn’t on any manager’s mind.
Furthermore, with layoffs come defaulted loans. Mortgage payments stack up and suddenly the real estate market is involved.
Asheville real estate is expensive, with the median sales price posted at around $315,000 as of March 2020.
Residents are paying a lot each month in mortgage payments. Once some of the loans default, foreclosures will start to rack up, thus, drastically lowering property values within neighborhoods.
Now, you have a situation where the people who have been able to pay their mortgage, lose what could potentially be 100s of thousands of dollars in equity, depending on the area.
To put it simply, millions of dollars in wealth can be lost in a single neighborhood, just from one or two foreclosures. All stemming from a tourism bust.
Scenario #2: Asheville Tourism Escapes Economic Hardship
The reason why I gave you the bad scenario first is because I’m the type of guy who wants the good news last. I’m an optimist, as much as I don’t sound like one.
Here’s the deal, Asheville could escape the economic fallout that’s looming over us if one or more events take place:
- The coronavirus is controlled or contained.
- The virus doesn’t spread rapidly in Buncombe County.
The Coronavirus is Controlled or Contained
This is the end-all-be-all. If COVID-19 is stopped in its tracks, whether by flattening the curve, finding a vaccine, or using a special drug to treat it (all of which are being worked on as I write this), then there’s a chance we could be back to normal by early-May, perhaps sooner.
We’re all hoping and praying for this. It will be the first Monday where the majority of Americans wake up and say “wow, I can’t wait to go to work today”.
If we flatten the curve, everyone will be cautiously optimistic. The chance that it could ramp up again is possible, but it would at least be controlled. However, because of the possibility of another outbreak, travel may not be popular.
The best-case scenario is if scientists and medical professionals find some sort of antiviral drug, a vaccine, or a cure. This would literally make things normal again, as the threat of the virus would become so low that it would essentially be like another type of flu.
I’m not saying the flu is good, but I think we can all agree that we’re not shutting down the world because someone has it.
In this situation, there is no stigmatism about traveling, and Asheville’s summer tourism boom lives up to about 75% of its potential.
The Virus Doesn’t Spread Rapidly in Buncombe County
This situation would occur if the county shut down in-time to halt further spread. As of writing this, Buncombe County has eight confirmed cases, but more are expected to come as testing continues.
If it turns out that the Asheville region was able to avoid a significant amount of exposure, people may see Asheville as a “safe place”.
This would remove any stigmatism about travel in the future months. Asheville would be the place to be because “they avoided the virus”.
I believe it’s an interesting point.
I will admit, I have no quantitative evidence to back this up. However, I would allude to how some people feel about Switzerland, the only country in Europe that remained neutral during World War II.
Switzerland, in many ways, is like Western North Carolina.
Towering mountains protecting the nation’s border, a laid-back type place, lots of tourism and admiration.
It is often said that Switzerland is the safest place on Earth, besides Antarctica, if World War III ever broke out. This same mentality could be the case for Asheville in 2020.
It’s something to study.
Final Thoughts
Obviously, there’s a lot going on in the world besides Asheville and whether the Biltmore Estate will have more or fewer visitors this year.
But as someone who lives in Asheville and appreciates what it’s given to me. It’s my duty to be concerned and educate people about what could happen to our most crucial income generator.
Tourism, whether Asheville locals appreciate it or not, has brought so much success and prosperity to our local businesses, helping cement our standing as one of the best places to live in America.
Without it, we would just be a quaint little town in the Blue Ridge Mountains.
Stay safe.
Stay Classy.
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