Business & Economy

Allen: A perfect storm is buffeting Vermont’s storied inns and hotels

Highland Lodge in Greensboro is a popular year-round tourist destination in the Northeast Kingdom. Photo by Jim Welch/VTDigger

In this column, VTDigger business and economy reporter Anne Wallace Allen looks at how those in the hospitality industry are dealing with the uncertainties the Covid pandemic brings.

The Wilmington Inn, housed in a historic home in the Deerfield Valley, generally relies on wedding business at this time of year.

Most of those bookings have been canceled or postponed to 2021, and foliage season isn’t looking very good either. Bookings for September and October are down 40% from last year, manager Charlie Foster said. Now he’s watching closely for updates about skiing at Mount Snow, the bread and butter for the inn.

“While they’ve said they are opening, no one really knows what that looks like yet,” Foster said. He estimates the inn’s revenue is running 65% below last year. “Without the ski business, we’ll be extremely worried financially.”

The pandemic has created a perfect storm of adverse conditions for leisure and hospitality businesses. While lodging does suffer booms and busts, the nature of Vermont tourism has always sheltered the industry somewhat, said Mat Barewicz, labor market information director for the Vermont Department of Labor. In good times, people from around the country visit Vermont; in recessions, visitors drive up from the big cities nearby. When the U.S. dollar is weak, tourism from Canada increases.

“We always kind of thought, ‘Look, Vermont is in that sweet spot where you are either catering to millions of people within a day’s drive, or millions of people across the globe,” Barewicz said. “Yet both of those situations require travel, and now we have an economic downturn based on the fact that people aren’t moving.”

Hospitality, entertainment and dining businesses are still limited to 50% capacity indoors. So even if people are allowed to enter the state without quarantine, there aren’t enough customers to justify a full reopening. And while some people from out of state are visiting Vermont this summer, many have chosen to stay away.

“Right now, given the travel restrictions, a lot of out-of-staters who would normally be coming up here are maybe not quite as trigger-happy to book reservations,” said Chad Sims, a general manager at Highland Lodge in Greensboro, which is limiting indoor occupancy to 25% capacity. He estimated the lodge and its restaurant have taken in half the income they had at this time last year.

The restrictions on travel are clearly keeping visitors away, said Foster at the Wilmington Inn. He usually sees a lot of international visitors in the summer.

“We spend the majority of our time on the phone explaining to people what the restrictions are,” he said.

In grant applications for the state’s emergency economic recovery grants, hospitality businesses showed average monthly losses of 96.6% at the height of the pandemic, state officials said in a report Aug. 17 to the Legislature — the highest of any sector of Vermont’s economy. Food service businesses reported average monthly losses of nearly 87%. 

The disproportionate hit to leisure and hospitality businesses can also be seen in July unemployment data, where the number of jobs in the sector was down 50% from July 2019. Employment in all sectors was down 12%, according to the Vermont Department of Labor. The next hardest-hit sector in the July 2020 data was construction, which lost 30% of its jobs year-over-year.

At least 10,000 people in the leisure and hospitality industry filed unemployment claims in July, Barewicz said. He estimated that 17,000 jobs have disappeared; many people in the industry hold more than one job. The Department of Labor bases its data on information reported by employers and on unemployment insurance claims.

“That gives you two guideposts of the order of magnitude” of the job loss, Barewicz said. “No matter which guidepost you use, it certainly paints a very tough picture for that industry, and illustrates perfectly the economic disruption associated with Covid.”

Many lodging businesses haven’t reopened since Gov. Phil Scott declared a state of emergency in March; others are using state and federal grants to tide them over until guests can travel again. Some lodging businesses have used federal Paycheck Protection Program loans, although the details of how those loans are converted to grants make them too risky for many tourism-related businesses. And this summer, many are receiving grants of up to $150,000 from the state’s emergency business grants program.

On Aug. 21, Gov. Phil Scott announced more grants for businesses from Vermont’s share of the federal CARES Act money, most aimed directly at the leisure and hospitality industry. That includes $50 million targeted to hospitality and tourism, $10 million for economic development and tourism marketing for groups such as chambers of commerce, and $50 million that will send $150 to every Vermont household as part of a “buy local” campaign aimed at steering Vermonters to local restaurants and businesses.

“I don’t think there is a sector in Vermont that has suffered a more prolonged and uncertain economic impact than the hospitality sector,” said Ted Brady, deputy secretary of Vermont’s Agency of Commerce and Community Development, which is administering many of the business grants. Some hospitality businesses have told Brady they won’t be able to reopen if tourism doesn’t rebound by winter.

Lodging owners aren’t asking the state to ease the travel restrictions; none see a safe way to do that. Instead, they’re relying on state and federal grants for short-term sustenance, and hoping the Covid-19 infection rate continues to decline nationally. 

Julie Rohleder, who owns the Fitch Hill Inn in Hyde Park, said a vaccine is critical to her family’s financial future. 

“At this point, unless the entire country can get this virus under control, there is not much that can be done to get my business back up to where it was,” she said. 

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Anne Wallace Allen

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