A June return would spare worst economic impact
Statewide orders to stay at home are causing concern for many in Door County’s tourism industry who rely on thousands of people leaving their homes to visit the county. But when it comes to the tourism economy, Door County may be positioned to avoid the most severe impacts if the economy reopens by June.
According to sales-tax collections in Door County’s accommodation, food-services and retail industries, sales in March and April are typically among the lowest of the year, beating only January and February. In 2019, the months of June, July and August constituted 60 percent of the sales-tax collections in these industries, and collections in March and April made up just 7 percent of total annual sales.
Room-tax collections reveal a similar story. In 2019, countywide room-tax collections in April were only higher than January, constituting just 1.5 percent of annual room-tax collections. In other words, the current Safer at Home order, which lasts from March 25 to April 24, is taking place during one of the slowest times for Door County’s tourism economy.
Of course, the countywide data mask important differences among communities and among business owners. The shutdown affects the businesses that are open during the winter and spring in ways that strictly seasonal businesses do not experience. A restaurant that shuts down because of declining revenue trickles into a loss of employment, dealing a blow to the individuals involved and the larger community fabric.
An analysis by Matt Kures at the University of Wisconsin-Madison Division of Extension’s Center for Community Economic Development estimated that declines in the accommodations and food-service industries are particularly susceptible to a lasting shutdown. The most recent comparable situation to the economic slowdown of the current pandemic – the Great Recession of 2008 – saw a steep decline in employment in the accommodation sector, but just a modest dip in food and beverage services.
Kures, accounting for seasonality, estimated that the impact of a 10 percent decline in revenue for the accommodation and food-services industries would result in a loss of approximately 8 percent of jobs in the sector statewide. In Door County, an 8 percent decline in these sectors means the loss of around 460 jobs, according to data from the U.S. Bureau of Economic Analysis.
Similarly, a 10 percent decline in revenue for the arts, entertainment and recreation industries would result in the loss of approximately 9 percent of jobs in the sector. In Door County, a 9 percent decline means the loss of around 70 jobs.
Kures’ analysis considers the statewide seasonality of tourism, but the seasonality of Door County’s tourism industry is more pronounced than the seasonality of the state as a whole. It is then possible that the effects on Door County’s tourism are not as dire as the statewide effects, particularly because some businesses that are not yet open for the season have not seen lost sales.
Although uncertainty abounds about the length and magnitude of this public-health crisis, businesses in Door County may be better positioned to absorb the impacts than the rest of the state.
Door County government may not be so lucky. Next week we will look at the impacts of the coronavirus on expected revenue at the County of Door.