As business owners nationwide struggle to find a way to stay afloat while shelter-in-place orders remain in place, those with strong ties to tourism are bracing for a very shaky start to the normally robust summer season.
And in San Francisco, a city whose economy is inextricably linked to the 25 million people who visit it each year, the owners of tourism-oriented businesses (and their employees) are anxiously waiting to see what kind of lingering effect the pandemic might have on consumer behavior and spending.
“There’s a lot of talk in the news about businesses getting back to normal, but what will ‘normal’ look like after all this?” asked Mariann Costello of Scoma’s, a waterfront restaurant that has been an anchor of the Fisherman’s Wharf community since it opened in 1965. “Realistically, business is going to be slow for a while,” she said.
Scoma’s, like most other restaurants in the City, now offers to-go dining only; Costello said it’s exploring ways to expand that business. “This is our new world, I’m afraid; so we’re looking and thinking, ‘How do we adapt our business model?’”
The short-term goal, she said, is to expand the to-go business so that Scoma’s can hire back some of its employees. The restaurant was forced to lay off nearly 90 percent of its staff, some of whom had worked there for 40 years.
The consensus among business owners is that even once governments give residents the go-ahead to venture back out into the world, some social distancing guidelines are likely to remain in place to help prevent new clusters of the virus in coming months. And even if those guidelines are eliminated, it could be some time before consumers feel comfortable again being in enclosed spaces with strangers and around groups of any size.
“How long before people want to take—and can afford to take—a trip, or even just eat out in a local restaurant?” asked Taylor Safford, Pier 39’s president and CEO. “We’re all trying to look into our crystal balls for the answer to that question but all signs point to it being a long runway to normalization, or what ‘normal’ used to be.”
To compare what Pier 39’s tenants and its fellow visitor-serving businesses across the city are experiencing now versus what they endured in the 2008 recession is, to speak in maritime metaphors, like comparing an oil tanker to a tugboat.
“Imagine trying to stop a passing container ship dead in its tracks,” said Safford. “A sailor would tell you, ‘That’s impossible!’ But that’s exactly what this virus did to the economy. The shelter-in-place order came down on Monday, and by midnight we’d shut down the entire property. We’ve closed temporarily to host private events before, but we’ve never shut it down completely.”
Pier 39 and its sister company Blue & Gold Fleet, which services several ferry routes and operates Bay cruises, were forced to reduce staffing by nearly a third. Blue & Gold’s ferry service continues, but on a weekend-like schedule in order to help essential workers travel to the City. Ridership on these remaining routes has decreased by over 85 percent, however.
Blue & Gold services to Tiburon, Sausalito and Angel Island have been suspended, as have all Bay cruises. Combined, these suspended routes account for roughly half of Blue & Gold’s business. This is the first time since the company’s founding in 1979 that it has had to suspend service. “I was a captain during the time of 9/11, and we didn’t stop even then,” said Blue & Gold President Patrick Murphy.
Murphy said some of his furloughed employees have been with the company for 30-plus years.
“So this is heartbreaking,” he said. “They’re family to us.”
Locals only
Louise Winsnes, director of sales and marketing for Red & White Fleet, is confident the travel industry will bounce back. “Tourism will be one of the slower industries to bounce back, but it will happen,” she said.
Winsnes agreed with her peers that the coming summer season will be a lot leaner. But she also believes the scene will look much different. “At least 40 percent of our business is international,” she said. “Those guests will be the slowest to return. The more immediate bounce-back will be the local market, so we need to come up with strategies that will help us capture the local stay-cation market.”
Winsnes conceded it’s not going to be easy. “It’s very hard to convince someone to be a tourist in their own city,” she said. “But it’s a beautiful city to rediscover, so we’re going to get creative.”
Key to ensuring stability for their businesses, say the owners we spoke with, is avoiding dipping so far into the red right now that debt eventually engulfs the business. “Even if you’ve taken the necessary steps to reduce payroll, rent still has to be paid; and most businesses have debt obligations,” Safford said.
Pier 39 has already initiated a conversation with its lenders about forbearance to allow some flexibility with tenants who themselves are struggling to survive. “Our goal is to reopen with all of our tenants intact,” he said.
Costello said she nervously awaits more details regarding the recent federal stimulus package. Under the CARES Act’s paycheck protection program, loans to businesses like Scoma’s would be forgiven if by June 30, the business is able to hire back 80 percent of its original staff. Otherwise, the loan has to be paid back.
“If we can’t even open our doors until May 1 and we need to accommodate some kind of social distancing requirement, which I expect will be the case, will there be enough customers and business to support that size staff?” she asked.
“Will people immediately come back to Fisherman’s Wharf when the order is lifted? I’d be suspect of anyone who tells you they can predict that,” Costello said. “And most businesses can’t afford to take on more debt. Just taking into consideration the money we’ve lost to date, I already expect we’ll be in the red through the end of the year at least.”
“For a business like ours, finding a way to stay open wasn’t even an option,” said Winsnes of Red & White Fleet. “But we also couldn’t just close up and walk away. We have vessels that require a minimum level of ongoing maintenance to make sure they’re operable. The minute we get the go-ahead to resume operations, we need to be ready.”
A representative for a major tour operator, who asked that he and his company not be named, said his company’s size affords it a bit more resilience than mom-and-pop type businesses. The company operates tours in over 20 cities worldwide.
“Were the shelter-in-place orders to be extended again, that wouldn’t necessarily be a death sentence for us like it could be for a smaller company,” he said. “But we’re hoping and praying that it doesn’t happen. We told our staff that the layoffs were temporary; and we meant it. Things may look a little different on the other side of the curve, but we need to look at it as an opportunity. ‘How can we be better and stronger?’ You have to be adaptable to survive, and we will survive.”
Main photo by Frazer Thompson PhD
