Market to Market

Drop in tourism may haunt South Dakota for years

Dec 23, 2020  | Ep4619

SIOUX FALLS, S.D. (AP) — Ashley Dorch thought of her children first when she was laid off Dec. 1

It's only been about two weeks since she was let go as assistant director of catering at the Best Western Plus Ramkota Hotel. But, already, she's applied for 20 jobs.

The single mother has only heard back from two, but wasn't offered a position at either to help support her family — including her 10-, 5- and 4-year-old children. She hasn't heard back from the unemployment office yet either.

That's what the foreseeable future will be like after getting laid off in a pandemic, friends and former co-workers who've also been laid off told her. And it scares her.

"I am the only parent they have in their lives," she said. "When it happened, that was the first thing I thought. Am I able to provide for them in the next month? Am I going to be able to put food on the table, or buy a new jacket if it rips, or new shoes if they grow out of them? Am I going to find a job quick enough to provide for them?"

"It is so close to Christmas, and I'm not going to be able to give my kids the Christmas that I wanted to," she added.

The 29-year-old is just one person impacted by a decimated tourism industry in Sioux Falls this year.

Overall, Minnehaha County has lost 36% of its taxable tourism income this year due to the coronavirus pandemic. South Dakota has lost 12.8% of its total visitor spending, sitting with nearly $2.97 billion spent this year, the Sioux Falls Argus Leader reported.

The loss threatens to leave thousands of people unemployed and shutter businesses — even years after the pandemic is over, local officials and national reports say.

"When people don't travel, they don't stay in your hotels, they don't eat at your restaurants, buy gasoline, shop retail," said Teri Schmidt, executive director of Experience Sioux Falls. "This affects people locally with their jobs, taxes and overall economic benefit of a community."

Dorch was one of over 130 people laid off from the Ramkota Hotel in Sioux Falls this year — a popular destination for businesses and conventions that all but disappeared in March.

She was able to hang on for months, hoping that the small increase in travelers this summer would carry them over into the new year. But it wasn't enough.

More than 80% of staff members were laid off at the hotel because occupancy dropped between 40% and 60%, said Jan Grunewaldt, chief operating officer for Regency Hotel Management.

"This year, and next year on the books, groups are all gone or mostly gone," Grunewaldt said. "These decisions are heart-wrenching, they keep you awake at night and they're delivered with the utmost empathy and heartbreak. But every single property of ours has had to do it. 50 hotels, lodges and resorts."

In addition to the Ramkota, Regency also manages the ClubHouse Hotel and Suites on Louise Avenue and AeroStay near the airport, with both seeing significant losses this year. Airport traffic alone has dropped 48.2% in 2020.

Overall hotel occupancy in South Dakota is down 21.7%, and Grunewaldt doesn't expect it to get better until mid-2021 at the earliest, and if a vaccine comes along.

The latest U.S. Travel Forecast predicts that leisure and business travel on the national level won't return to pre-pandemic levels until 2024. Planners for conventions and conferences are hesitant about planning events until 2022 or 2023, Schmidt said.

Large conventions and events like Pheasant Fest are planned out years in advance. The earliest the event can return to Sioux Falls will be 2024.

Schmidt and her team have to "get back in line to compete" for convention and event schedules, "which can take years," she said.

"Even if 2021 picks up, people will still be struggling and catching up," Grunewaldt said. "It will be 2022 to 2025 before things really come back."

It's not just hotels, but local businesses — restaurants, gas stations, bars, and more — that rely on the visitor industry.

"I worry, how much more can they take. Can they hang on?" Schmidt said. "They've given their lives to these industries, and now COVID is pounding us into the ground. We have to keep coming back up, and together that's what we're going to do."

More than $12 million in estimated economic impact was lost in 2020 because of 91 events canceled due to COVID-19, not including events organized by groups other than Experience Sioux Falls, Schmidt said. Already for 2021, Pheasant Fest's cancellation is a $3.9 million blow to the local economy, based on its 2018 event

As the pandemic continues, Dorch said she's seen friends in the restaurant, bar and visitor industries struggle with unemployment. A few have been evicted or lost their homes because they haven't been able to find work again.

"It's the equivalent of losing a major employer in our community," Grunewaldt said. "The hospitality and tourism industry is one of our top five state economic drivers. It's not just hotels — it's convention centers, the Pentagon, sporting venues, the fairgrounds. All of these are empty shells with debt service and without valuable customers in them."

While Sioux Falls is scrambling to cope with a severe drop in revenue, South Dakota as a whole is fairing better than the city and several other states.

But it's still scraping by, said Katlyn Richter, global media and public relations manager for South Dakota Tourism. An 11-year growth trend halted in March, dropping the state's tax revenue by 13.8%.

"It's a huge impact on South Dakota's entire bottom line," Richter said. Revenue and taxes generated from the tourism industry covers $840 a year in taxes for South Dakota households.

Behind agriculture, tourism is the second-leading industry for South Dakota, accounting for 5.2% of the state's economy. In 2019, visitor spending generated more than $84 million in state and local tax revenue in Minnehaha County alone.

South Dakota is fairing better than several other states, including states like Minnesota and Wisconsin where travel spending is down by nearly 50%. Part of that Richter credits to marketing strategies to attract visitors to the "open state" during the pandemic, filled with national and state parks to explore.

One of the most impactful campaigns this year was Kristi Noem's commercial advertisement, Richter said, originally airing on Fox News during the Republican National Convention. After the commercials ran, Richter said the state saw increases in web traffic to its tourism site and hopes it will translate to more visitors in the future.

While national reports estimate people won't be comfortable with pre-pandemic level traveling until 2024, South Dakota hopes to reach that level by 2022.

The state is attractive for hesitant travelers because it's small, rural and features outdoor attractions such as hiking, fishing and hunting, Richter said.

To prepare for those travelers and other business opportunities, the state allocated CARES funding to marketing organizations, such as Experience Sioux Falls, to market their cities and the state — hoping to attract tourism and business conventions when the time is right.

"We have to be assertive, positive, factual, accurate and committed," Schmidt said. "When they're ready, we'll be ready."

As for Dorch, she'd like to return to the Ramkota Hotel when business picks up again, either in 2021 or later. She loved her job and the people she worked with.

But, she's also looking at going to school again — studying nursing or business. As the optimist she is, Dorch believes she can manifest something positive from this.

"I might not be able to provide some things for my kids now, but I try not to think about the negatives," she said. "Once everything is gone and this is all over, I'm going to go back to work and save up and give them a better holiday that they deserve."

 

More from this show

Grinnell Mutual Insurance
Sukup
Accu-Steel
Pioneer