Planning, innovation are keys to recovery for Wine Country businesses from coronavirus economic crisis, experts say
Coming months will reveal the depth of the economic pain caused by public health measures to slow the coronavirus pandemic and how long it will take to bounce back, but North Bay businesses need to plan now how they will survive the crisis and bring back revenue, according to financial and tourism experts.
“This is an issue of depth and duration, and (public) policies are trying to shrink both of those in such a way that once we open up we turn the corner more quickly,” said Sonoma State University economist Robert Eyler to 735 professionals and civic leaders participating in North Bay Business Journal’s Business Recovery Conference webinar Thursday morning.
The goal is to avoid a loss of capacity from the labor and employer sides of the economic equation, according to Eyler. He said the shock of the business lockdowns led to initial job losses and lower sales, but the fear is that prolonged lower sales will lead to losses of businesses. The release of last month’s employment data May 22 should show the depth of the local job impact, he said.
About 147,000 unemployment insurance claims were filed by residents in Sonoma, Solano, Marin, Napa, Mendocino and Lake counties in the two months, with the unemployment rate currently between 15% and 20%, Eyler said. That’s largely because of local dominance of the four sectors leading the U.S. job losses, particularly retail, services and tourism. Eyler noted that most North Bay county levels of new claims historically track with California’s, but new applications in Marin tend to lead the statewide trend.
The shape of the recovery has been a big debate point among economists. Will it be V-shaped, where the bounceback is as quick as the fall; U-shaped, where the time at the bottom could be longer; or even like the Nike “swoosh” logo, where there is a slow emergence? Eyler is predicting a “modified V,” where public policy — relaxing of the lockdown and injection of relief funds — helps determine the timing and upward slope of the exit.
The key is to reopen the economy in ways where the businesses can easily “flex into the situation,” to be able to adapt and innovate relatively quickly to the health guidelines and customer demand.
“So one of the concerning pieces is if we don’t allow people to move around, especially in California, we will lose an entire tourism year,” Eyler said. “And if that happens, it’s going to be very problematic, because there’s all kinds of economic-impact connections from those industries into the other parts of the economy.”
That’s why Sonoma County Tourism is talking with local public officials and operators of restaurants, wineries and hotels about a phased approach to recovery, said Todd O’Leary, vice president of marketing and communications. The first phase would be outreach to locals emerging from the lockdown to patronize surrounding businesses. Next, outbound marketing would focus on the “drive market,” visitors within in a few hours’ car trip to Wine Country. Eventually, the effort will move to the “flight market,” encouraging visitors to board planes again.
“People will want to make sure that not only they can travel but they can travel safely and have a safe experience in coming here to Sonoma County,” O’Leary said. Part of that is getting the word out about new reopening guidelines from hospitality and wine trade organization.