Loss of tourism a vague threat

No concrete numbers exist to determine impact of smaller airline guarantee program this winter

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Forecasting the loss of thousands of winter visitors because of a smaller airline guarantee program, some in the business community fear the sky is starting to fall. But no one not the chamber of commerce, the city or the ski area can say how fast it's falling or how big the pieces are.

The Steamboat Springs Chamber Resort Association, Steamboat Ski and Resort Corp. and other local businesses ranging from Realtors to restaurant owners are scrambling to collect money to reserve airline flights into Hayden this winter. They are convinced the viability of the Steamboat economy is dependent on tourism. However, no one seems to know with any precision just how many tourists are visiting Steamboat, how much they're contributing to the town, or where, exactly, they're spending their money.

Nevertheless, many business people are hoping to convince the rest of the Steamboat community just how interdependent are the local healthy economy and the number of tourists visiting the valley each year.

"I don't know if people realize what would happen if we really did pull the plug on tourism," La Montawner Tom Garrett said. "Or not even if we pull the plug, but if we lose 25 or 40 percent of our tourists over the course of the next three or four years, between the airline situation and other things."

By "other things" Garrett was referring to declining numbers of skier visits and factors beyond the control of local officials, like less snowfall.

"How does a 25 to 40 percent loss translate in terms of local restaurants, Strings events, cultural events, lost sales tax dollars and what else?" Garret asked.

The answers are not easy to come by.

Andy Wirth, senior vice president of marketing for the ski corp., said that concerns regarding the local transportation support fund initiated a discussion at a meeting July 21 regarding local perceptions and misconceptions of tourism in the valley.

"It's a significant political issue," Wirth said, "and it's hitting home on all fronts, certainly on the airline program front."

Some area businesses are concerned that an anti-tourism sentiment is gaining steam in the area, he said.

"A lot of businesses have been quiet, because they've been working so hard over the past six to 10 months. But they're becoming more active now, trying to make sure that the relationship between tourism and the economy is understood by everyone."

Making the connection is considered an urgent matter by most local businesses, as the number of guaranteed airline flights coming into Hayden this winter has become questionable. The uncertainty stems from the fact local lodges have stopped collecting a resort fee that was used to help pay for the airline guarantee program. The lodging fee and ski corp. paid for the lion's share of the program.

High fuel prices and a competitive airline market have raised costs of reserving flights so much that the all-important direct flights from Chicago to Hayden have been crossed off the list of flights that Steamboat can afford to reserve.

"I'm not thrilled about the Chicago cutback, and I'm sure no one out there is either," longtime Steamboat visitor and New York resident Rose Ericson said. "I'd be interested to know whether someone can track how much the loss of direct flights from Chicago will hurt Steamboat tourism. The reroutes are ugly for us, as they may involve a night over in St. Louis, Dallas or Newark, so we would likely opt to fly from Chicago to Vail or Denver if necessary then drive. But many visitors may just stay put in Vail or the Front Range."

That is the scenario that some local businesses, particularly the ski corp., are fearing.

"The destination skier has always been and will always be the backbone of Steamboat's economy," Wirth said.

And since more than 80 percent of Steamboat's winter guests fly, rather than drive, into the valley, a drop-off in the number of guests who can get here by air will definitely translate into a drop-off in revenues.

Wirth said there is absolutely a direct correlation between the number of tourists visiting Steamboat and its economic viability.

"A 25 percent drop-off would be nothing short of catastrophic," he said. "It takes my breath away to think of how a 25 to 40 percent drop-off would affect not only ski corp., but the entire local economy."

A 25 percent drop-off in tourism business is not as unlikely as it may sound. Crested Butte and Aspen experienced business volume decreases of 25 to 30 percent during last year's weak ski season, Wirth said.

"Since they're our peers, we talk to them. Those kinds of declines were very difficult for Aspen and Crested Butte. The effects trickle down to waiters, waitresses everybody trying to make a living. As it is, people work so hard, combining two or three jobs to get things going. To move backwards from here would really be terrible."

Wirth justified calling the potential drop in tourists a catastrophe by trying to explain just how much local businesses and at least indirectly, all residents depend on tourism dollars. But neither the chamber nor ski corp. keep very detailed track of just how many tourists visit Steamboat in a year, how much they spend, and what, exactly, they're buying.

"Nobody really knows," Wirth acknowledged.

Ski corp. does have some general figures it can point to. Wirth said that each winter about 250,000 guests stay an average of 4.5 days in Steamboat, and families spend anywhere between $3,000 and $8,000 on their vacations, depending on the time of year they visit. Those costs include airfare.

Ski corp. assumes that 25 percent of every dollar is spent on ski school and lift tickets, 35 percent is spent on lodging, 28 percent is spent on retail, and about 12 percent is spent on food and entertainment.

"Total expenditures vary a great deal," Wirth said. "We're still working on establishing just what these people are spending."

The chamber, another participant and endorser of the transportation support fund that will be used to guarantee airline seats this winter, has not studied the number of tourists and their spending habits in Steamboat since 1996.

At that time, approximately 250,000 guests were traveling through the city each summer, spending an average of $75 a day on retail, recreation, lodging, food and entertainment.

Although exact figures on the spending power of tourists aren't available from last season, many business people acknowledged that a 25 percent drop would be hard to take.

"One bad season wouldn't do a decent business in, but a couple in a row, and a lot of businesses here in town could run out of money," F.M. Light & Son's owner Ty Lockhart said.

Although no one seems to know how much tourists contribute to sales tax revenues, the healthy amount of collected in Steamboat Springs goes toward many of the city's amenities, said Sandy Evans Hall, the chamber's executive vice president. Those amenities include Steamboat Springs Transit and Parks and Recreation programs. The city collected about $12.2 million in sales tax in 1999.

In addition, half a percent of the sales tax or $1.4 million last year goes to the school district to pay for new technology and to deal with growth challenges.

"If we experience a significant drop-off in the number of tourists here, City Council is going to have to face some difficult decisions come budget time," Evans Hall said. "Some things, and I'm not sure what, would have to be cut."

Councilman Paul Strong agreed.

"With those kinds of decreases, we'd probably have to look at our budget again. Maybe cut some things. The first things to go would be capital expenditures, like improvements on Howelsen, a skating rink, and paving."

In August, Wirth is going to meet with economists from Rosal Remmen Cares, consultants with which both the chamber and ski corp. have worked in the past, to analyze the impact of tourism dollars on the Steamboat economy in more detail.

"These questions about how many tourists, and how much and where they're spending, are questions that everybody's asking, and we're looking into them," he said.

Although skiing, retail, lodging, restaurant and entertainment industries all vary greatly, the one common denominator that unites them is the fact that the majority of all their operating revenues are collected during the winter months, Wirth said.

"I've had retailers tell me they make 80 percent of their profits during the winter," he said. "The rest of the time they stay open just to be up and running."

La Monta Garrett said that during May in both 1999 and 2000, he has lost $125,000 just to stay open during mud season.

"There's just not enough local support for all the businesses in town," Garrett said. "I wonder how many people that live here wouldn't live here if they didn't have all the choices they have, brought here by tourism."

People don't come here to visit by accident, he added.

"If our city fathers stop supporting tourism because of some local voices, the true trickle-down effects of less tourism are going to be realized," he said.

Representatives from the real estate, restaurant, retail, construction, and even bank industries gathered July 21 to discuss ways to raise transportation fund dollars.

So far, the Steamboat Springs Restaurant Association has promised to donate between $125,000 and $130,000 to the fund.

The retail community met the afternoon of July 21 in retailers' first attempt to get together and decide how to contribute to the fund. On July 25, a couple of retailers sent out a letter to the majority of their fellow merchants urging them to contribute to the fund.

Retailers have come up with a $100,000 contribution goal, which will come from a quarter-percent of retailers' total sales. Local retailers also would like to see representatives from chains like Safeway and City Market contribute to the fund as well. None were present at the July 21 meeting.

"You go to City Market on a Saturday afternoon, and you see a lot of extra business volume," Wirth said.

Local bank representatives John Kerst and Paul Clavadetscher also are considering how to get involved, Wirth said.

The Steamboat Board of Realtors was represented by President Jill Limberg at the July 21 meeting. She re-emphasized the Realtors' commitment to the fund by pointing to her board's self-assessed fee that generated some $20,000 last year. The $20,000 came from personal $100-or-more donations from the pockets of local realtors.

"Some people are saying that Realtors make so much money, they ought to contribute more. But a lot of Realtors aren't making all that much money. And there's no way we can go back to our previous customers to collect any kind of quarter-percent fee. Other businesses can go back to their customers and raise prices, but we can't do that," Limberg said.

Wirth is hoping that an upcoming presentation made to the Board of Realtors will lead to a more profound understanding of the airline situation among local Realtors, who consider a $20,000 contribution to be adequate.

Currently Wirth and Evans Hall are putting together incentive packages for businesses that participate in the airline guarantee program.

"We are working on a significantly reduced deposit for merchant ski passes," Wirth said, "as well as airline tickets for promotional use and staff incentives. We currently have in excess of 50 airline tickets right now, and we're trying to come up with an equitable way to distribute them."

For now, Evans Hall said she is optimistic that the community will raise the $750,000 needed to reserve 11 percent, or 16,000, fewer seats than were reserved last year. The decrease is due to higher costs for airline seats. The $750,000 would be paired with $1.4 million from the ski corp. to guarantee the seats.

"But we're not saying we can come up with whatever it takes," Evans Hall said. "There's a limit to how much the community can give, and at some point we will have to draw the line and say, 'no more.'"

To reach Bonnie Nadzam call 871-4205 or e-mail bnadzam@amigo.net

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