(upbeat music) - Major support for Carolina Business Review provided by Colonial Life, providing benefits to employees to help them protect their family, their finances, and their futures.

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- It is the single largest industry in both North and South Carolina, and it has billions upon billions of dollars of impact annually on lifestyles and on business.

We're talking about tourism.

I'm Chris William, and welcome again to the most widely watched and longest running dialogue on Carolina business, policy, and public affairs seen each and every week for the last 30 years across North and South Carolina.

Thank you for supporting this.

In a moment we will unpack what the single largest business is doing now.

And we're joined by the heads of tourism, in both North and South Carolina.

We start now.

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(energetic music) On this edition of Carolina Business Review, special guests, Duane Parrish, from the South Carolina Department of Parks, Recreation and Tourism, and Wit Tut tell, from Visit NC.

(dramatic music) - And welcome again to our dialogue.

Happy spring.

Good to see you both Duane, Wit.

Good to have you back.

How are you?

- Good.

Good to be here, Chris.

- Yeah.

You know, this is an obvious question but, I've always wondered where do the heads of tourism like to spend spring break?

- (laughs) I'll go first.

So, you know, I have typically growing up spent my spring breaks at Myrtle Beach.

I mean, while the weather was not completely warm typically, you may not go in the water, but it was great to be out, and walk around the sunshine, always a lot of activity, things to do in Myrtle Beach.

I've typically done that, and lately I've been along the coast somewhere.

Charleston, Hilton Head, Myrtle Beach the last few years, but the General Assembly is in session then, so a lot of times I'm working and don't really take a full spring break like I used to when I was younger.

- Yeah.

Right.

Wit?

- Yeah, that's the same with me.

You know, I try and alternate the mountains and the coast because they're both so great.

This year I'll be on the Neuse River Trail riding my bike outside of Raleigh because the legislature's in session, we need to be engaged.

- Well guys, let's start with another obvious question.

You know, at the trough of the discouragement after the public health care crisis of COVID and its impact on tourism and hospitality, what were those darkest days like in 2020?

Wit, we'll start with you.

- Yeah, sure.

You know, been in tourism 25 years and never seen anything like this.

Tourism hit a wall in March and just stopped.

We've never seen, we've had hurricanes, you know rock slides, things that have paused it in areas, but this was universal, it was blanket.

We typically get about $500 million in spending a week in North Carolina.

By the end of April, we were down to about $93 million a week in spending.

So that's an 80% drop in visitor spending and just has a tremendous impact on the state.

- Duane?

- April I just remember as a former hotelier occupancy dropped below 20%.

In my entire career I'd never seen it get that low.

It was just dark days.

When the shut down, we stopped advertising, and people stopped spending and they stopped traveling.

It was, about as dark as it gets.

It felt like 9/11, the recession of 2009, and all that combined.

Every previous recession or bad times, we've had, hurricanes, it was 10 times worse.

- You know, how did the feeling of that affect where you are now, and how you plan, and how you model out for what tourism, what hospitality, is now going forward?

Either one of you.

- [Duane] Yeah, go ahead Wit.

- All right.

It really impacted us, you know, because we didn't know what visitor mindset was.

And typically, you know, that's the thing that changes maybe every year, maybe every couple of years, we were having to track it every week, just because fear was the biggest motivator.

And that's never something we really factor in, in tourism but that became the motivator of whether people would travel or not.

- Yeah.

I would echo what Wit said.

Consumer confidence has typically not been an issue for tourism.

We've, you know, it's always a pleasant part of expenditures for most people, but, this was one where you literally worried about your health and safety for traveling, and that really hasn't been the case to any degree.

And, you know, when people are scared, they're not going to spend money, they're not going to travel, and we've seen that, and we're really just sort of coming out of things now.

And so that was probably the biggest thing for me.

Hurricanes, people may be scared to go to a particular area for a very short period of time, but then it comes right back.

This has been extended over a year now.

- You know, and there is this, we all know this, there's this pent up demand that people in businesses are anxious, they want to get back to normal, they want to feel more normal, and we see the pictures of crowds on the beaches, and along the coast, and outside at bars and restaurants that are probably not the most safe distanced.

Is that an issue?

How do you address that as a tourism professional or do you, not let it go, but how do you make sure that we have to remember that we still do have a risk?

- Yeah.

We had a big issue with that.

People wanted to get out doors, and you know, we're known for the outdoors.

So we saw people flocking to the mountains into the coast as summer broke on.

So what we did was, we actually received some CARES Act dollars and we created a safety campaign where instead of trying to inspire people to travel, we were trying to encourage them to do the right thing, to model the right behaviors, to wear a mask, to keep their distance.

We also started a program with Leave No Trace organization called Outdoor NC to try and get people to take care because, the other thing is a lot of these people it was the first time they'd been out in the wilderness, out in nature and, you know, nature's beautiful but it can be a dangerous thing too.

And you want people to treat it right and treat it with respect.

So it really changed the way we talked to the potential visitors.

- Yeah, Duane, what do you think?

- Again, echoing a little bit what the Wit said.

It really was a silver lining time for outdoor recreation and the great news for the Carolinas.

We're both known for that.

What happened was, places like golf courses, places like the beach, became viewed as, starting in June when things began to reopen, they were sort of viewed as safe.

At least at that time, whether they really were or were not, and that's what people flock to.

And the cabin fever was there after several months of being locked down.

And so, we just tried to promote, you know, we always said, you know, do it safely, follow the protocols, but we try to promote those things that they were willing to do.

And golf was one of them.

State parks had a record year.

Golf, we've got double digit increase in the number of rounds since June of last year.

So we saw where the consumer was willing to go, and that's what we tried to market to.

- So here we are with many school systems, many families, were either in spring break, just finished spring break, or on the tail end of it, one way or another.

When you take a look around now, what is your sense of how spring break is unfolded or unfolding?

And what would you say about a safe forecast for the summer season?

And Duane, let's start with you.

- Safe forecast, you know, honestly, it's coming back faster than I anticipated, and I think much faster than a lot of the forecasters thought.

I don't think everybody understands just how powerful cabin fever can be.

And so people are much more, you know, they were much more scared of this back a year ago.

Today, they know a lot more about it, so people are more educated and they're willing to take a little bit of a risk.

And so we see that now.

You drive around, you see more the traffic, you see the more activity in malls, you see more people back in their offices working, and, you also see more people traveling.

And I think as things continue to go, the leisure traffic I think for our state will be backed by this summer.

The leisure market will be back by the summer.

I think, you know, cases going down, vaccines going up, and the weather getting warmer, people are getting out.

What we'll will be missing I think is the business traveler and the meetings market.

The meetings market has a lead time, and so it'll be 2022, I believe, before the meetings market is back.

Business traveler, I'm not sure yet, but I think leisure traffic will be back by the summer to normal levels.

- Wit?

- Yeah, exactly.

We see the same thing.

We had some areas in the mountains and the coast that actually had more visitors in 2020 than they had in 2019.

Now the spending wasn't the same, and that's part of the issue.

So leisure travel is going to come back quick and first.

As soon as you can get a couple more people vaccinated, and get that up, I think people will be back leisure traveling.

The meetings, the events, the business travel, that's going to take longer to come back.

And unfortunately that's where a lot of the high-end spending comes from.

So you're likely to see good visitor numbers, but I still don't think we'll have good visitor spending numbers back to where we were for a while.

- So when you both articulate the difference between personal travel and the business traveler, how much does the business traveler makeup for total spending?

- You know, in South Carolina, it depends on the market.

You know, in a place like the Grand Strand and Myrtle Beach, business travel is probably less than 10%.

For a place like Greenville, South Carolina, it's about 60 to 70%.

Statewide it's probably 40%.

So it's a big market segment but it depends a lot on the locality you're in.

- Yeah, it's kind of the hidden part of tourism.

You know, people think of, 'I'm going to go to North Carolina', they get, 'Oh I'm going to go to the mountains.

I'm going to go to the beach.'

What they don't realize is more of our visitor spending actually comes from the Piedmont, then the mountains or the coast.

And that's because we have those big conventions, big events, sporting events, sports events, and you know and not just professional sports events, amateur sports events.

You get a team with, you know a tournament with 50 girls volleyball teams there, and the whole family comes, they stay, they spend.

So that's a lot of the earning for the state.

Charlotte alone, Charlotte Mecklenburg area produces more than 30% of the state's total tourism spending.

And they've lost a lot of that because there are no conventions, there are no business travel, and there haven't been a lot of events.

- And Chris I'll add to that, one of the things that is difficult to track because a lot of times business people will travel possibly with their family, particularly if they're going to a business conference and they stay a little longer or they or they get there a little earlier, which really is a leisure trip combined with the business trip.

And so they're directly related to each other, and so this is traffic not being its normal level, has a negative impact on the leisure market.

But, you know, - Go ahead - [Duane] No, we'll come back.

- Yeah, how do you know specific to the low country in Charleston, Duane, it's a, it's a little bit of both, right?

It's a little bit of the beach, great beaches surrounding there along the low country coast, but also the destination and the growth of Charleston just as a pure metro area is driving a lot of things, so what does it look like down there when you overlay what you two have just been talking about, whether you have business or personal travel, how has Charleston fared?

- Charleston was slow to come back.

Now recently has picked back up a good bit, you know, Charleston is a 50/50 mix on the leisure side, you're right, the beaches, the historic district, known for food and restaurants.

On the business side, you know, you have the Boeing plant, you have Volvo's only North American car manufacturing plant.

So there's a lot of corporate traffic there as well, along with the ports and so, there is a mix there of both business and leisure.

The meetings market is very strong there, but again, that part's been missing.

A destination like Hilton Head or Myrtle Beach, which are for the most part, predominantly leisure market, they've come back faster than say Charleston.

- And Wit, specific to North Carolina, is, you talked about it earlier, you made the inference that this barbell between North Carolina mountains and North Carolina coast and gold coast, et cetera, has the DNA of that balance changed forever?

Or do you expect it's going to go back to what it always has been?

- I think it will go back.

I think some things have changed forever.

You know, we've seen, even during the pandemic, while commercial lodgings have taken a beating, rentals have exploded and have had 20, 30% growth.

And so once people try that and they get familiar with using Airbnb, or BRBO, or any of those other things, they may not go back, they may not change their travel patterns.

But I think the biggest potential change in travel to me is recreational vehicles, RVs.

We've seen a tremendous spike in people buying RVs and okay, that was great for one year, but you know, we want people to get back to doing what they did before.

But if you've invested all that in an RV, that's not just for one year, you're going to want to take that out next year and the year after and the year after.

So I think we're going to see some shifts come out of this, that really changes, that lasts for a long time.

- Yeah Wit, and same thing, Duane.

I mean, so what have you learned that's going to be different that you know and you would bet your bottom dollar, that this part of tourism will be different now, and we can't ignore it?

- Wit nailed one of the things, what I would call the short-term rental market, and that's an Airbnb and BRBO.com as of June it was ahead of the prior year numbers.

And short rentals were catching up the hotels before the pandemic started.

I think this pandemic just put them three or four years ahead of that.

And so they are now on equal footing in many respects, in many locations, with hotels, if you will.

The other part of this Wit mentioned is outdoor recreation.

Our state parks or overnight accommodations, that's camping, cabins, and villas, is up nearly 30% since we reopened in May of last year, phenomenal.

Our day use traffic is up about 30%.

We had parks that in 70 years had never hit capacity that filled up.

Outdoor recreation I think is here to stay and state parks, national, local parks, are just a part of that.

Wit's right, RV sales nationally are up somewhere in the 20% range.

Boat sales as well.

But outdoor recreation activity, great news for North and South Carolina, we both have a lot of that.

- You know, how is the change in the underpinning employment in tourism?

What is it, I don't even know if I know the right question to ask here but, how has working in the field of tourism and hospitality changed?

Is it changed forever?

Is it going to be less?

Will it be more?

- I'll start it off, sure.

So we reached over 50% unemployment in the leisure and hospitality category in our state.

Unheard of.

We are, as of January, we're back at 14%.

But the state unemployment rate is only 5%, so we still have a long way to catch up.

Going forward, I think some of the back of the house jobs, accounting in particular, those have been combined.

Whether you're a hotel, restaurant, or attraction, I don't know, it'll take a long time to get back to our numbers where we were before.

But someone still has to clean the room in a hotel, someone still has to serve the meal in a restaurant.

I think we will catch back up.

The hard part right now, despite the high unemployment, it's difficult to find some people because I think A. some people in the industry just change industry.

They just left because they saw tourism being down for quite a while, and they took up some other career path.

And the other is, you know, there're incentives now, and particularly the American Rescue Act, there's additional money and less incentive to go back to work, I would say.

- Yeah, Wit?

- Yeah, I think that's the big change that the tourism industry is facing is, we lost a lot of our workforce when we didn't have jobs for them.

Manufacturing was still going on, in some cases it was ramped up.

And so, you know, I remember driving to the mountains in North Carolina and seeing signs on a factory saying, you know, we're offering starting wages, $18 an hour, $20 an hour.

So I think a lot of the tourism workforce, and we still think we have about a hundred thousand people unemployed in North Carolina, they've gone to other places.

And so that's going to be a challenge for that that small restaurant, that local business, that wants to get back up and get started.

Cause it's a really competitive labor force out there and it's going to be hard to find people.

- I know you guys aren't fiscal policy or even monetary policy influencers, you certainly understand it, but when you look at some of the, I'll call it stimulus, or rescue, or the CARES Act money and the money that's still being deployed and is yet to be deployed, is it too much?

Are we not in, of course this is my question, but are we not allowing the system to find itself and right itself, without having an artificial stimulus on top of it?

- Yeah.

I mean, I'll go.

I think we needed something, obviously, you know, these were desperate times.

I think that the thing that's worked most effectively has been the Paycheck Protection Act.

You know, I think if we can help keep those businesses alive, and if that is the way of supporting people, keeping them in jobs, to me seems to be a more direct and better way to help people rather than waiting till they get unemployed and then having to send them through all that process.

So to me, that was the most effective thing that was done.

We hope they continue to keep doing that.

- Duane?

- Yeah, I agree with Wit.

The Payroll Protection Program was the, golden egg that the goose laid.

And particularly for small businesses like restaurants and hotels, the hard part now is, as we're ramping up, and businesses coming back, is getting employees to come back, that, despite our high unemployment, that's an issue right now going forward.

On the stimulus side, the $1,400 checks will help America.

I think will help inspire some more travel, some people who may not have traveled otherwise, that additional funds will help them go out and spend, hopefully in travel and tourism.

- How long do you think it takes to get back to normal?

I know it's a broad question, but is it 24 months?

Is it five years?

Is it 10 years?

- I think we're, you know, on the domestic side, I think we're back to normal, not for a full year but I think by the end of this year, we're almost to normal.

If not by spring, certainly by spring of 2022.

The missing component will be the international part of it.

And for a place like Charleston that's about 10% of their traveling and tourism.

So, that's a big component and that takes longer.

I think that's somewhere, the international component's probably the end of 2022, maybe even into 2023.

But I will say I think the domestic market will make up for some of that.

- When do you declare that you're back to normal in North Carolina?

- I think this is going to be so interesting.

I think we're going to hit 80% of normal by the end of this year.

Getting that last 10, 20% I think is going to take a couple of years.

- In about the last five minutes, I want to unpack what has been a complex relationship between schools, school administrators, family, and tourism.

Many schools now, might be faced with this idea that summer school will be a requirement as the general assemblies, both the State House in Columbia and also Joan Street and Raleigh debate this idea of remediation in reading during the summer, how do tourism chiefs as you are, but how does tourism in general embrace the idea that school may work against what tourism has traditionally been over the summer months?

- I'll just take this, so, Chris, I think that, you know, we've always sort of believed that the summer was sort of a time for families to travel.

It was a time for young people to gain employment whether you're a lifeguard or whatever the case may be, and being out of school allowed that to happen.

Certainly the pandemic has changed things and I anticipate this summer will be different and there will be some in-class school going on this summer, but we hope going forward, that's not the case.

We've always made the case that, you know, it is a great time to take that sort of break for three months.

To gain that employment, particularly for those in high school in the working age of 15 to 20, to be able to gain employment for three or four months and also help the tourism industry from trying to hire those people at a busy time for us.

And so, it's also when the weather's the warmest.

So I think people will still want to travel the most during the summer, But you know, we get it.

I understand education is always a higher priority and I get it.

This summer will just be different.

- Wit?

- Yeah.

And I think, you know actually there might've been a blessing that came out of this was, we've learned how to do remote schooling.

And I understand it's not ideal, and we don't want to do it all the time, but now we can do it on days that would have been weather days, things that delayed the school year, that extended the schools out.

So, I mean tourism has never been against people getting education, that's really important.

We just like it to be a defined school year that doesn't keep getting expanded and expanded.

And so I think some of these technologies may allow people, okay, so we just had these storms that blew through last night.

If the schools can go to remote instead of taking a day out and having to add a day to the end of the year, that's going to help us.

So I think there are some good things that came out of it.

This year obviously is going to be a different year, different summer.

And I think everybody expects that, you know, and we really want people to be able to catch up, so.

But hopefully going forward things will be better.

- I'm sorry.

I'm sorry Wit.

Were you done with that?

- [Wit] Yeah.

Yep.

- Yeah.

Duane, I know you answered this question partly and I don't want to bemoan or belabor this thing, but do you, fear might not be the last word, but would you be concerned that proponents for year round school would have the wind at their back now in subsequent years to say, 'Well, in 2021 we were able to do it and see tourism didn't get hurt and schools actually benefited', or some other type of dialogue?

- Well, while I think tourism is coming back this year, tourism was hurt.

You could certainly make that case through the summer.

I don't know, we're not fully back by the summer.

I think the leisure market starts to come back but there's always going to be that sort of friction between that, but you believe that, you know, many things to take place over the summer.

That's when the family gets together, the family traditionally has always gone on summer trips.

It's great, whether you're going domestic or internationally, it's always been pretty popular then.

It's also a great time for us to, as I mentioned earlier, to hire some of those young people who may be, you know, investigating their career, and we think that's a stepping board for some careers during that time period.

So we'd like to keep that summertime sort of open.

Realizing this year, this particular year, is unlike any other but, we're hoping it goes back to normal in 2022.

- Yeah, and Wit same question.

Again I don't want to take this too far, but, do you feel like there is some momentum for the year round school?

Do you hear that at all in any, either school systems, or on a state level dialogue?

- Oh, I think there is from the education community.

I don't know that the parents and the families want it as much.

But I will say this, and I may be different than a lot of people.

I think the right type of year round school can work for tourism, but it has to be the right type.

It can't be just, 'Well, we're going to have school and it's going to run all year long.'

My kids were in year-round schools where they were nine weeks on three weeks off, nine weeks on three weeks off, and then they had a bigger break in the summer, so, when they were on that schedule we actually took more vacations than we did regularly.

And there was still time in the summer and it allowed the kids I think, a better educational format.

So I think it's possible.

Everybody just has to work together to have the best type of year-round schools and not just simply a school year that never ends.

- And wait, let me stay with you for just one more minute.

We're running out of time.

In South Carolina PRT obviously works hand in hand with many agencies including Commerce.

In North Carolina, it's not a surprise, and I know, you know this, Visit NC is part of North Carolina Department of Commerce.

How has that changed now that you are within the family, if you will, and we have about a minute left, and how has the relationship with Commerce, especially coming out of COVID?

Is that been good?

Has it been bad?

Is it indifferent?

- No, I think it's been really good.

You know, we're part of the Economic Development Partnership in North Carolina, which contracts with Commerce to bring business and jobs to North Carolina.

And I think we've really gotten closer with the Department of Commerce, as we've seen what's really been a jobs crisis that's come out here.

There are people that need jobs, and there are companies that need employees, and they don't necessarily match up.

So, you know, if we can help in any way to get people, more people to come in who are qualified to take those jobs, or find a way to get people in the state to be able to fit those jobs, I think that helps.

So we've had a great relationship with Commerce and I think this year has only strengthened it really.

- We are out of time.

That's going to be the final word.

Wit, thanks for joining us safely from your office in Raleigh.

Duane, always nice to see you.

Wherever you end up going to summer wear sunscreen, wear your mask.

Be careful.

And thank you for joining us gentlemen.

Until next week, I'm Chris William and we hope your business and your summer is safe.

- Major funding for Carolina Business Review provided by High Point University, Martin Marietta, Colonial Life, The Duke Endowment, Sonoco, Blue Cross Blue Shield of South Carolina, and by viewers like you, thank you.

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