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- It is of course, hard to be objective, but there is something special about the Carolina summers, for sure.

Welcome again to one of the most widely-watched, and longest running program on Carolina business policy, and public affairs, seen each and every week across North and South Carolina for more than three decades.

And thank you for supporting this dialogue that long.

Summers in North and South Carolina can be especially iconic.

We spend a lot of time on the beaches, of course.

And on the highways to adventures and destinations.

And of course, we also end up being a place that many people visit, as well.

But what is different about tourism this year?

Every year we like to convene the heads of tourism for the Carolinas, and this year is no different.

We start our discussion with Wit Tuttell, from North Carolina, and Duane Parrish from South Carolina, and we start right now.

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And Martin Marietta, a leading provider of natural resource-based building materials.

Providing the foundation on which our communities improve and grow.

(upbeat music) On this edition of "Carolina Business Review," Wit Tuttell, Executive Director of Visit NC.

And, Duane Parrish, Director of the South Carolina Department of Parks, Recreation and Tourism.

(upbeat music) - Well happy summer, welcome to the program.

We always like to have this one on.

These gentlemen are not just very comfortable with each other, but work closely.

I would say it's a bit of a litmus test, right?

For the Carolinas to have tourism, single largest business.

Is that fair to say?

- Sure.

- Sure is for our state.

- Sure is for our state.

- Record tourism, Duane in South Carolina.

I'm looking at my notes here.

29 billion total rev for last year.

33 billion in North Carolina.

This is a pretty big industry, right?

- It is.

- Continues to grow.

- Employees hundreds and thousands of people, brings lots of money to the economy.

- You know, so lets start with air.

And this is easy to poke holes in, or ask questions about.

But Duane, we got three years now of pretty stupendous growth.

At what point, number one, is this sustainable?

I mean, these kind of hotel prices, these kind of travel costs, is inflationary situation.

What point do we level out, and would you expect it to hit some ceiling and drop, just the cost of travel?

- Baring a recession, I don't think it will drop.

During COVID people really realized, at being sort of cooped up, or we all call cabin fever, realized how difficult that can be.

Just sort of cooped up at home.

And they said, "You know what?

"When I get out of this, "I'm gonna make it a priority to travel."

And I think that has moved up the scale of people now.

They make it more of a priority to travel.

Hotel rates have gone up just like inflation.

They've gone a little above inflation.

I think that's supply and demand.

People are willing to pay more, they wanna get out more.

Outdoor recreation has taken a new thing like golf and state parks, and beaches.

Are all more important now, and more busy quite frankly, than they were pre-COVID.

Yeah, Wit, is this?

I think "New York Times" called this revenge spending in tourism.

Is that what this is?

Would you call that generally?

- Yeah, I think we saw that coming out of COVID, was really revenge travel.

People hadn't been able to get out.

They wanted to get out, and they went out and did it.

And they got out, and they traveled.

And I think that's relaxing now.

But I think like Duane said, we're seeing it's a priority.

People realized how much they missed when they couldn't travel.

And, they're gonna do it.

Even if it costs a little more, even if it's a little harder.

They're still doing it.

- I wouldn't say it's a little more, though.

Year over year, it might be a little more.

But 2020 to 2023, it's what?

A 40% increase in some ways.

Is this?

Again, is this sustainable?

- I don't know if this type of increase is sustainable, but I think they're gonna pay what they're gonna pay.

And supply and demand.

I think we're gonna continue to see people when they travel.

And so therefore, the price will still be high.

Yeah, the cost, inflation of course, we talked about inflation in so many different ways, Duane.

Clearly inflation plays into tourism, recreation, parks and recreation, tourism.

How do you model out, this may not be the right question.

But how do you model out this arc that inflation is on, and what it's going to do to tourism, and people that can afford to go?

- I think like everything else, is what Wit mentioned, the growth will continue to be.

But the rate of growth will slow down.

Rates aren't going to go down anytime soon.

Baring some major recession.

What you'll see, I think, is a leveling off of the rates.

People becoming more comfortable with whether they are choosing short-term rentals, or hotels, or family and friends.

I think you'll see that continue to evolve as we come out post-COVID.

But it's really changed the prioritization not only of making travel more of a priority, but what they do during the trip has changed.

I mentioned outdoor recreation.

The rebirth of golf has come into that.

And you see it in anything outdoor.

You see it in the national parks, you see it in the state parks.

Anything outdoor is RV and camping, and hiking, boating, fishing, paddle boarding, canoeing, all have just taken on a new.

And that's been sustained.

It wasn't just right after COVID, it's still going on today.

- With the total revenue growing in all these areas you just talked about.

That will cover up a lot of sins.

So when revenue does hit the wall, or starts to go down, have you identified problem areas to say, when this thing turns, we need to be out front of this, or that.

Is there something that comes up on your radar?

- No, we haven't had a problem here.

Labor is still an issue.

That's really not pricing, but labor is still an issue.

And I think that's facing our industries all across.

From airlines to hotels, to restaurants, to attractions.

Labor is still an issue.

So with labor, Wit, is there, and I know you can't do this.

And I know states really can't do this.

But around immigration policy, is there a larger association of tourism execs that could bring to bear some pressure around immigration to know that if we fix even a small part of that, it'll help feed into a better labor situation.

- Oh exactly, there is.

And it's the U.S. Travel Association, we're both members of.

It's essentially the lobbying group for the tourism industry nationally.

And, they're trying to work on that.

Because it gets caught up in an immigration issue.

And it's not really an immigration, it's a workforce issue.

For what we're trying to get, these HB1 visas, where people are coming in, temporary workers.

We can take a lot more of them than we're getting right now.

And there's a great track record of them coming in, doing the jobs, and then going back.

So we feel like we should be able to increase that.

- Do you feel like that's loosening up a little bit, or is it still that politically polarizing.

- It's still politically polarizing, but it is loosening up, yeah.

We've seen it, we got more, we can use a lot more.

But it is getting better.

- What's policy in South Carolina around immigration?

- Not necessary a policy on immigration, but the state as a whole included, the governor would like to see the HB1 visa cap raised, so that we can have that.

Particularly in places that are, there's not a labor force close by, like some of the barrier islands of Kiawah, Hilton Head in the southern part of the state.

One of the things I want to point to Chris, is an industry back in 2020, as post-COVID, we laid off too many people.

We laid off 53% of our workforce nationally.

That was a mistake looking back, we sent the wrong message.

The optics there was times are tough, we don't need you.

And then when business came back quicker than anyone thought, the staff wasn't willing to come back.

And so, I think we made a mistake as an industry-wide.

Nationally, we laid off too many people, and sent the wrong message.

People moved on to something else, or retired, or whatever they did.

- Is that the same sentiment?

Do you have the same sentiment?

- Oh definitely.

I think North Carolina, the economic development partnership, the business development people have been so good, there are a lot of other jobs.

And so, we still haven't gotten back to where we were in employment numbers.

Even though the spending is much higher, we still don't have as many bodies working in tourism, as we did before.

And it's tough to find them, because there are other jobs that they can take.

- Yeah so, if we project that onto a specific industrial sector, in hospitality and tourism, it would be restaurants.

I don't think it's lost on anyone, that there's a lot of frustration around the level of service, how many days they're open.

The cost of these folks that are working in restaurants.

Duane, that obviously goes to what you just said.

But is there, not an easy fix, but are we not doing something to fill that hole the right way?

- There are several things happening.

One of the silver linings in the cloud is wages in the leisure and hospitality sector are up 23% in our state for post-COVID.

That's a step in the right direction.

- Are they beyond, I'm sorry to interrupt you.

Are they beyond where they were in 2020, then?

- Yeah, they're beyond where they were in 2020.

Yeah, they've gone up dramatically.

Of course, that's also a cost factor.

And you mentioned hotel rates, earlier.

Another part of it is, hotels and restaurants are figuring out how to do things differently.

You can check in with your phone now, and bypass the front desk.

Your room, if you stay on a three-night stay, they're gonna ask you if you want your room cleaned on the second or third day, because they don't really have enough labor to do that each day.

And so, I think things have changed in the hotel world, a little bit in the restaurant.

A little bit more difficult on the food and beverage side.

Because someone has to cook the food, prepare it, and seat people.

But we're a very resilient industry.

We figure out how to make changes to accommodate.

And the accommodation now is, we just don't have enough people.

The other part is, you're gonna see a lot of restaurants closed on Sunday and Monday.

You already see that now.

Unfortunately, it's effecting things like airlines.

It's not just hotels and restaurants, attractions and the like in our industry.

And it's not an easy fix.

- And I think there's another factor, too, that's impacting the restaurants.

And that's people are working from home.

They're not in the cities any more on Mondays and Fridays.

They're working from home.

So restaurants also rely on the locals to come, too.

And when you're not in that city center, with that employment base, then the restaurant is not gonna make the money.

They're not gonna be open.

- This is a bit of chasing it down a rabbit hole.

But we have seen some research that there are folks moving out of urban cores, to rural areas for a lot of reasons.

Do you see that as well?

And does that play into this?

Or, have you seen any evidence of that?

- We seen people moving out of the urban areas into the rural areas.

But we've also got people moving into the urban areas.

So far, it's filling up.

- I think particularly for the Northeast and the Midwest, in the Carolinas, we've had an influx of people that either had a second home, and decided to move, go ahead and retire, move here.

Or, came down and bought one, which has helped, obviously, the real estate sales going on.

- So we've talked about this for decades.

The in-migration in the Carolinas, is really again, as you both know.

Is there any slowing down on that?

Do you see anything that's gonna say, "Yeah, at some point we're gonna slow down?"

But, no?

- Not really.

- For awhile.

- It took off after COVID.

It won't, that continued, that pace has slowed somewhat.

Interest rates alone have brought that down some.

But no, I don't see it slowing down very much.

I think we have great weather, great food, great hospitality, our Southern culture.

Why wouldn't you move here to the Carolinas?

- It's hard not to like the business when you two talk about it in such glowing terms.

Are you worried about anything?

- I think workforce is a challenge for us.

We're worried about that.

We've also seen over-tourism getting to be a bit of an issue in some areas.

So, we're trying to work on managing that, managing the flow, getting people to understand the behaviors when they're out there, and also getting the right visitor to come at the right time.

- What is over tourism?

Expand on that a little bit.

- Well, what we saw- - And by the way, you don't get a pass on this.

(crosstalk drains out dialogue) - Particularly during COVID, we saw people flock to the mountains and the coast, they wanted to be outside.

Unfortunately, they went to the same place.

So instead of being all together inside, they were all together outside.

And so what we tried to do, was get them to spread it out a little.

Plus, we had a lot of people that weren't experienced in being in the outdoors.

So, they didn't know what to pack for a hike.

They didn't know you had to wear sneakers.

They didn't know you couldn't take a selfie on top of a waterfall.

So there were a lot of things we were trying to do to help people be safe, and protect the landscape.

And also protect themselves while they're out traveling.

And that's something new that really wasn't an issue before COVID.

- So over-tourism, would you describe it that way, Duane?

- I would.

But I'll use Charleston's example.

A peninsula where a historic district is surrounded by water on three sides can only hold so much.

Honestly, when over tourism happens, that's when marketing is most critical.

Because if you don't market, then you have no control or say in where people go, or what they do.

However, the surrounding areas around Charleston.

There's so many things.

From the beaches and the other areas around the rivers and the lakes, around Charleston, where you can market, not only in different geographic areas, but also time of year, different months to shift it around, where you sort of balance things out more from that perspective.

Whether it's traffic, or over-tourism, as you call it.

Like in a peninsula area.

Same thing for a beach, were you don't, seasonal on the coast, you don't have a parameter as to how we go around, it only goes a half of circle.

So you gotta find a way, or linear destination like the Grand Straight of Myrtle Beach.

We gotta find a way to move people out in different areas.

Where you don't have that impact of too many people in one place at the same time.

- So has that caused you to have to be more politically active when you go to the state house?

- A little bit politically.

We also started a campaign of what we call "Undiscovered South Carolina."

And it was a way to move people out of, what I'll called the discovered areas.

Get people off of the interstate, if you will.

Even if they were still gonna go to the beach, have them stop somewhere along the way.

But also to get them in other areas.

And without the recreation, that's easy to do.

Because a lot of our outdoor recreation is outside of the bigger cities.

And so, we've really pushed that out from a marketing perspective, and drive some more traffic into those areas, where they can certainly handle more.

Where some other places, like a central Myrtle Beach, or a Hilton Head, or Charleston, particularly post-COVID, can have a lot of impact from tourism coming in.

So we use our strategies to market.

Again, to sort of move people in those areas.

- Does this, and it's not the right way to say it, but when you, do you have to be more politically active when it comes to going to Raleigh or Jones Street, when it comes to, as Duane just talked about.

So you got the Gold Coast in North Carolina.

You got the Southern Oak Island, Holden, all those places along the south, going into the Grand Strand.

Do you have to make the case that we need more resources?

We need, not just a new interstate, but we need a better way to manage all of these people.

And, does it fall on deaf ears, or do you feel like there's some sympathy?

- Oh no, I think we've been heard from, from the beginning of the pandemic.

I think that the industry itself, has done a great job.

And I think our political leaders understand the importance of the industry.

To serve it, that it helps the residents.

And there's new issues that are gonna come up that we're gonna need that attention.

Electric vehicles, electric charging.

If people are driving electric cars, they're gonna have to charge them.

And so, we're gonna have to make sure people feel safe about that, so they will travel.

And so, there are a lot of things that we have to, we have to be active in the public eye with the politics.

And that's not gonna go away.

- Next week on this program, speaking of travel.

Her name is Hailey Gentry.

And she is the CEO and the Aviation Director for one of the largest airports, not just in the Carolinas, but certainly in the country.

In the world, seventh busiest now, I think.

Globally is where it ranks.

That Charlotte Douglas International Airport, that's next week.

Also, Lynn Goode is the Chairman and CEO of one of the largest public utilities in the country, Duke Energy.

She'll be back, as well.

So let's go to something.

So, Hailey Gentry is coming on this program.

How important are assets like Charlotte Douglas?

Like the South Carolina port?

Like the North Carolina port?

Like some of these important economic development assets?

How does that become part of your portfolio, if you will?

Well, I could tell you we would of not gotten, pre-COVID we had a direct service with British Airways from Charleston to London, Heathrow.

We would not had gotten that without the economic development part side of it.

For example, Volvo having a plant in North Charleston.

Even BWM in the upstate.

And the port authority being there.

That plane has to be filled up not just with visitors, but with business people, as well.

Front of the plane, back of the plane.

So they're a critical part in evolving aviation.

Charleston airport had it's busiest year this past year.

They fly to more direct flights to cities that they ever had before.

We looked, hoped to get that British Airways flight back again in 2024.

Those industries are a critical part of what we do.

And conversely, for them to pick a location, quality of life is a big part.

Somebody is a visitor first, before they ever pick a site.

And I can tell you, if they have a great experience as a visitor, they're more likely to come back and pick that site to develop a plant for Boeing, or a plant for BMW, or a plant for Volvo.

- Yeah, same question for you, Wit, around that importance of the asset.

- No, it's huge.

It's were we work together really well with the business development and tourism.

Because you're gonna need those business travelers to fill up the front of the flight.

But the flight's not gonna be successful if you don't have anybody in the back, as well.

So the leisure travelers are gonna go in the back, typically.

And the business travelers are gonna go up front.

And it's important to have those.

We can open up new markets.

And we see travel follows the flights.

So if you get that service, you'll get those visitors.

They all are gonna come, they're gonna love it.

And maybe they'll move that business here.

- One of the big things that kind of came to light around the COVID pandemic reality, if you will, was the importance of aggregators like VRBO, and of course, Airbnb.

Has a lot of that smoothed out?

Or, what are the biggest challenges when it comes to...

Okay, what's the inside joke?

(crosstalk drains out dialogue) - We were a big vacation rental state before COVID.

Our coast, a lot of things are rentals in the mountains, a lot of rentals.

It's just taken off.

It's a phenomenon.

People have discovered these vacation rentals.

They love the privacy, they love the uniqueness.

They love the expanded space that you get.

And it took off during COVID, and has not slowed down.

- Yeah, I agree with Wit.

So it's a disruptor, much like Lyft and Uber are to the taxi industry.

It's that to the hotels.

But there's been some assimilation now.

There's now some motels that have some of their inventory on an Airbnb, for example.

There is some assimilation that will continue to happen in that regard, but I think it's a little bit of a different product, as Wit mentioned that you're looking for, in terms of what's offered.

There are things a hotel offers.

Hotels offer that, or Airbnb or short-term rentals can't, and vice versa.

I think the consumer will ultimately decide that.

Wit and I's job is to get them to come to the location.

And could even be family and friends in that mix of where they stay.

But I think it's, in our legislature there's a debate about not allowing any restrictions on them.

And then, there's debate on the other side about not, restrict them all.

There's a happy medium there in the middle somewhere.

And we'll get there, but it's still in the early stages of the business cycle in that regard.

Short-term rentals on the electronic internet side has really not been around that long yet.

So I think these things will shake out in the next couple of years.

- Does Airbnb, and they see, and I don't wanna put words in your mouth, Duane, but they seem to want to make this work for a whole lot of reasons.

- They do.

At the end of the day, they wanna make it work.

And I think we've gotten the tax situation there now, where there's a level playing field in terms of whether you stay at a hotel, or an Airbnb, you're paying the same tax rate.

That's leveled out.

That was issue number one.

And issue number two, was some of the regulations surrounding that.

It will, and they wanna play, and they wanna help, too.

They don't want a bad reputation of being a place that has parties and noises.

That's the last thing Airbnb and VRBO wants.

So I think at the end of the day, it will work itself out.

It's still in the infancy stages as an industry.

- Same experience for you?

- Yeah, exactly, yeah.

We've had a longterm deal with Airbnb and VRBO to get them to pay the taxes.

I think there's still a lot of the regulation there that's gotta get worked out.

But as an item, it's not going away.

- A couple of one off's is pretty important announcement out of South Carolina within the last couple of weeks about the International African American Museum.

It's been long in the process.

And long in the pipeline.

It's finally opened up, about $120 million or so investment.

Why is, not to diminish the case for the slave trade in Charleston, which was ground zero, as we well know for a long time.

Why is IM, as they're calling it.

Why is that such a significance?

- Well, it's one of the largest attractions in our state to open up in over a decade.

But it also is one more, Charleston has a lot of feather's in his cap, this adds one more to it.

But what it also does, it tells the historical part, the educational part, of really what happened in that time.

And tells it in the framework of 2023, instead of say, 1974.

And it has gotten so much attention.

And it's a combination of being funded by the state, the county, the city, and private funds.

Former Mayor Joe Riley, the longtime mayor there, was really sort of the instigator behind all that.

Put it together, decades in the making, like you said.

But it's just one more.

Charleston doesn't do anything halfway.

- Without debating that, you mean?

- Without debating it.

It gets debated, and it may take a little longer, but at the end of the day, it is truly a prize.

And I think that's what with IM, is what they're calling it.

Yeah, it will be that.

And it's just opened up.

And it will, I think it will be just another feather in their cap.

And a phenomenal place to visit for everyone.

- You know, the interesting part is you read, as you read some of the background around the story, was that it's located in Gadsden Wharf, which was the place- - Correct.

- That did the slave trade.

In South Carolina, I know we had, I'm trying to think, the czar of natural resources in North Carolina was on, the Secretary of D&R.

- Yeah.

- And he talked about the year of the trail.

- The trail, yeah.

- So why, again?

I know these are a little bit of promotive things, but why is that so significant in North Carolina?

- Well, I think, as we talked about.

People are looking to get outside.

And so many people miss things things because trails often, only the locals know about the best ones.

So the idea here was we got people getting outside.

Let's get them in the best places, let's keep them safe.

Let's help them have a wonderful experience.

And let's highlight a lot of the trails.

And everybody thinks, well, that may be in the mountains, or the coast, but there are a lot of great trails in urban areas in the state.

Food trails, and things like that, that we can promote, that don't get a lot of exposure.

- Does any of the Biden administration infrastructure money feed into that, that you know of?

- I don't know if it went into Year of the Trails.

It's done a lot to help tourism promotion throughout the state.

- We got about three minutes left.

Duane, let's look forward to 2024.

Here we are, 2023.

Would you expect it to be a record year, above last year?

- I do expect 2023 to be a record year above last year.

- What do you think?

How's that gonna leverage out to 2024?

What would you think?

- A little difficult to tell in 2024.

Obviously, lots of things come into play that you don't know about.

But assuming there's nothing major, recession-wise, or God forbid, another pandemic, something like that.

Assuming things stay, I expect continued growth, maybe not those high percentages that we've had the last couple of years.

Like our state parks revenue is up 34% from pre-COVID.

Just in two years.

I don't expect that kind of growth.

But I expect it to continue to grow.

- What are your headwinds, do you think?

- Gas prices is always a headwind, we're a drive state.

- [Chris] Is labor still gonna be one?

- Labor is still gonna be an issue.

But it's an issue everywhere.

It's becoming, it's not just restaurants and hotels now.

Labor is an issue everywhere.

I think that continues.

Over-tourism is what Wit talked about.

It has to be managed better.

We're getting better at it.

It was a big issue before COVID.

And COVID made it sort of go away.

But it's come back now.

And the good news is we've had some experience pre-COVID, and we'll get better at it as we go along managing that, as well.

- Yeah, Wit, same question.

What do you think is gonna happen this year?

Another record year?

More than 33 billion?

- Oh yeah, I think so.

We won't go up 15% again like last year.

But I'm thinking we'll get back into the four, 5%.

- [Chris] Really?

- Increase range, yeah.

- [Chris] On 33 billion?

- On 33 billion.

- That's uh, I can see why over-tourism would be an issue.

Same question, though.

What are your headwinds?

What are you worried about?

What do you keep an eye on and model out?

- Yeah.

Workforce, I think, is an issue.

Getting people to come, potential recession.

We'll see what happens with that.

Things like boycotts, the political nature of the next couple of years.

I think are gonna be interesting for us to see, and to navigate for all the states.

Workforce is probably the biggest issue though, that we look at.

- I know y'all hate this question.

But, I kind of wanna ask it.

Where is your favorite place to go?

- Oh, gosh.

In South Carolina?

- Yeah, well maybe not.

Maybe you're going somewhere else.

- Well, I thought that if I give you hook, a hook out of it.

My favorite spot...can I give you two?

- [Chris] Sure.

- Okay, my favorite spot in the upstate, is Lake Jocassee, it's Devil's Fork State Park.

Prettiest lake in the state, absolutely beautiful.

My favorite place along the coast is Charleston, the beaches there, the historic district, and around that area.

Those are two of my favorite places.

- And you have 10 seconds, so you can almost wiggle out of this.

What's your favorite place.

- All right, well we just did a program called dream big in Small Town, North Carolina.

So I would say the Blue Jay Bistro.

Up in eastern North Carolina.

- That's a good one, good promotion.

Thank you gentlemen, always nice to see you.

Until next week, I'm Chris William, hope your weekend is good.

Good night.

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