ATLANTA — As Georgia reopens it economy, state leaders, lawmakers and academics are trying to answer the key question: if you open, will they come?
The state’s economist warned lawmakers during appropriations meetings earlier this month that the state can only expect the economy to bounce back when Georgians feel safe frequenting businesses again — and no action lawmakers or the governor takes to expedite reopening will change that.
“Whatever governors, do or don't do, people kind of make their own decisions to a certain extent,” Jeffrey Dorfman said during an appropriations meeting. “Sometimes fortunately, sometimes unfortunately.”
Consumer confidence — the level of comfort people have visiting restaurants, hotels and other businesses amid the pandemic — is expected to be the largest driving force behind Georgia’s economic revival, but is a hard thing to measure while people across the country are weighing health and safety versus financial stability.
As Georgia businesses are given the green light to reopen, academics and industry leaders wonder if the number of customers will be enough to sustain day-to-day operations. A team of professors from the University of Georgia are working to gauge when consumers will feel comfortable enough to return to normal spending habits in various sectors.
Dr. John Salazar, associate professor at the University of Georgia, is spearheading the research into the tourism industry and has done similar studies on consumer confidence after Sept. 11 and the Great Recession.
“In these circumstances — especially during Sept. 11 and now with this situation — the reality that our society is heavily based on consumption really does hit home,” he said.
Allowed to open, is it worth it?
With a laundry list of sanitation and social distancing requirements for restaurants to reopen dine-in services, business owners have found themselves shelling out dollars for plexiglass dividers, face masks and extra cleaning supplies to serve only a small portion of their regular customers.
Even if the demand was there to fill a restaurant, social distancing requirements significantly reduce the number of customers they’re able to serve per square foot — leading to empty tables and lost revenue.
Reopening a restaurant during the pandemic is a significant investment, Dr. Daniel Remar, assistant professor at UGA, said, for a small piece of revenue.
“If you can show the industry that a majority of your consumers are not comfortable going to a restaurant, even with measures put into place,” he said. “I think it would make sense for the business to save their money, so to speak.”
Remar is leading the food service industry section of the study that looks at how much factors such as a server wearing a mask, distance between customers, outdoor versus indoor seating or if they see another customer coughing impacts a person’s decision to dine-in.
“I think that's the type of information that the business owners in the industry wants to know, so they can make these decisions on whether to take out more money and invest in these new measures,” he said. “If that's a worthwhile investment or just to hit pause and shutter their business.”
But the question ultimately leads back to health risks versus financial stability. The accommodation and food services industries have seen the most unemployment filings out of Georgia’s record high unemployment rate — which reached 12% last week.
Since March 7, nearly half a million Georgians in the accommodations and food service sector have filed for unemployment, according to the Georgia Department of Labor.
Not only do businesses need to comfort customers but also employees weighing their health and their paycheck, Remar said.
“What will it take to make workers feel comfortable going back to this atmosphere, too?” he said.
'No light switch'
Salazar likened Georgia losing revenue from its convention season to Hilton Head Island, S.C., losing an entire summer of vacationers.
“March and April are two of the highest demand months for hospitality in the entire year for the entire state of Georgia,” he said. “And we lost that.”
Based on March unemployment filings, Salazar estimated the state lost $800 million in economic impact in accommodations and food services sector in just that month alone.
The rebound of hospitality and tourism in Georgia relies not only on whether vacationers will take health risks, he said, but also if Georgians will have the money to travel.
Last week, Col. Gary Vowell of the Department of Public Safety, said law enforcement agencies were preparing for a Memorial Day weekend “like no other” — Georgia state troopers and Department of Natural Resource officials patrolling waterways and beaches to enforce social distancing.
During the holiday weekend, the state topped 43,000 coronavirus cases.
But Salazar said there is no “light switch” to when all Georgians feel ready to get back to their favorite travel destinations.
“The independent hotelier is impacted the most because they're not financially set up to go three, four or five months without business and that is where they have to make that very hard decision,” he said. “The longer it takes to turn the engine, the more — unfortunately — we'll see some of these hospitality businesses possibly go away.”
Jim Sprouse, executive director of the Georgia Hotel and Lodging Association, said the impact of coronavirus on the hospitality industry has been “devastating” — mainly for larger hotels in major cities that rely on sporting events and conventions.
“There's no revenue coming in and I'm not sure when it's going to come back,” he said.
Hotels across Georgia shuttered because a loss of customers, he said, now they’re working to bring them back.
According to the American Hotel and Lodging Association, as of May 20, seven out of 10 hotel rooms in the U.S. were still sitting empty — not including shuttered businesses — and since mid-February the industry has lost more than $25 billion in room revenue — the number still climbing.
Sprouse said hotels have new sanitation and social distancing protocols but just saying business owners are doing these things won’t make visitors more comfortable.
“Things that used to happen outside of the customer's eye will now be very visible,” he said. “Like cleaning the elevator buttons.”
Sprouse sits on the governor’s COVID-19 economic impact task force committee, which discussed implications of faltering consumer confidence on the state’s economic rebound in a recent meeting.
State Rep. Clay Pirkle, R-Ashburn, also sits on the committee and said consumer confidence is a leading indicator for lawmakers on when to expect the economy to turn around.
“We've got to have people spend money to have the economy turned,” he said. “Once we see more people return to work and we see the consumer confidence going in the right direction, then we will see the light at the end of the tunnel.”