Though it may be another five years before employment fully recovers from the recession, businesses who serve high-end consumers will bounce back fastest, Martha’s Vineyard Chamber of Commerce executive director Nancy Gardella told a meeting of Island businesswomen on Tuesday.
Already some Vineyard hotels had unexpectedly reported to her that this year’s spring and summer seasons had been their best ever, Ms. Gardella said, in a self-proclaimed optimistic take on the Island’s economic position.
But the starting position, she acknowledged, is a tough one. As of September there are still 400,000 Massachusetts residents unemployed, 36 per cent of whom have been without a job for 15 months or more, she said. Half of them lost their jobs between the fall of 2008 and the end of 2009.
Job losses were particularly painful in manufacturing and, more importantly for the Island, construction.
“We’re going to continue to have a rough time,” the chamber director said.
The weakness in the housing market is ongoing; in Massachusetts it is down 13 per cent, and across the country real estate broker commissions are down 60 per cent.
The slow growth, Ms. Gardella said, affects the state’s own coffers in many ways: there is less income tax and less sales tax, foreclosures have eroded the property tax base, capital gains tax overall is lower.
“This recession’s unprecedented slow recovery requires a close, honest evaluation of your business,” Ms. Gardella told the breakfast gathering sponsored by the Martha’s Vineyard Women’s Network at the Old Whaling Church.
She said she had observed a diversity of responses to tight times on the Vineyard, from those “nimbly getting out ahead of the market” to others who “sit back, with the same display, the same offering, the same price tag, reminiscing about pre-9/11 business.”
Her advice began with this: “Plan for an extended period of slow growth.”
But already there are reasons to be ready. Ms. Gardella said that transportation providers to the Vineyard reported four to eight per cent increases in 2010 over 2009. “That’s 68,000 to 136,000 additional people at your door so far this year,” she said.
The majority of accommodation properties reported an uptick, she said, adding:
“In dining, too, there was some recovery, after two painful seasons, especially at the high end.” She noted restaurants’ huge loss of sales in 2009, but pointed out that the situation sparked serious strategic thinking in some Island establishments. For instance, she singled out Sharky’s marketing, communication and pricing “unmatched, anywhere.”
The second quarter of 2010 saw jobs growth in Massachusetts the highest it has been since 1984.
Even in real estate there were glimmers of better times. “Complete stagnation has been followed by some interest, followed by some movement,” Ms. Gardella said.
As of three years ago, some 70 per cent of the Island’s property value of $20 billion is owned by seasonal residents, she said, suggesting all business owners take this into account when revisiting their business strategies. Likewise, the Island reaps 70 per cent of its annual $1 billion in revenue between May and October.
Clearly tourism is critical to the Island economy, she said, and both domestic and international tourists have been increasing since the worst of the recession.
The most recent figures available, from the summer of 2008, show the impact of domestic tourism on the Dukes County economy, she said: $113 million in expenditures, $28 million in payroll; $6.32 million in local tax receipts.
Room rates plunged in 2008 and had not recovered, Ms. Gardella said. Leading markets, including the largest American tourist destination and one of the Vineyard’s main feeder markets, New York city, has recorded an uptick in its occupancy tax receipts. In Massachusetts, June 2010 rooms tax takings were up 13.4 per cent on the previous year, but that year was down 11.2 per cent from the year before.
Ms. Gardella listed what the chamber saw as the Vineyard’s main feeder markets: Massachusetts, New York city, Hartford, Conn., New Hampshire and Rhode Island, followed by California, Florida, New Jersey, the Washington, D.C. region and Canada.
Domestic air traffic into Boston’s Logan airport was up 7.4 per cent on the previous year, she said, bringing 2.1 million vacationers.
The chamber was part of the statewide tourism effort that was focussing strongly on showcasing green technology, arts and culture, culinary experiences and experiences friendly to the lesbian, gay, bisexual and transgender population.
Massport, the independent authority that manages the state’s airports and transportation infrastructure, reports that Air France, KLM and Alitalia all added routes to Boston.
Visitors to the Vineyard from Canada were up 10 per cent; from France, 21 per cent; the United Kingdom 18 per cent; and from Italy a whopping 41 per cent.
Not coincidentally, she thought, after 600 articles were published in German newspapers about President Obama’s first visit to the Vineyard in 2009, the Vineyard saw a 21 per cent increase in German visitors.
Ms. Gardella advised Island businessmen to revisit their business’s value proposition, reenergize their businesses, be strategic and set goals now.
Though the worldwide slowdown had slowed spending, consumers were finally opening their wallets again, particularly those with fatter wallets.
The Vineyard was uniquely poised for the high-end market, which is improving the fastest, she reiterated, predicting that high-end businesses may see spikes as the economy generally improved.
She tempered her optimism by noting that this recession is being followed by an unprecedented slow recovery. Even though it is officially over, Ms. Gardella said, “It has created a new normal.”