My View: Notes from the Front Row: 3 scenarios for recovery (Opinion)
What’s next? Most every tourism destination in the country has been in the same position as South Shore — shut down because of the COVID-19 virus.
As some states and destinations begin to reopen, and as the South Shore begins to consider doing the same, it begs the question of what’s next?
There is no question this has been the single most significant impact on the South Shore economy ever experienced, but what comes now?
It’s hard to articulate precisely what will happen, and in the consulting business, you don’t think in terms of single outcomes, you think in terms of scenarios.
Why scenarios? Because if you think in terms of a single outcome, people tend to always gravitate to the best outcome, which is often not likely to happen. So here are three scenarios you might want to consider.
Let’s keep it simple. The first is the optimistic scenario, which would suggest that the South Shore economy will recover swiftly to levels it was experiencing before the pandemic within the next six to 12 months.
The pessimistic scenario is the opposite: the South Shore economy will barely recover, and full recovery will take years, perhaps 3-5 years.
The moderate scenario is that the South Shore economy will recover somewhere in between maybe to 60-70% of where it was pre-pandemic, and that will take 12-24 months.
Given how crippled the economy is with unemployment at 20-25%, it’s hard to see the optimistic scenario have a great chance of happening.
I know some may think the economy will bounce back, but the research and data suggest otherwise. There may be an initial pent up demand, but that is approximately 15% of the California travel market. The rest of the market is not there.
So that leaves us the moderate and pessimistic scenarios. At this point, it’s essential to ask what the impact of either scenario on the South Shore economy will be. Under either scenario, the impacts will be significant.
There will be lodging, restaurants, and stores that either don’t have the financial strength or cost structure to sustain themselves and will either not reopen or will struggle significantly.
It is estimated that 20-30% of restaurants may not survive the end of the year. This will have two significant impacts on job losses and tax revenue.
The former impacts individuals and the latter impacts the whole community. Think about it — a loss of residents and a significant impact on community services. From the city perspective, the impact could be devastating.
A significant loss of transient occupancy and sales tax revenue coupled with the growing demand for retirement benefits, and as the stock market continues to lag, it will require municipalities to put more money into retirement funds.
It is my view the South Shore economy will never be the same, that this event will be transformative, and we have two choices. We can wish it would go back to what we knew pre-pandemic, or we can begin to consider what the economy and the tourism economy could be moving forward.
As this South Shore moves into the post coronavirus future, we will need to find a balance of what worked before and what we will need to succeed in the future. It will not be easy.
My recommendation is every restaurant that has to-go food, for these businesses to have any chance to stay in business, try and support them.
I have tried several, and they have done a really good job adapting. It is a little bit different and takes a bit more time, but don’t let that stop you. Get some take out.
It’s a wrap.
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