Beach businesses seek to recoup losses as time runs out
REHOBOTH BEACH — With five weeks to Labor Day, businesses down at the beach are now running on survival mode.
The Rehoboth-Dewey Beach Chamber of Commerce reports that 76 businesses in the resort area have seen a collective $205 million loss in revenue, comparing the first seven months of 2020 to 2019.
“That’s just the tip of the iceberg,” said Carol Everhart, the CEO of the Rehoboth Beach-Dewey Beach Chamber of Commerce. “That’s just showing the difference in revenue for only 76 of our businesses that answered the survey … I’m highly suspicious that 30% of businesses will close their doors.”
For Everhart, the only thing that will enable businesses to make it through the rest of the year is to bring back customers. To do that, she said it’s time for the state to head to Phase 3. Gov. John Carney said in mid-June Delaware will remain in Phase 2 indefinitely because “too many Delawareans and visitors were not following basic health precautions.”
“We need more visitors and we need broader guidelines,” Everhart said. “If you look at our data, we have 62 hospitalizations out of almost a million people in Delaware. While we don’t want to see anyone in the hospital, it’s a pretty safe record for what other states have. Businesses know how to run businesses and to do it safely. We want to work with the state on this and help our businesses survive.”
For businesses in the resort area, the 15 weeks between Memorial Day and Labor Day are make it or break it. For many businesses in the Delaware coastal communities, summer seasonal revenues in June, July, and August count for as much as 80% of their annual revenue. Without those key summer months, businesses could struggle to make it past the January and February slump.
When the stay-at-home order was issued back in March, about 70% of the businesses in the resort were shuttered. Gov. Carney allowed some to remain open for essential work and eventually allowed the state to move to Phase 1 reopening on June 1. But it also meant that at the resort, many businesses stumbled out of the block for the summer season.
“At this point, it’s hard to make any predictions about what will happen,” said Betsy Reamer, the executive director of the Lewes Chamber of Commerce. “The numbers we normally would have in July and August are just not here. I’d say we’re down 30% in traffic, and it’s probably higher than that.”
In the survey, retailers reported the biggest hit with a $57 million loss between 2020 and 2019 so far. Unlike restaurants and hotels that were deemed essential businesses, many boutiques did not make the cut and had to wait until June for Phase 1.
Retail businesses in the Route 1/Coastal Highway area accounted for $43 million of that loss, according to the Rehoboth chamber’s report. It is not clear whether lossers suffered by tenants at the Tanger Outlet Centers — a major driver of shoppers in that area — are included in that figure, but Tanger’s parent company did say on its website that it offered all of its tenants the option to to defer 100% of April and May rents interest free, payable in equal installments due in January and February of 2021, according to its first-quarter earnings report. The offer was attributed to local- and state-ordered closings at its 39 Tanger Outlet Centers nationwide.
Rentals/real estate and restaurants were close behind with $43 million loss and $41.8 million loss respectively. Ahead of Fourth of July, the state removed bar seating at restaurants in the resort area to stem the tide of rising COVID-19 cases. Hotels report a $31.6 million loss, and Gray said that sell-outs for the remaining four weeks won’t save the industry.
All businesses surveyed were in the 19971 ZIP code, which has been among the hardest hit by positive COVID-19 cases. But the survey also breaks down by geography, showing downtown Rehoboth Beach and the iconic boardwalk with the greatest revenue hit at $91 million.
For beach businesses to make up enough revenue loss to make it through the winter when the customer base dries up, Everhart said that there needs to be more customers.
Town officials and area tourism groups have done their best to help bring back traffic. Lewes offers free parking until noon and Rehoboth Beach does the same on Mondays to encourage more visitors. Southern Delaware Tourism unveiled an ad campaign to stress a safe summer, while the Lewes Chamber offered an advertising co-op to reach people in the D.C. metro area.
But Reamer said that these efforts aren’t showing notable results. It’s getting hindered further by the repeated inclusions on the New York, New Jersey and Connecticut travel advisory list, which led to a cascade of hotel cancellations.
“Just yesterday I was walking down Second St. and I saw parking spaces open in the middle of town. To me, that’s a symbol that the crowds aren’t here and the business is not here,” she said. “People just don’t feel comfortable coming to town to eat and to shop.”
For Michiko Seto, who owns the Blooming Boutique in Lewes, Milford and Millsboro and seven other retail shops throughout the county, she’s faced with reworking her entire business model because what she’s seeing does not look encouraging. She has been in business for 14 years.
“It’s been down mostly across the board. The locals are not coming because they think the tourists are here, and we have a large retiree community here. They’re taking this seriously,” Seto said. “I don’t blame the visitors for not coming, I wouldn’t go on vacation right now. Most of the people I’m seeing are from Wilmington and north Delaware, and I’m grateful that we’re supporting each other right now.”
What also hurts small businesses right now is finding employees, since Seto said out of the 60 employees she normally has on staff, she has about 22 on deck now.
“The unemployment payment is too good right now to entice people to come back and it gets to a point when someone calls out sick, I have to bring someone in from my location in Milford to cover it. The shop in Milford is already closed 5 out of 7 days,” she said. “It’s all frustrating, but you have to keep going. What other option is there?”
Peter Osborne contributed to this story.
Editor’s Note: An earlier version of the story incorrectly said Tanger Outlets was responsible for much of the $43 million in retail losses along Route 1, based on an interview with someone not affiliated with Tanger. Tanger said after this article was published that it did not provide information to the chamber for its survey.