Friday, April 16, 2021

State of closure: California’s COVID-19 policies and the impact on tourism

By Joe Kleiman, InPark News Editor

ABOVE: California’s Great America, Santa Clara. All photos and video by the author for InPark Magazine

2020 marked the first time that every Disney theme park around the globe closed simultaneously for an extended period of time. The Walt Disney Company announced that Anaheim’s Disneyland, the grand dame of the company’s theme park family, would reopen to celebrate its 65th anniversary on July 17th. That date came and went and the Disneyland Resort’s two theme parks did not open. They remained closed as Labor Day and Veterans Day approached and throughout the holiday season at the end of the year.

On March 13, 2020, the State of California instituted operational restrictions for gambling venues, theme parks and attractions, and cinemas and live theaters.  A few weeks later, they would all be shut down. On April 28, Governor Gavin Newsom unveiled the state’s “Roadmap to Pandemic Resilience.” The plan established four stages for each county, determined by six different factors.

**Ability to test, contact trace, isolate, and support the exposed

**Ability to protect those at high risk for COVID-19

**Surge capacity for hospital and health systems

**Therapeutic development to meet the demand

**Ability of businesses, schools, and childcare facilities to support physical distancing

**Determination of when to reinstitute measures like Stay-At-Home

With Phase 1 being the worst conditions, movie theaters and gambling halls eventually found themselves moved to the earlier opening Phase 2, while theme park reopenings fluctuated between the third and fourth stages. This was partially due to the state’s experience in dealing with an international outbreaks of measles that was traced back to a single individual who visited the Disneyland Resort in 2014. Unlike with the measles, in early 2020 there were no indications when a vaccine for COVID-19 would be available and expert understanding of the disease was changing on an almost daily basis. Containment of a potential outbreak was deemed necessary. As the state saw it, unlike movie theaters, gambling halls, and family entertainment centers, whose clientele tend to remain local, theme parks draw from across county, state, and even international lines, creating the potential for a large outbreak dispersed over a wider geographical area.

The Roadmap was flawed, as it was a progressive strategy and was not implemented with the concept that things might get worse. Among its fallibilities were two key assumptions – first,

The Roadmap was flawed in that it was a progressive plan and did not include concessions for the situation worsening. Among its fallibilities was that it relied on the people of the state voluntarily adhering to four simple actions until a vaccine was ready and widely administered – wear masks, social distance, avoid large crowds, and wash their hands. These simple guidelines proved difficult for a large number of state residents to follow, especially in the earlier days of the pandemic, when the risk appeared to be less severe than what the state was ascribing. The problem was compounded by differing guidance from some federal and state officials.

As the state ordered businesses shut down, it assumed that financial hardships caused by this action would be offset by continuing federal supplemental support and loans for business owners and laid off employees.  While initial federal legislation proved helpful, additional federal aid was hindered by political quarrelling between political parties in Washington.

In response to a worsening health situation, the Governor announced on June 5 a new County Monitoring List, which imposed restrictions on those counties seeing an increase in COVID-19 positive tests and hospitalizations. By August, almost every one of the state’s 58 counties were on the list. The continually changing restrictions added to the Roadmap created confusion and on August 28, Newsom replaced the Roadmap with the “Blueprint to a Safer Economy.” The Blueprint utilized four tiers, and was very specific in listing the restrictions under which a business or activity could open in a specific tier. It also included stipulations that allowed for counties to be bumped back to a more restrictive tier if the situation worsened. Under the new plan, amusement and theme parks, along with other businesses that involve long distance participant travel, such as convention centers and spectator sports, remained at the final tier of opening.

THE TOUR

Disneyland Resort esplanade and park entrances, Anaheim

Much of the national and international attention on California’s closures have been focused on Disneyland and the other Southern California theme parks. It is well established that the Disneyland Resort is an economic driver for the state. According to a 2019 report by the Woods Center for Economic Analysis and Forecasting at California State University, Fullerton (the center is partially funded by at $75,000 grant from the Disneyland Resort), the Resort had a total economic impact on Southern California of $8.5 billion in 2018, a 50% increase over 2013.

This is a small drop in overall tourist spending for the state. According to Visit California, the government/private industry partnership responsible for marketing the state’s tourism industry, tourists to California spent $144.9 billion in 2019. In 1995, the state legislature passed the California Tourism Marketing Act, which breaks down tourism into five distinct categories: accommodations, restaurants and retail, attractions and recreation, transportation and travel services, and passenger car rentals.

When taken together, the impact of California’s COVID-19 policies has been devastating to the overall tourism economy. To understand more, we’ll take a look at three California counties adjacent to each other.

SANTA CLARA COUNTY

Visit California splits that state into 11 regions for tourism marketing, with San Diego, Orange, and Los Angeles Counties each acting as their own regions. In 2019, the year before the pandemic hit California, the fourteen counties that comprise the San Francisco Bay Area region accounted for $38.9 billion of tourism spending in the state. Of that, roughly one fifth ($7.6 billion) was spent in Santa Clara County, located at the southern end of San Francisco Bay and known as the heart of Silicon Valley.

Within the City of Santa Clara sits what we’ve dubbed “the loneliest parking lot in California.” Located at the intersection of Tasman Drive and Great America Parkway, the lot is bordered on its south side by California’s Great America, one of three theme parks in the state operated by Cedar Fair. Like its sister park Gilroy Gardens, in the nearby Santa Clara County community of Gilroy, Great America remained closed for the entire 2020 season. Although Cedar Fair does not share park attendance records, a 2016 presentation by the park to the city’s planning department showed that the park’s total economic benefit to the county in 2015 amounted to $91 million.

On the eastern side of the property sits the 68,500 seat Levi’s Stadium, home to the San Francisco 49ers of the National Football League. The stadium also acts as one of the largest concert venues in the Bay Area. The 49ers began their 2020 season playing in the stadium, sans live spectators. In November, Santa Clara County instituted a ban on contact sports, causing the team to temporarily move to Glendale, Arizona. A side impact of this is its effect on neighboring Great America, which during a non-pandemic year would remain closed when stadium events took place. In 2015, Roger Ross, then the Communications Manager for California’s Great America, told InPark: “When games are going on, every time the stadium’s shown, our park appears in the background. We’re getting millions of dollars in national marketing for free.” According to a May 2020 article by Mike Ozanian, the 49ers stand to lose $208.5 million dollars during the season without stadium revenue.

Levi’s Stadium and the loneliest parking lot in California, Santa Clara

Across the street from the loneliest parking lot is the 302,000 square foot Santa Clara Convention Center. With cancelled and postponed bookings due to its closure in March, the convention center was transformed into a COVID-19 treatment facility, dismantled in May. The Santa Clara Convention Center, which had just changed management firms, was already operating at a loss due to financial management issues with its prior firm. Fifteen minutes to the south, in downtown San Jose, sits the much larger 550,000 square foot San Jose McEnery Convention Center. In March, Team San Jose, which in fiscal 2018-2019 had brought in $63 million in revenue through its operation of McEnery and other San Jose cultural facilities, laid off 1300 staff members.

The Tech Interactive and Downtown San Jose

Across the street from McEnery is The Tech Interactive, one of the nation’s leading science museums. Shortly after indoor museums were allowed to reopen in Santa Clara County under the state’s Blueprint guidance, The Tech issues the following statement: “We were excited, like many in our community, to see the news that some businesses in Santa Clara County — including museums — can now reopen with limited capacity. However, we wanted to let you know that for now, The Tech Interactive will remain closed.

“There are several reasons for this. For one, we want to be extremely cautious about the health of our community, staff and visitors — we don’t want to contribute to the spread of Covid-19, particularly while schools remain closed. And given the hands-on nature of our experiences, we simply wouldn’t be able to open as The Interactive you know and love.”

According to the museum’s financial report for the fiscal year ending June 2020, admissions revenue had decreased $1.4 million from the prior year to $2.26 million. This includes the first four months of closure due to COVID-19.

Winchester Mystery House, San Jose

A ten minute drive to the west takes us to the Winchester Mystery House. The privately held estate/museum closed on March 13. Walter Magnuson, Winchester’s General Manager, tells InPark: “After a period of assessment by the county, we were able to open our outdoor recreation areas and gardens in May with modifications. We breathed new life into the gardens, using them to tell the story of Sarah Winchester through a self-guided tour.”

Museum staff worked hard to create a first-time self-guided tour of the mansion’s interior, adhering to COVID-19 health and safety guidelines. This inside look at the historic home opened on July 13, but only for a few hours. “The day the order went into effect in the county allowing us to reopen,” said Magnuson, “was also the day that Newsom ordered the closure of museums.”

When the Winchester Mystery House first reopened, Magnuson noted that the majority of visitors were locals, living within 50 miles of the attraction. In October, when the home started offering paranormal tours of its gardens, more people started visiting from outlying communities. “They wanted to start exploring after being stuck at home for so long due to the pandemic,” he says. One of the biggest seasons for Winchester is Christmas, when the house is decked out for the holidays. The season begins just before Thanksgiving. “We started tours again on Friday the 13th of November, and had to close again the following week.”

Magnuson has been impressed with Santa Clara County in helping him and his staff navigate the ever-changing government COVID-19 regulations. “Their response and resources have been phenomenal and they set up a call center early in the process. As long as the public continues to wear masks and social distances, our operation will be able to continue.”

MONTEREY BAY

A forty-five minute drive over the Santa Cruz mountains brings us to the coastal town of Santa Cruz, on the northern end of Monterey Bay. While amusement parks and theme parks throughout the state have opened portions of the facilities as zoos and for outdoor dining and retail, only one has actually opened rides. Operating under a provision of the state’s Blueprint that allows parks with fewer than 17,000 capacity to operate with attendance limited to county residents only (as mentioned earlier in this piece, the state has maintained a desire to limit the geographical exposure of a potential outbreak originating at an amusement or theme park) and with modifications in place, the Santa Cruz Beach Boardwalk reopened November 7. Due to worsening conditions in Santa Cruz County, it was forced to close a week later.

Established in 1953, Whiting’s Foods is the primary concessionaire at the Boardwalk. In November, 2020, In Park spoke with Ken Whiting, President of Whiting’s Foods, who also serves as Second Chair of the International Association of Amusement Parks and Attractions (IAAPA).

According to Whiting: “As a food and beverage provider at the Santa Cruz Beach Boardwalk, our company has been directly impacted by state guidance that has kept amusement parks and attractions closed in California.  After nearly eight months, re-opening guidance was recently provided, however achieving approval levels is difficult, and compliance restrictions and limitations make profitability elusive.

“It’s been a difficult year.  We have had staff lay-offs, wage reductions, and an uncertain future for all. We worry about the impacts to the hundreds of teens and young adults that we employ, as they have lost a place of belonging.  Debt service will be a burden for next couple of years, impacting business investment and employment for the future.

“We have used this ‘gift of time’ to determine ways to pivot our business, however those ideas are costly to implement, with no short-term impact.

“It’s been proven that amusement parks can operate safely in the COVID environment.  Park leadership has acted with an abundance of caution to implement and enforce policies and procedures that ensure team and guest safety. 

An hour south of Santa Cruz, on the southern tip of Monterey Bay sits the Monterey Bay Aquarium. The aquarium is one of three Association of Zoos & Aquarium facilities in California that has been prohibited from opening under state guidance. David Rosenberg is the aquarium’s Vice President of Guest Experience and the Immediate Past Chairman of IAAPA. “We look at shopping malls, which are allowed to be open in Tier 1 [also known as purple tier, indicating the worst conditions under the Blueprint system],” he told InPark. “We want parity with them and with other indoor establishments allowed to open in the Purple tier. In fact, we are confident that we have created a very safe and controlled environment – one that exceeds state guidelines.”

Pointing out that operational expenses come almost exclusively from paid revenue such admissions, Rosenberg noted that animal care amounts to close to $1 million per month. “When the gate is taken away, it becomes very challenging. Because of this, we anticipate a loss of around $55 million for the entire year [2020].”

Visit California estimated 2019 tourist spending for Santa Cruz County at $1.1 billion and for Monterey County at $3.2 billion.

THE BIGGER PICTURE

Simply put, fewer visitors to attractions, fans at sporting events, and attendees at conventions creates a domino effect that results in a drastic reduction in hotel bookings, train and airplane trips, and car rentals. Lower revenue at all these businesses results in a reduction in tax and delays or cancellations of infrastructure improvement projects. Laid off personnel begin to lack the income that would normally cycle back into the community.

Amongst the hardest hit parts of the tourism sector are hospitality and dining. Dan Gordon, CEO of San Jose-based Gordon Biersch Brewing considers state capacity caps in restaurants to be a death knell. According to Gordon, presenting at a California Assembly committee hearing on October 14, “Full service restaurants cannot survive unless they are operating at 75% or higher capacity.” He compares the state restrictions to flying a 747 with only one engine. “30% of all restaurants in the Bay Area,” he added, “are expected to not reopen.”

Speaking at the same hearing, Caroline Betita, President and CEO of Visit California, presented new research from Tourism Economics “that shows the dire situation outlined in May has gotten worse: Visitor spending statewide is now projected to be down 54.5% from last year – from $144.9 billion to just $66.1 billion – and the industry’s recovery will take at least five years. Even that outlook is based on the availability of a vaccine early next year and another round of federal stimulus, two factors that remain in doubt.”

Betita told the committee that the impact on tourism was nine times worse than the events of September 11 and that the industry’s gains had been pushed back by a full decade. As an immediate countermeasure, Visit California began transitioning ad buys from international and interstate markets to within California, instituting a new campaign highlighting the health and safety measures implemented by members of the state’s tourism community while reassuring residents that it’s possible to have fun while traveling safe. At the same time, Visit Calfornia is working with partner organizations and agencies to develop long-term strategies on revitalizing the state’s tourism economy.

As Santa Cruz’s Ken Whiting told us: “COVID-19 has won a few battles, but it won’t win the war.”

Joe Kleiman is News Editor for the InPark website. He has 25+ years management experience: in tourism, museums and attractions, in the giant screen industries and as a zookeeper. Based out of Sacramento, he has been covering the impact of COVID-19 on the attractions industry globally and in California for InPark since January, 2020.

Contact Joe at [email protected] and follow on twitter @ThemedReality.

ADDITIONAL INPARK COVERAGE ON CALIFORNIA ATTRACTIONS AND COVID-19

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