After Sandy, LI tour industry faces hurdles

Paul Monte, general manager and chief executive of Paul Monte, general manager and chief executive of Gurney's Inn, in the kitchen of the upscale resort in Montauk. Despite superstorm Sandy, he says bookings are slightly ahead of last year. (Feb. 21, 2013) Photo Credit: Gordon M. Grant

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Long Island's estimated $5-billion tourism industry, which is defined by wide beaches and iconic boardwalks, faces new challenges this summer. Still recovering from superstorm Sandy damage, the Island will be trying to lure visitors whose wallets have been thinned by rising gas prices and higher payroll taxes in a still troubled economy.

Those hurdles and the possible economic impact of federal budget cuts due to the "sequester" have led to some anxiety about the 2013 season that kicks off Memorial Day weekend.

"I'm worried people are going to be more cost-conscious, and I need to be proactive in making sure I'm there for them," said Tim Burke, owner of the Lobster Grille Inn restaurant and 230 Elm catering hall, both in Southampton. "The summer -- June, July, August -- is what pays for the whole year."

This year that's truer than ever, he says. Burke spent most of his savings -- intended to get him through slow winter months -- on repairing damage from 2 feet of floodwater churned up by Sandy. He's still waiting for an insurance payout.

Big money is at stake for the Island. Hotels, wineries, shopping outlets, beaches, amusement parks and restaurants generated $4.9 billion to $5 billion last year, as estimated by the region's top tourism official. That's just short of the pre-recession total of $5.1 billion in 2008 cited in a state report.

The industry employed an average of 103,000 people on Long Island last year, 300 more than in 2011.

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Apart from several key beaches, most attractions escaped major damage from Sandy, which struck Oct. 29, said R. Moke McGowan, president of the Long Island Convention & Visitors Bureau.

Among the hard-hit locales is the City of Long Beach, parts of which were under water from the storm surge, which left sand piled like snowdrifts in the streets. The city's chamber of commerce estimates the businesses of half its 300 members remain disrupted -- temporarily relocated, closed or struggling to recover.

 

Boosting beach business

The city's famed 2.2-mile boardwalk also was demolished, and it's uncertain whether it will be rebuilt by Memorial Day.

Mark Tannenbaum, the chamber's executive vice president, said daytrippers are lured by the beach and restaurants. About 15,000 people arrive by the Long Island Rail Road on a good day in summer, with others coming by car. His group is seeking city approval to let some businesses -- restaurants, surf shops, gift and antique shops, for example -- operate from tents along the beach if there's no boardwalk.

"It will help bring in people to the community knowing they'll have services along the beach," he said.

Sandy was particularly unkind to Jones Beach, the iconic South Shore attraction, which needs tens of millions of dollars in repairs. The boardwalk, walkways, electrical and sewage infrastructure, the snack bar, fences and protective dunes were all damaged.

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George Gorman Jr., deputy regional director for state parks, said there also was damage at Robert Moses, Heckscher, Orient Beach and Wildwood. "We are working very diligently to get all the state beaches and parks open or at least partially open by Memorial Day weekend," he said.

 

Worries over budget cutsAlthough unrelated to Sandy, federal budget cuts raise concern for their potential to affect consumer confidence. The 2 percent payroll tax increase that took effect Jan. 1 -- technically the end of a temporary reduction -- is trimming paychecks. The average reduction is $1,200 a year for households earnings $75,000 to $100,000, according to the Washington-based Tax Policy Center, a nonpartisan research group. Retailers say they already have noticed the impact, and tourism officials worry it could lead visitors to spend less this summer.

"Moderate-income families -- they're going to be more careful on how they spend dollars," said Joe Gergela, executive director of the Long Island Farm Bureau, which represents 4,000 members, including 650 growers. "That could affect farm stands, wineries, as well as restaurants, hotels and bed-and-breakfasts, all those types of things."

Burke, the Southampton restaurateur, says he expects a good season, but he's cut prices for March to attract business.

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Less concerned is Paul Monte, general manager of the upscale Gurney's Inn in Montauk, who says bookings are slightly ahead of last year.

"We didn't see a tremendous bump when they gave the [payroll tax] relief a couple of years ago, so I don't expect to see a tremendous slump when they take it back," he said.

Another concern is rising gas prices -- and whether they'll discourage travel. On Friday, regular averaged $4.024 on Long Island, up slightly from $4.013 a year ago, the AAA said. Last year it averaged about $3.90 a gallon on Memorial Day, $3.60 a gallon on July 4 and about $4.05 on Labor Day.

"Increasing fuel costs may reduce the number of trips to our centers, thus reducing the amount spent at our centers," Tanger Factory Outlet Centers Inc., the real estate investment trust that owns the well-known shopping venues, warned investors in a recent Securities and Exchange Commission filing.

Still, McGowan of the tourism bureau forecast that overall revenues will grow. "For the most part, our tourism products -- lodging and attractions, man-made and natural -- are in good stead," he said.

For some hotels, Sandy provided a boon, said McGowan, in the form of families forced to flee flooded homes and seek emergency shelter and flood-damaged businesses renting temporary space. McGowan cited figures from Smith Travel Research showing an 83 percent average hotel occupancy in Nassau County in January, compared with 56.8 percent a year earlier. In Suffolk, the average was 66 percent, up from 46.6 percent in January 2012.

"You're looking at percentage increases through the roof and rates up as well," he said.

The Island's wineries, however, though mostly spared Sandy's wrath, saw business slump afterward amid gas shortages and the cleanup elsewhere on the Island. In February, a blizzard and a nor'easter forced a one-week delay and then cut attendance at the six-weekend-long Winterfest wine and jazz festival on the East End, said Ron Goerler, president of the Long Island Wine Council and co-owner of Jamesport Vineyards.

Goerler said he expects turnout at the Island's vineyards will be boosted by Wine Enthusiast magazine's January issue, which selected the East End as one of the top 10 international wine destinations for 2012.

 

'Upward' from recessionThe Island's leisure and hospitality industry took a beating during the recession, with total revenues falling 13 percent in 2009.

"I think we're on an upward trend and will continue to improve," McGowan said.

Dede Gotthelf, owner of the 90-room Southampton Inn, said summer bookings are running even with last year and have improved slowly but steadily since the recession's end in June 2009.

"I'm cautiously optimistic that we're going to do very well" this year, she said.

Sandy's toll, however, is ever present.

"The demand is up to par, but people ask a lot of questions," said Dana Wallace, a Fire Island real estate agent who arranges rentals.

Harvey Levine, who owns the Blue Waters Hotel, Seasons Bed & Breakfast and rental homes in Ocean Beach on Fire Island, said reservations at his properties are about the same as the 2012 season's.

Repairs on Levine's hotels and houses, which were all damaged by Sandy, are about 70 percent complete. Though he is still waiting for insurance settlements after paying out of pocket for the fixes, Levine said one of his apartment rental units is nearly filled for the season.

"After the storm I was concerned, but people are calling," he said. "They're asking about Sandy, but the only thing we have to worry about is if good weather comes."

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