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Economic driver: U.S. Open will bring plenty of spending to Long Island

A tent and stands are being put up

A tent and stands are being put up at Shinnecock Hills Golf Club where the U.S. Open will be held the week of June 11. Credit: Veronique Louis

Long Island's economy can expect to score as the U.S. Open rolls into Shinnecock Hills Golf Club in Southampton this week, ushering in millions of dollars in spending at restaurants, hotels, rental properties and other businesses, according to local businesses, experts and tournament organizers. 

Strong demand drove the average nightly rate for hotels in Southampton for the week of the tournament to $895 by the end of May, according to travel website TripAdvisor. That price was about double the $441 average for the following week. Practice rounds for the Open start Monday, and the tournament runs through June 17.

Internet vacation rental service Airbnb says more people are renting space in their homes the week of the Open than in the weeks before and after, and hosts will bring in nearly $460,000 — almost four times more than in the previous week.

In Southampton, Fellingham's Restaurant Sports Bar owner Millie Fellingham said her 56 indoor and 18 patio seats will be filled all week.

"It's like a full week of July Fourth for us," she said. "Golfers' families are here, their friends are here, and there are two things they all need to do. They need to sleep, and they need to eat."

The United States Golf Association projects that the tournament — the nation's top golf event — will attract 35,000 spectators daily and create more than 1,000 part-time or temporary jobs, including those in security, parking, food and beverage. This year, 47 percent of U.S. Open ticket buyers are from outside New York State, said Jeff Altstadter, spokesman for the USGA.

The association also projects that total spending related to the U.S. Open will be $120 million, on accommodations, transportation, restaurants, entertainment and other goods and services.

Some experts urged caution in estimating the level of spending.

"The question is . . . how much higher is that [spending] than would normally have been spent in town during the same period?" said Victor A. Matheson, a College of the Holy Cross professor of economics and accounting who has studied sports economics.

Economic impact studies of sports events often fail to account for the “crowding effect,” when visitors displace people who would have been there otherwise in a popular vacation spot like the Hamptons, Matheson said.

Another factor is “leakage,” in which money spent on the tournament does not stay on Long Island, he said.

Still, in most cases, communities that host the U.S. Open will come out ahead by millions of dollars, Matheson said.

An excuse to spruce up

Business has been strong at Herrick Hardware in Southampton as people renting their property during the Open  spent money on home improvements, said Steven Grigoras, the store's manager.

Sales have reached more than $60,000 weekly, and "I'd guess about 25 percent of that is because of the U.S. Open," he said.

"Somebody I know redid their whole house," Grigoras said. "It needed a remodeling anyway, but the U.S. Open was an excuse to do it now and then rent the house out."

The Town of Southampton is allowing homeowners to rent out their properties during the Open for less than the usual minimum of 14 days.

“You’re seeing quite a few homeowners take advantage of that who may not usually be interested in renting,” said Preston Kaye, a real estate agent with Bespoke Real Estate, which has listed a 3.6-acre oceanfront estate in Southampton at $175,000 for two weeks around the Open, or a pro-rated amount for a shorter time. The tournament, he said, “is bringing a lot of folks out here that may not normally come out here this early in the summer.”

One visitor paid $35,000 to rent a 10-bedroom home for two weeks, said Ritchey Howe, a real estate agent with Sotheby’s International Realty in Southampton, but “there are also only a handful of players that will pay top dollar.” 

Hamptons real estate agents said demand has been moderate enough that plenty of rentals are still available.

Perhaps corporations and their top executives “are just not wining and dining clients the way they did in previous Open times,” Howe said.

Airbnb expects more than 120 local homeowners to rent their properties to 562 guests for the week of the Open, a big jump from 358 anticipated the week before and 327 a week later. The guests will be coming from throughout the Northeast, as well as more distant states, such as Florida and California.

Airbnb lists Southampton homes available for rent at a median price that works out to about $1,400 a night for Friday and Saturday nights (June 15 and 16) — and the top 10 percent of rentals are asking a median price of $3,500 a night, according to AirDNA, which tracks Airbnb trends. By contrast, asking rents for the weekends before and after the Open vary from $1,075 to about $1,150 a night, with the top 10 percent listed for about $2,500 a night, AirDNA reported.

Nearly 7 in 10 Airbnb hosts are women, almost 1 in 5 hosts is 60 or older, and almost one-quarter are listing their homes on Airbnb for the first time, Airbnb said.

Marty Lentz, 41, an attorney who lives in Brooklyn, is renting out her three-bedroom waterfront home in North Sea during the Open through Airbnb.

Lentz said she started getting inquiries from potential renters in the United States and abroad last year — much earlier than she expected. A family booked it about two months ago, she said.

“It was very unusual to get inquiries in the middle of 2017 for June 2018. I was surprised by that,” Lentz said. Given the strength of demand, home rental prices during the Open are about one-third to one-half higher than they would ordinarily be during June, she said. The vacation rental site HomeAway also reported a spike in business, with more than four times as many bookings as in mid-June last year, and roughly two to three times as many as the weeks before and after the Open.

Southampton is proving to be a more popular destination for home rentals than last year’s Open location in Erin, Wisconsin, outside Milwaukee, with six times as many bookings, HomeAway reported.

Local hotel booking numbers are high for the week of the golf tournament, but June is typically one of the busier months of the year for hotels on Long Island annually, said Nick Minerd, spokesman for STR, a hospitality industry research firm based in Hendersonville, Tennessee. 

Room occupancy was a little above 80 percent each June from 2015 to 2017.

“June is already a busy month in the market with hotels selling eight of 10 rooms on average over the past several years. That doesn’t leave much opportunity to push occupancy levels higher. However, we have seen a substantial lift in pricing power among past U.S. Open host markets,” Minerd said.

The Capri Hotel, located in Southampton about 3.1 miles from Shinnecock, has 29 rooms, including three suites, and was almost at capacity in late May, said Tina Glandian, co-owner.

Prices for  four rooms  at Capri available June 14 ranged from $999 to $2,799 as of June 4, according to the hotel's website. Prices for rooms available a week later ranged from $299 to $1,399.

U.S. Open fans started booking in early fall, Glandian said.

Hotels filled up fast

Demand for rooms has spilled outside Southampton.

“We have been sold out . . . for at least a year,” said Lawrence Smith, general manager for Hotel Indigo Long Island, a 100-room boutique hotel in Riverhead that is 16 miles from Shinnecock Hills Golf Club.

The town’s hotels are all either at capacity or nearly full, said the town supervisor, Laura Jens-Smith. The owners of local restaurants, shops, wineries, breweries and other businesses are preparing for the influx, she said.

“It’s the beginning of the season, so I think it will bring a lot of folks out here that wouldn’t necessarily be here this time of year,” Jens-Smith said. “There’s golfing going on all day, but in the evenings there’s plenty to do afterward.”

Some business owners predicted that heavy traffic concerns could dampen sales.

"They've done a good job with the traffic patterns during past Opens, but the perception is that traffic will be bad," said Henry Hildreth, the owner of Hildreth's Home Goods, which has two stores in Southampton and one in East Hampton. "But in the long run it will be good, because a lot of people who otherwise wouldn't be out here will see the area and come back."

Added Roy Stevenson, owner of Stevenson's Toys & Games, "Shinnecock attendees get bused in, so we never see them here. That said, other attendees are renting properties nearby, so they'll end up in the village to eat and, hopefully, shop."

Golf fans are big spenders

Towns hosting U.S. Opens typically benefit more than they would from some other sporting events because the golf tournament runs for several days and golf tends to attract fans with high disposable income, business experts said.

“The people that attend the golf tournament, generally speaking, are going to be more affluent, so the average spending per person is going to be greater than your typical visitor for just about any other sporting event,” said professor Patrick Rishe, director of the sports business program at Washington University in St. Louis.

For instance, the median household income of a PGA Tour fan was $71,800 in 2016, compared to $68,400 for the NFL and $57,600 for the NBA, according to Sports Business Daily.

English Premier League (soccer) topped the list at $81,800, while NASCAR fans ranked last, with $49,700.

The U.S. Open also tends to draw spectators from farther away, which leads to more spending, said professor Daniel Rascher, director of academic programs for the sports management program at the University of San Francisco.

“If you spend a fair amount of money getting to a location, you’re not going to stay at a Motel 6,” he said.

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