Oil's lingering effect
The oil seems to be gone, but the economic impact of the distaster lingers
The Slick Effect While the visible physical impacts of the BP oil leak are minimal in Northwest Florida, the economic damage of the disaster is a dilemma that continues to unfold — and it has cost small business the most. By Wendy O. Dixon, Zandra Wolfgram, Jason Dehart and Carolyn Devonshire Originally published in the Oct/Nov 2010 issue of 850 Magazine
It was just a matter of time.
When the Deepwater Horizon oil well exploded on April 20 and began spewing millions of gallons of oil and methane gas into the Gulf of Mexico, the people of Northwest Florida knew the toxic mess would eventually drift their way and make landfall. The big questions were when, where and how much?
As they waited, the past six months have been some of the most frustrating ever for Gulf Coast businesses. When waves pushed patches of oil and tar balls onto area shores, fishing spots were closed and those who looked to the Gulf for their livelihood wondered how their future would now unfold. As oil mousse created a toxic odor and mixed with sea grass — the images flashed worldwide via the news media and Internet — hotel reservations were canceled, the jobless rate went up and some businesses teetered on the verge of bankruptcy.
This debacle could not have happened at a worse time of year. The oil approached just as locals were beginning to see the light at the end of the tunnel after a long recession. But the taint of oil — perceived or real — devastated what was supposed to be Northwest Florida’s “season.” And the already fragile economy came close to shattering.
Local businesses are still reeling from the losses that cast a pall over their major income-earning season. Even if all the oil goes away tomorrow, many fear the stigma will last long into the future.
In retrospect, business owners across the region say the public perception fostered by 24-hour news coverage of the spill may have caused more damage than the oil itself.
“The media is one of our major problems,” said longtime Apalachicola oysterman Grady Leavins. “Not bad in most cases, but they hammered on something so long that you could destroy an industry whether you wanted to or not. They destroyed the tourism industry for the most part.”
And as video of dead dolphins and oil-covered birds filled television screens, fear of the oil reached beyond Florida’s shores, to the consumers who suddenly became wary of eating the shrimp, crabs and fish that the Gulf is so famous for.
By late July, the commercial shellfish and fishing industries were off about 23 percent.
Jerry Sansom, executive director of Organized Fishermen of Florida, said that even though their seafood is perfectly safe to eat, commercial fishermen weren’t able to move their product.
“The problem is the perception that if (seafood) is from the Gulf, it’s dripping with oil. That’s very wrong,” he said.
Adding to the problem, many charter boat captains and fishermen opted to work for BP, deploying booms and skimming oil. And that often left restaurants without the fresh seafood their menus promised.
Looking back over the past six months, it’s hard to find any aspect of life along Florida’s northwest Gulf Coast that hasn’t been affected.
First Family Promotes Gulf Coast Tourism
While enjoying a boat ride aboard Bay Point Marriott’s 50-foot ferry, the Bay Point Lady, the nation’s first family was greeted by a porpoise that swam alongside as they cruised St. Andrew Bay. President Barack Obama, his wife and two daughters had come to Northwest Florida in August to promote tourism. The president raved about the area’s beauty and declared the beach open for business, encouraging Americans to vacation in Panama City Beach.
“Today the well is capped. Oil is no longer flowing into the Gulf,” Obama told local small-business owners on Aug. 14. “I’m here to tell you that our job is not finished, and we are not going anywhere until it is. That’s the message that I wanted to come here and deliver directly to the people along the Gulf Coast — because it’s the men and women of this region who have felt the burden of this disaster. They watched with anger and dismay as their livelihoods and their way of life was threatened these past few months.”
Lee Ann Leonard, general manager of By The Sea Resorts in Panama City Beach, met with the president during his visit. By mid-August, the resort chain, which consists of three Gulf-front hotels, a restaurant and a church retreat, had documented more than 1,000 room night cancellations caused by the oil spill, translating into nearly $200,000 in lost revenue. And Leonard was expecting still more losses.
“I was brutally honest about how hard it will be for businesses like mine to make it when the revenue is just not there,” Leonard said. “Certainly, the first family’s visit will help increase consumer confidence, but it will still be difficult. Even if we have a great September and October, it’s not going to make up for a loss in July, during which we charge twice the rate with longer stays because of summer vacations.”
Coping As Best They Can
The calls began as a trickle in late April. The operator of charter fishing boats Lady Em and Fish N Fool saw eight trips a day dwindle to just one a day. By mid-May — a month after the oil began gushing — cancellations caused by guests changing travel plans were flooding in.
“This is peak high season. We are usually fishing hard and often, and now we just have one boat for fishing and one working with BP, but the boat that is available is not booked every day, so it’s a double kick in the teeth — we don’t have the boats and we don’t have demand,” Capt. Mike Eller, a longtime fisherman who has owned and operated Fish Destin since 1991, explained with frustration late this past summer. “Now, 2010 is lost completely as far as I can tell.”
Unfortunately, Eller’s tale isn’t a tall one. According to the Beaches of South Walton Tourist Development Council, reports for May alone showed that room occupancy levels were down 6 percent, rental revenue was down 6 percent, food and beverage revenue was down 16 percent, and revenue from additional products and services sold was down 32 percent. Even in places where oil wasn’t evident, bookings were down significantly throughout the summer.
“If you have a family and a week off, would you even chance it? I wouldn’t,” said Justin McMillan, owner of Journeys of St. George Island. “So I understand.”
Though Molly Caroline’s is among those suffering reduced numbers, Whipple Van Ness Jones III, the owner of the Seaside boutique shop that specializes in Vera Bradley merchandise, said decreased sales were just the beginning.
“It’s killing us,” Jones said. “It’s a food chain thing. Because sales are down, we’ve had to cut back hourly employees and even let some go.”
Is there a silver lining to BP’s oil sheen? According to boat captain Eller, who is also the co-president of the Destin Charter Boat Association, 99 percent of the local charter companies were contracted by BP as “vessels of opportunity,” charged with spotting oil, watching boom or cleaning up oil. So, what was a bust for many became a boon for select local charter companies. But even a silver lining fades at some point.
At Destin Seafood Ice Market & Deli, general manager Jay Carmena said sales are down 40 percent compared to last year. Ironically, prices of seafood are up because of shortages caused by fishermen and shrimpers working for BP.
To cope, Carmena said, “We’ve reduced expenses, cut back on employee hours and will wait to see how it all works out.” In the meantime, he is spending more time than ever countering concerns over his seafood. “We reassure them that both the state and federal inspectors are out in full force and are checking more stringently than they were before to be sure it’s safe,” he said.
Sparky Sparkman, owner of The Spinnaker Lounge and Beach Club, said he has tried to keep hope alive among his 300 employees.
“You try to put on a bright face for staff because they live and die by the season,” he said.
Perhaps Pam Anderson, operations manager for Capt. Anderson’s Marina in Panama City Beach, put it best when she said simply, “Everyone’s frustrated.”
She compared the spill to a “slow-moving hurricane you have to get through, except this has been going on for months. No one knows how long it will take for the oil plumes at the bottom of deep Gulf waters to wind up on shore.”
Meanwhile, local businesses wait to see the final tally of their summer season — and continue to wonder how much compensation they will get for their losses.
“I don’t see how BP can make everyone whole,” said Yonni Patronis, owner and general manager of Captain Anderson’s Restaurant.
Philip Griffitts Jr., chairman of the Panama City Beach Chamber of Commerce and owner of the Sugar Sands beachfront hotel, said advance bookings stopped in June when occupancy rates were already down by 20 percent.
So local businesses tried some creative marketing approaches. Many Gulf-front hotels installed live webcams to give potential tourists a close-up view of the oil-free beaches.
“We have a ‘oil-free guarantee’ that the beach will be clean or you’ll be given Shipwreck Island tickets to enjoy the inland water park,” Griffitts explained.
In South Walton, the Tourist Development Council tried to turn the tide of misperception and lure visitors back to its beaches by spending $1.35 million on a testimonial-driven marketing campaign centered on how to “be” in the Beaches of South Walton.
In early August, the council began offering $250 vouchers for Southwest Airlines tickets or purchases at the Silver Sands Factory Stores to visitors who would spend at least three nights in one of the county’s more than 500 hotel, motel or rental properties.
“We know many of our loyal visitors have been concerned about the Gulf oil incident, but our 15 beach communities are open for enjoyment, and we’re ready to prove it with this reward,” said Dawn Moliterno, executive director of the Beaches of South Walton.
Many local tourist agencies focused on the positive — in this case, what’s off the beach path — and some areas used big-name entertainment to lure in visitors. The Emerald Coast Convention and Visitors Bureau held a concert series called “Rock the Beach,” starting in June with Kenny Loggins and the Doobie Brothers performing. It was paid for in part through the $25 million that BP gave the state to counter the effects of the oil spill. And musician, Gulf Coast lover and businessman Jimmy Buffett, who just opened a new Margaritaville Hotel in Pensacola, held a free concert in Gulf Shores, Ala., in mid-July to promote tourism in the region.
“This is a testament to the willingness of local business owners to rise to this challenge,” said Dan Rowe, CEO and president of the Panama City Visitors and Convention Bureau.
Among those sharpening the marketing hooks and battening down the hatches was Capt. Eller, who has owned his company, Fish Destin, for 20 years. He updated the company’s website and made catering to loyal customers a priority.
“We already refocused our attention when the economy took a nosedive,” he said. “We knew what would keep us strong was keeping the clients we did have. I saw this as a young captain: You may not have the nicest boat or the biggest catch, but if you treat people well, you will build a strong clientele.”
Where from Here?
“One way or another, we will be forever changed by the oil spill,” said Chad Hamilton, chairman of the Fort Walton Beach Chamber of Commerce. “The uncertainty as to whether this is a one-year, three-year, five-year or multi-decade impact is what makes this so difficult.”
He cautions that the unknown and the gloomy potential of adverse effects from the oil spill can make it difficult to endure.
“We cannot liken this to the impact of a hurricane because we have a historical perspective on how to recover from a storm,” he said. “An oil spill of this magnitude presents far different threats of damage, many of which may require us to have the endurance to hold on through nature’s repair of the ecological damage.”
Though he expects that tourism will take a couple of years at best to recover, Eller has faith in the beach destination he calls home.
“Mother Nature is very resilient, and so is the economy of the Emerald Coast,” he said.
But for the best outcome, the local businessman believes the entire community will need to take the high road when it comes to local travel.
“I encourage everyone to fill up their car at a BP gas station, because if they go broke, we all lose,” Eller said. n The News Service of Florida contributed to this report.
An Ironic Twist
Despite bad press over the threat of oil-soaked beaches, Florida tourism numbers were up for the second quarter of 2010. Nearly 21 million tourists — 18.3 million U.S. residents and 2.5 million tourists from overseas and Canada — came to Florida for a visit during the three months ending June 30. The bad news: They did stay away from many Panhandle destinations.
Trips to Florida from U.S. residents were up 2.4 percent from the same period in 2009. Overseas tourism was up 11.9 percent, while Canadian travel markets improved by 10.4 percent.
Source: News Service of Florida
BP, which transitioned its individual and business claims program to the Gulf Coast Claims Facility in late August, paid out nearly $400 million during the 16 weeks it managed claims related to the oil spill in the Gulf of Mexico.
Claims activity since May 3, when BP paid its first claim, are as follows:
Amount Paid: $399 million
Claims Filed: 154,000
Checks Written: 127,000
Calls Received: 166,000
Total Amounts Paid by Category
Wage Loss, Undefined: $157,000,000
Rental Property Owner: $48,000,000
Oyster Harvester: $10,000,000
Charter Boat Owner: $8,000,000
Real Estate Sales: $4,000,000
Seafood Processor: $4,000,000
Restaurant Owner: $4,000,000