Asheville businesses feel the pain of tourism decline

by Barbara Durr, avlwatchdog.org

A drop in Asheville tourism is hurting local businesses across the board, from shops and restaurants to hotels, bed-and-breakfasts and even short-term rentals, as owners and managers face declining revenue and uncertainty about their finances.

“We’re definitely suffering right now,” said Brandi Howard, manager for the Mount Inspiration company of three gift and clothing shops featuring Asheville mementos. “As far as we’re concerned, tourist season hasn’t really started.”

In one of her strategically located shops right on Biltmore Avenue downtown, the sales for a recent full day had not broken $100.

The Buncombe County Tourism Development Authority’s latest figures, reflecting April tourism, show a decline in total lodging sales of 11%. It also estimates that credit card spending by tourists fell by $300,000 between March through May this year, or $7.0 million compared with $7.3 million in 2022.

Tourism accounted for $2.6 billion in visitor spending in 2021, according to the figures from the TDA’s 2021-22 annual report. That included $915 million in workforce income, 27,000 jobs and $238 million in state and local taxes. The 2022 figures will not be available until next year, said TDA spokeswoman Ashley Greenstein.

“Usually, it’s like someone flips a switch, and it’s game on,” said Will Gay, the owner of the Diamond Brand Outdoors shop on Biltmore Avenue, regarding the start of July, the second biggest month for tourism after October. “This year, it’s like someone forgot to flip the switch.”

For his store specializing in outdoor clothing and gear, Gay estimates business is off between 10% and 20%.

“Tourism and hospitality have been a part of this vibrant community for generations. A healthy visitor economy helps support the wide array of creative experiences and businesses we enjoy as residents every day,” said Vic Isley, CEO & president of Explore Asheville and the Buncombe County Tourism Development Authority.

“Nearly 70% of all visitor spending occurs in establishments outside of local lodging. So, we are hearing that business is inconsistent from restaurants, shops, tour providers, arts and culture venues, and attractions — not just lodging partners,” she said.

Isley said that economic uncertainties and increased foreign travel “plus the real and perceived public safety issues” surrounding Asheville have resulted in year-over-year declines. “All of which negatively impact sales tax collections our local governments rely on to provide services to us as residents,” she said.

‘A noticeable downturn’

Many downtown restaurants are hurting. Chef-owner Mike McCarty at the Lobster Trap, whose restaurant clientele is about half tourists, said, “It’s definitely a noticeable downturn in tourism. We see it, just like other restaurants around town.”

He estimates his business at 35 Patton Ave. downtown is down about 12%.

“It’s slow everywhere, and we’re definitely feeling it,” said Shaun Hayes, the bartender at the Blackbird restaurant located on the ground floor below the Aloft Hotel on Biltmore Avenue, where most of the clientele are tourists.

“Even when it’s busy, it’s not really that busy,” Hayes said. As a bartender dependent on tips, the 13-year Asheville resident worries he can’t pay his bills.

Some restaurants rely more on local patrons than tourists and aren’t feeling the pinch. Peter Pollay, the chef and owner of Posana, 1 Biltmore Ave., said his revenue is up compared with last year and not just because he raised his prices. His guest count has increased 5%-7% compared with 2022, Pollay said.

Yet, Pollay said, “Every time I open my mouth, I’m knocking on wood.”

Business owners and managers said that visitors seem more cautious about spending, owing to continuing concern about a possible economic downturn and inflation, which has actually cooled significantly in recent months.

Downtown hotels are lowering rates and offering special deals to fill rooms, which means reduced revenues. “We’re making significantly less than we had forecast,” said Michael Lusick, senior vice president of the FIRC Group, a real estate development and hospitality management company, and a member of the TDA board of directors.

Lusick said he’s offering lower rates at his two downtown hotels — the Haywood Park at 1 Battery Park Ave. and the Cambria at 15 Page Ave. — “because they’re not doing as well (as forecast). But there’s a ripple effect. We pull business that normally would have stayed outside downtown into downtown at the lower rate, and we make less money.”

That ripple effect hits FIRC’s two hotels outside downtown, the Country Inn and Suites at 22 Westgate Parkway and Springhill Suites by Marriott in Enka.

His overall hotel revenues are down between 12% and 15%, and “I hope we’re at the bottom,” he said. But as he tracks the pace of bookings, he’s concerned that these could be flat going into the key leaf season.

Widespread economic pain

Bed-and-breakfasts, which are outside downtown, also are feeling the pain, with declines of 10%-15%, said Randy Claybrook, who owns the Bent Creek Lodge B&B and leads the Asheville Bed & Breakfast Association.

“2022 was a high-water mark, and we were slammed,” he said, but “the overall demand is just softer” this year.

Even short-term rentals were down by nearly 13%, according to TDA’s May figures.

For some hoteliers, there’s some compensatory income. The drop in revenues at FIRC’s two downtown restaurants, Isa’s Bistro at the Haywood Park and Hemingway’s Cuba at the Cambria, is less than 10% because “local business is still there, so we’re insulated somewhat from trends in tourism,” he said.

In the Biltmore Village area, just south of downtown, three hotels owned by Biltmore Farms — the Doubletree by Hilton, Hampton Inn and Suites, and Marriott Residence Inn — are experiencing the same drops in occupancy, leaving hoteliers concerned about profitability, said Kyle Highberg, senior director of operations at Biltmore Farms.

“We hoteliers are really feeling this pinch right now,” Highberg said.

He’s trying to stem the slide by chipping away at costs for such items as food, shampoos and soap. By buying in bulk, he said, he could get discounts. He also is working to bolster his hotels’ occupancy by offering special rates to segments of travelers that he previously would not have targeted, such as government travelers, who have limited per diems.

Revenues were mixed at the two Biltmore Farms hotels that are available for group meetings and events, which have declined in Asheville overall this year. Highberg said that business has changed. Clients used to book a year or two ahead, he said, now they are booking as little as a month in advance.

“It’s important to contextualize the slowdown,” said Matthew Lehman, general manager at the Grand Bohemian in Biltmore Village. “Things are notably slower than last year or the year prior, but 2021 and 2022 were some of the busiest years that this community has ever seen.”

“Yes, we are falling way behind recent performance,” he said. But “we still would be tremendously successful compared to any pre-COVID year.”

The surge of visitors in 2021-22 occurred because Asheville, with its many outdoor attractions, was considered a safe destination to visit in the mid- to post-pandemic times, he said, and it is what is called a “drive market,” where many visitors did not have to fly here.

“So that tsunami has receded now that people are more willing to get on airplanes and cruise ships,” Lehman said. “Luxury hotels in Europe are having the best year they’ve ever had.”

The small market of Asheville, he said, is “reverting back to what you would call the new normal. What everyone bandied about the last couple of years was never a new normal.”

“I think as an industry we got a little spoiled. We got a little fat and happy,” he said.

The drop in tourism here is a bit deeper than some comparable cities. In Wilmington, the occupancy tax revenue was down 3.9% in April compared with last year, the latest figures available, said Connie Nelson, the public relations director for Wilmington and Beaches Convention & Visitor Bureau.

Decline less steep in comparable markets

In Charleston, revenues per available room were down 0.5% in April and 1.6% in May compared with last year, said Daniel Guttentag, director of the Office of Tourism Analysis at the College of Charleston.

While the Grand Bohemian is a luxury hotel in a quieter part of town away from the challenges of downtown, Lehman still feels “cautiously pessimistic.”

The reasons for that bit of pessimism, he said, are that Asheville is a place that many tourists have already been to, and the increase in inventory of hotels and short-term rentals are giving visitors more choices. Short-term rentals have eaten into multigenerational visits, he said, when having a whole house can be more convenient.

While his bookings have been relatively consistent or even slightly up, bookings for the important leaf season are soft, he said, and coming with shorter lead time than in the past.

“We’re concerned because it is softer. We’re not panicked,” he said.

Several of the hoteliers said that Fox News reports on high crime in Asheville were likely a factor in some tourists’ decisions not to visit.

In the past, when business was slow, hoteliers often cut staffing. But they learned a lesson from the COVID pandemic: Building back staffing was difficult, even with much higher wages for workers. Lehman and others said they want to avoid staff cuts.

Lehman said it took almost a year to rebuild the team at the Grand Bohemian, and now he said, his aim is “keeping all these people, moms and dads employed.”

Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and surrounding communities. Barbara Durr is a former correspondent for The Financial Times of London. Contact her at bdurr@avlwatchdog.org. To show your support for this vital public service go to avlwatchdog.org/donate.