John F. Russell
STEAMBOAT SPRINGS — Longtime Steamboat Springs businessman Scott Marr has seen a lot of business fluctuations since purchasing the Holiday Inn on the west side of town in 2001.
He purchased the property just prior to the 9/11 attacks and endured the economic slump that followed. And he stayed afloat when the housing bubble burst in 2008, but the coronavirus outbreak is something different, Marr said.
“I think that this, in terms of the immediate impact that it’s had on our business, is much worse,” Marr said “This has been much worse than either 9/11 or the Great Recession. It’s just was like an immediate shutoff versus those that were much more of a slower kind of exodus of people.”
Coronavirus creates almost immediate slowdown
After enjoying a record January and February, Marr and his businesses were off to a strong start in March. He is also a partner in Rex’s American Bar & Grill. However, things changed last week as the impacts of the coronavirus became real.
On Sunday, March 15, the Steamboat Resort suspended operations, and then on Monday, restaurants and bars in Colorado were ordered to close in-restaurant dining for at least 30 days to help stem the spread of COVID-19.
“You can just figure that we’re going to be down 50% for the month of March from where we would normally be,” Marr said. “So this is a huge difference (from past economic slowdowns). Once the ski area closed and the word got out that you couldn’t come here and ski, it was just like an immediate cutoff of the lifeline of our business.”
Marr said the impacts of the 2008 recession were gradual because of the many construction projects that were underway that year. He said he didn’t see a downturn until March 2009, and he was off about 20% that year.
This latest crisis started when the phones began ringing off the hook shortly after the news about Steamboat Resort closing broke Sunday.
“We would typically run 85% to 88% occupancy for the month of March,” Marr said. “We’ll probably run 40% to 45% this March, which is more typical of what we would do in April and May.”
Feeling the pain
Emily Gallagher, an assistant professor of finance in the real estate track of the Leeds School of Business at the University of Colorado, said Steamboat and other resort communities are feeling the brunt of the COVID-19 pandemic.
“Resort communities are not well-positioned for this particular form of crisis,” Gallagher said. “They’re likely to undergo a sharp, but hopefully, temporary recession.”
She said Steamboat brings in about $241 million a year from tourism, which drives the local economy.
“That (amount of revenue) is probably shot for the season and probably into the summer,” she said. “In some ways, Steamboat is lucky that this hit toward the end of the ski season. If it had hit in November instead, it would have been even worse.”
She added that Steamboat will likely see significant unemployment before the epidemic abates.
“What I’m really concerned about is that the federal government hasn’t been very focused on unemployment coverage,” Gallagher said. “So it really needs to step up and boost the amount of unemployment coverage that currently exists, so that people can keep paying their bills.”
Looking for a lifeline
Randy Rudasics, manager of the Yampa Valley Entrepreneurship Center, encouraged business owners to reach out to their banks and discuss their options for managing cash flow, including loan payments. He said businesses should look at their inventory for the summer and do what they can to manage that inventory a little more sensitively.
He also said businesses need to try to take care of their employees first and foremost, ensure safety and allow as many as possible to work from home on constructive projects that benefit the business, including social media, marketing and product development.
“I call it an extreme mud season,” Rudasics said. “I do believe some businesses will struggle more than others — particularly those that touch customers like retail and restaurants, but construction might be OK because there is not quite the same human contact experience.”
Rudasics said it’s a time for owners to reevaluate their business strategy.
“Everybody’s unique,” Rudasics said. “Some businesses are more able to kind of seasonally reduce staff, because they’re used to doing that, and now they’re just going to do it a month earlier. Others are going to struggle to maintain customer relationships and to continue to prosper when everything kind of slows down.”
Local businesses got a bit of good news Thursday, March 19, when Gov. Jared Polis announced Colorado’s application for federal disaster area designation has been approved. That means Colorado small businesses impacted by COVID-19 can seek individual small business loans up to $2 million as part of the Small Business Administration’s Economic Injury Disaster Loan program. Small businesses throughout all 64 counties, including Routt County, may now seek SBA Economic Injury Disaster Loans.
“It has been an incredibly challenging time for us all,” said Kara Stoller, chief executive officer at the Steamboat Springs Chamber. “The chamber team has been working to pull together resources for both employers and employees during this time of unknown.”
The Steamboat Chamber is offering guidance for businesses in these tough times on its website under the COVID-19 Business Resources tab, which offers guidance for what businesses need to do in times of disaster and outlines what businesses need to do to pursue a low-interest loan from the SBA.
The chamber was encouraging business owners to gather three years of federal tax returns (individual and business), personal financial statements and articles of incorporation. A business plan with financial projections might be helpful but not likely required.
“The SBA, looks like it’s going to be offering low-interest loans — the kind of thing they do after a hurricane hits — and those are nice loans, those are good loans, but small businesses probably need cash assistance as well,” Gallagher said. “I would be following very closely what’s going on with the Small Business Administration and jumping on any requests for applications for loan assistance as soon as possible.
“I also would be contacting my local officials, my senators and trying to encourage them to not just provide loans but also cash assistance to small businesses,” Gallagher added. “You know the reality is this is going to be really hard. There’s probably going to be several months with very limited revenue coming in.”
On Thursday, the city of Steamboat Springs announced it would be extending payment for February sales tax returns by 30 days with Steamboat Springs City Council to evaluate further extensions in the future.
“We hope this step will aid small businesses during this critical time,” said Steamboat Springs City Council President Jason Lacy in a news release. “We’re all in this together, and the city is committed to making its best efforts to help the community through this crisis.”
Continue to follow the Steamboat Pilot & Today’s COVID-19 coverage for additional information about resources to help businesses and displaced workers.
To reach John F. Russell, call 970-871-4209, email jrussell@SteamboatPilot.com or follow him on Twitter @Framp1966.
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Coronavirus impact leaves Steamboat area businesses looking for help in uncertain times - Steamboat Pilot & Today
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