Sept. 11 effects not as bad as feared
What the terrorist attacks have done, in part, is to change the understanding of what a normal business year will be like. Complicating the matter is that the attacks occurred in the middle of a year-long recession. The affects, therefore, varied across the economy.
The drought and fires that have scorched Colorado this summer have had an equal or greater impact, some business owners says. And businesses that are more specialized sometimes felt the effects more sharply than those that are more diversified.
“Sept. 11 was not a myth,” said the Vail Chamber’s Steve Rosenthal, who owns Colorado Footwear in Vail. “I was having a record-breaking year up until Sept. 10. We’ve been struggling since, although we’re not as far down as I thought.”
A major change was in the type of visitor. Travel jitters may have dissuaded some from making Vail a destination.
“The person we missed here was the European,” he said. “Fortunately the Mexican clientele still came.”
Rosenthal said Vail Valley marketers recognized the shift and adjusted their ideas of where visitors will drive from to get to Vail.
“We expanded our area. St. Louis is only a 15 hour drive from Vail,” he said. “The fact we are on Interstate 70 is a plus.”
Real estate rebounds
For the area’s real estate industry, the 12 months post-Sept. 11 have been much better than expected.
“We’re having our second best year ever,” said Harry Frampton, of Slifer, Smith and Frampton, the area’s largest real estate firm. “That certainly was unexpected. After the events of Sept. 11 we were terribly concerned and worried about what comes next. Sales in October and November were slow.”
But then things rallied. Sales overall this year have been 12 percent behind 2000, the best ever recorded. Interest rates at near-historic lows are helping keep buying activity strong.
For the first six months of 2002, sales totaled just over $600 million, 3 percent ahead of the previous year.
But Frampton said he feels 911 has also been a positive force driving real estate sales.
“It gave people more appreciation for what we call gathering places, where people buy because it’s a place where families come together. In essence, 911 has made people appreciate great communities like Vail, that have a family focus.”
The lodging industry recovered thanks to a strong second quarter, said Stan Cope of the Lodge Tower in Vail.
“We were severely affected by Sept. 11,” he said. “By the end of the winter we were tracking higher than we were last year.”
That was before the fires and before Colorado Gov. Bill Owens declared “All of Colorado’s burning,” on a nationally televised news broadcast. That declaration deterred people from vacationing here, said Cope.
Colorado hosts more than 24 million visitors annually, and many of them are summer visitors drawn to the scenic splendor of the the state.
“We were looking pretty good this summer until Gov. Owens announced the state was on fire,” said Cope. “The phones stopped ringing. That had a more pronounced effect than 9-11.”
Lodging outlets that depend on business travelers may have had a different experience.
For Darryl Bangert of Lakota Guides who runs rafting and backcountry jeeping trips, Sept. 11 changed the way people planned their vacations.
“People are booking closer to their trips. (Sept 11) makes people not commit to long-term reservations,” he said.
The drought, the worst in 500 years, has had a more pronounced effect on rafting in general.
“Business is down 20 to 30 percent,” he said. “There’s a lot less business.”
Vail Resorts had a solid year. Skier numbers were 4.6 percent behind last year but earnings were up through Sept 11. Last year the company posted its best numbers ever with $118 million in earnings before interest, taxes, depreciation and amortization, on total revenues of $559 million.
But despite the terror, Sept. 11’s events have also encouraged more cooperation in the valley, said Vail’s Rosenthal.
“From a positive standpoint, Vail, in the last three years, has had a much better team effort between the town, business community and Vail Resorts,” he said.
For local governments, Sept. 11 struck while they were creating their annual budgets. The attacks warned officials valleywide to tighten revenue projections.
“We budgeted sales tax collections down 10 percent,” said Vail Town Manager Bob McLaurin. “We weren’t as bad off as we thought in terms of revenue. We had more drive-up traffic (from Denver). We were probably off about 5 percent.”
The Eagle County government suffered a similar slump, County Manager Jack Ingstad said.
“The good news is resort communities were not hit as hard as some communities across the country,” Ingstad said. “The bad news is we were hit to the tune of 6 to 7 percent across the board.”
As a result, the county isn’t expecting an increase in revenues this year, Ingstad said.
It’s difficult to separate the effects of Sept. 11 from the lingering recession with its layoffs, stock market gyrations and loss of investment, Frampton said.
“The economy was soft long before Sept. 11,” he said. The most visible local sign of that is an increase in the available inventory of real estate, he said.
“I think the recession caused people to put real estate on the market,” he said. “At the current rate of sales, it won’t take long to get rid of the excess.”
But the uncertainty of Sept. 11 is still lingering, most business people have said. And many still seem to be waiting for the other shoe to drop.
“We’ll be keeping our fingers crossed,” said Rosenthal, “That when we hit 9-11 that we’ll be seeing some plus numbers.”
Cliff Thompson can be reached at 949-0555 ext 450 or email@example.com