One of the state’s leading tourism experts believes there will be a steep drop in tourist visitation and bed tax revenue due to the effects of the coronavirus pandemic. And the director of the Missoula International Airport said passenger revenue is drying up and causing “distressing” budget deficits.
Norma Nickerson, the director of the Institute for Tourism and Recreation Research at the University of Montana, told members of the Economic Affairs Interim Legislative Committee on Tuesday that she estimates there’ll be 50% less statewide bed tax collections for fiscal year 2021, which runs from July 1, 2020, through June 30, 2021. She’s also projecting 75% less visitation in the third quarter of 2020.
That’s a devastating blow to the economy and tax revenue in a state that relies on tourism as a major industry. Montana drew 12.6 million nonresident visitors in 2019, and those tourists spent about $3.6 billion combined. That spending supports roughly 60,0000 jobs and is especially important in western Montana.
In 2019, the gross lodging tax generated by the City of Missoula was $2.75 million. In the first quarter of 2020, only $326,000 was generated, which is down 16% from 2019.
Nickerson said her estimates might be “optimistic.”
“But I hope not,” she said.
Nickerson said large research firms, from which she gathers data, show that most potential American travelers are much more likely to be supportive of mask-wearing policies rather than opposed to mask-wearing.
“There’s three times as much support for mask-enforcement policies than opposition,” she said. “And three-quarters of travelers are supportive of existing or potential 14-day quarantine policies for travelers from states with high incidences of COVID-19.”
The Missoula International Airport saw a drop from 36,285 departing passengers in May of 2019 to only 5,100 in May of this year, an 85.94% decline, according to airport director Cris Jensen.
"For the month of June to date, we are averaging around 400 passengers per day depending on the day of the week,” he told the Airport Authority Board in a memo. “In June of 2019, we had 43,335 enplaned passengers or approximately 1,444 daily passengers.”
But Jensen said airlines are adding capacity in the future, with American Airlines actually expected to add seats to the market this year compared to how many they had last year. American is allowing 85% of the aircraft to be filled, with Delta only allowing 60%. Allegiant Airlines has no cap but is telling passengers if a flight is over 75% capacity, they may book another flight at no charge.
“As you can see, all very confusing,” Jensen said.
Jensen said the budget is an area of concern because revenue associated with passenger traffic is “essentially drying up.”
In March through May of 2019, the airport brought in roughly $1.77 million in revenue versus $1.52 million in expenses. In the same time period this year, the airport had revenues of roughly $900,000 compared to expenses of $1.46 million. That resulted in a budget deficit of approximately $556,376, which Jensen called “distressing.”
The airport is still in the midst of a massive expansion and Jensen said COVID-19 has not had a major impact on the budget or schedule of that project. He added that the airport received $5.6 million from the federal CARES Act.
Nickerson said passenger visits to the Bozeman airport have been down 90% at times. She said airlines are cancelling flights, so tourists are just deciding not to book trips.
Todd Frank, the owner of the three Trail Head outdoor gear and river sports stores in Missoula, said his downtown location has seen a big drop in business.
“We’re down downtown significantly,” he said. “But we don’t have boating in there anymore, because we moved our boating equipment out and to our Midtown location last year,” he said. “Apparel is the most challenging category. It’s partly supply chain issues, but partly because people are uncomfortable trying on things.”
He said he’s seen “a ton” of tourists coming in to the downtown location.
“But they don’t seem to have anything to do,” he said. “They’re just kind of wandering around. Activities are shut down, so they’re wandering around. They’re doing a little bit of shopping, but it’s not moving the needle.”
For boat sales, Frank said he relies much more on locals than out-of-state tourists.
“People are finding things to do within 150 miles of Missoula,” he said. “They didn’t go to Bali on spring break, so now they’re buying a raft.”
The Trail Head women’s store in Southgate Mall has seen a big drop in business, and Frank thinks that’s because people are just not going to the mall as much right now.
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