New York City’s tourism industry has been devastated by the global pandemic of Covid-19. Many of the city’s attractions and transportation hubs stand eerily empty, while foot traffic and hotel bookings have cratered to levels unheard-of in modern times. New York City alone may lose as many as half a million jobs in businesses catering to visits or moving people about the city. How can the city’s tourism industry recover? How will New York City welcome visitors once again?
 
On May 12, the Manhattan Institute hosted a virtual discussion with Peter J. Madonia, Chairman of the Belmont Business Improvement District; Cristyne Nicholas, Chair of the New York State Tourism Advisory Council; and Travis Noyes, founder of Attraction Services Consulting; along with moderator Nicole Gelinas, Manhattan Institute Senior Fellow and City Journal contributing editor.

Event Transcript

Michael Hendrix:

(silence) Welcome to the Manhattan Institute for our discussion on reviving New York's tourism industry. It's my pleasure to introduce Nicole Gelinas, our senior fellow at the Manhattan Institute and a contributing editor at City Journal. Nicole is a CFA charterholder and author of After the Fall: Saving Capitalism from Wall Street and Washington. She served as a columnist for the New York Post and published analysis and opinion pieces in the New York Times, Wall Street Journal, Los Angeles Times and other publications.

Michael Hendrix:

Nicole will introduce our discussion and our panelists after 40 minutes of substantive conversation. We'll go to 15 to 20 minutes of Q&A. So have your questions ready to enter into our Slido platform. Just share your name and affiliation when you do. And with that, Nicole, over to you.

Nicole Gelinas:

Good afternoon, Michael. Thank you for your introduction and thank you to everyone for making time to watch our Manhattan Institute webcast this afternoon. In 2019, 67 million visitors came to New York City from around the country and around the world. 20% of our visitors were from overseas. Our two biggest markets were Britain and China. However, COVID-19 and the public health shutdowns due to COVID-19 have hit the tourism industry faster and harder than any other sector. This industry has been effectively shut down for nearly two months now.

Nicole Gelinas:

The shutdowns imperil what is a big job creator for New York City. In 2019, the tourism industry was responsible for half a million union and non-union private sector jobs ranging across job skills from Broadway and opera performers to hotel housekeepers and restaurant workers. These half a million jobs represent more than 10% of New York City's 4.1 million private sector jobs before this pandemic began to spread in New York City.

Nicole Gelinas:

So here today, we are privileged to have three distinguished guests to first discuss the challenges that the tourism industry faces and then to discuss how the tourism industry is already grappling with how to reopen safely and productively over the coming months. This afternoon, we are privileged to have Cristyne Nicholas. Cristyne is the chair of New York State's Tourism Advisory Council. She is also the CEO of Nicholas & Lence, a PR and strategy firm. Cristyne was the chief of the city's tourism marketing arm, NYC & Company. She is also the chair of the Broadway Association.

Nicole Gelinas:

We also have Travis Noyes. Travis is the founder of Attraction Services Consulting. His current initiatives include empire outlets on Staten Island, the New Day Initiative at Federal Hall and he serves on the board of NYC and Company, the National Parks of New York Harbor, the Lower Manhattan Marketing Association and Snug Harbor Cultural Center.

Nicole Gelinas:

We will also have joining us shortly, Peter Madonia. Peter is the chairman of the Belmont Improvement District in the Bronx. He has served as a long time advisor and confidante to three mayors including chief of staff to Michael R. Bloomberg and he is a trustee on the Randall's Island Park Alliance since 2009. He also serves on multiple boards including marquee tourist industry sector boards.

Nicole Gelinas:

So welcome to all of our guests. Thank you for being here with us this afternoon. Cristyne, I'll start with you. Cristyne, you know more than anyone else in the city about how tourism works in New York. Before we can get to solutions, we have to define the challenges that we face. Could you tell our audience the scale and scope of the situation that the tourism industry faces today and how much do previous crises particularly 9/11 and the financial crisis, can they teach us at least limited lessons of how we can think about beginning to recover, Cristyne?

Cristyne Nicholas:

Sure. Thanks, Nicole and thanks to the Manhattan Institute for inviting me. The scale is just unprecedented. New York City tourism and tourism globally has never seen a decrease like this ever in history and hopefully we will never again. When you look at worldwide Marriott's hotel inventory, it's down 95%. The airports are just completely closed. I mean, I don't need to tell everybody on this. They know the facts already, but the question is you know what can we look at from the past to try and help us move forward. What I can tell you from back in 9/11, right after 9/11, it was a completely different scenario.

Cristyne Nicholas:

Yes, things were closed. Airports were closed, bridges, tunnels were closed right after September 11th. But the devastation was in one geographic location. We had the impotence to open up. I mean, if you recall, September 11th was a Tuesday. We met with Mayor Giuliani the next day with all of the economic leaders in the city and he specifically told me and Jed Bernstein, "I want Broadway opened up tomorrow," meaning Thursday, two days after September 11th.

Cristyne Nicholas:

So we had a will, we had a way, we had a path forward and even though at first, we couldn't market internationally, we knew that we could market to New Yorkers. So our first marketing campaign was really be a tourist in your own town. Then we started to move out to the 50-mile radius of visitors sort of the local market, the low-hanging fruit. Then we went to the 250 drive-in visitors and then we went to the international visitors that had to come by air travel.

Cristyne Nicholas:

I think what we could look at with that situation moving forward is that we are going to have to take baby steps. It's not going to be a situation where we press a button or flip the sign on our door that says open for business and expect everybody to come flocking back. It just will not be possible, aside from continued travel restrictions as we see the federal government has extended the international travel restrictions for this summer. We also see that Broadway has made an announcement today that they will be closed through the summer and they haven't talked about an opening date, but they are working on refunds through September 6th I believe.

Cristyne Nicholas:

So we have to try to figure out what can we do now. What can we do now? What can we do in the next two weeks? What can we do in the next month? So it's going to be baby steps. I think what will be different in this, and we have some ideas and we can get into this later on some specifics, but in my view, market will meet demand. I believe that as we start to open, the market forces will be such that they're restricted. So restaurants will not be able to open fully.

Cristyne Nicholas:

Maybe they'll be able to open 25 to 50%. Obviously, Broadway shows and large-scale events are still going to be banned, but there will be some openings. The demand may be such that it's going to decrease as well or it can't decrease any more than it is now. People will be restricted from coming not only physically but also this has just been a total burden on economics and personal finances that people may not be able to afford to come. People may not be able to afford to go out to dinner more than once a week, once a month.

Cristyne Nicholas:

So things will start to gradually open slowly and at the same time people will start to go out and become consumers again, but it's not going to be where they can become consumers again and there won't be that spike. There won't be that V where everything dropped off and it's going to go spike right back up. It's going to be a much more gradual increase.

Nicole Gelinas:

Thank you, Cristyne. [inaudible 00:09:48] the challenges and some hints at the beginning of a recovery. Travis, welcome to you. You work with many clients across various sectors of the tourism industry including both outdoor and indoor attractions. Can you tell us a little bit specifically about the experience so far of some of your clients in trying to navigate this world and trying to figure out what realistically people are going to be able to do and want to be able to do over the next few weeks, few months and potentially even longer than that.

Travis Noyes:

Sure. Thank you for having me here today. I represent multiple clients across various industries in the tourism industry including retail, walking tours, historic sailing, some startup companies. I think it was universal that everybody lost 75 to 100 of their business overnight. So we've really approached this in stages. The first stage was, "Well, how do you stop the bleeding and how do you stop the bleeding while taking care of really valuable employees who are the heart of your business?" So that's what we tried to do immediately, figure out what government programs there were.

Travis Noyes:

Then the second was to really build up the war chest because this isn't, as Cristyne said, going to be an overnight fix. We anticipate that this is certainly a lost year of profitability, but that we're really going to need funding to operate for 12 to 18 months before things start to normalize for most of our my clients. THen it's really to plan this restart. With international travel questionable, we're looking at forecasting 18-month horizon before we can return to last year's levels.

Travis Noyes:

How can we restart the businesses with lower capacities. A lot of my clients who have outdoor products, I think are going to have a little bit of a head start opening whether that's historic sailing outside or the walking tours. But this is also a really interesting time to pivot into some of the long-term initiatives that people have been wanting to work on that they've been too busy for.

Travis Noyes:

So one of my clients, EXP1 is the largest walking tour company in the US. He's really always wanted to build a real content media side of this company alongside his tours so they could really be a local expert. So he's taken the opportunity to just start experimenting in that, building his content databases. And another one of my clients, Manhattan by Sail is taking the opportunity to take his boats out of the water and repair them and upgrade them, so that when he is able to come back in business that those are as pristine assets as they could possibly be.

Nicole Gelinas:

Thank you, Travis you've also given us quite a lot to move back to. I would like to welcome, Peter to the broadcast. Peter, again is the head of the Belmont Improvements District and a long time history of advising mayors across the last two decades. Peter, welcome to the webcast. Thank you for joining us.

Peter Madonia:

Thank you. Sorry for the technical difficulties, but appreciate it.

Nicole Gelinas:

You are highly attuned to the city's non-profit tourism-oriented sector including many major marquee museums and attractions. Can you tell us about the fiscal challenges that some of the entities that you deal with are facing right now? Also, a little bit what they're also thinking about the terms of the logistics of reopening, for example outdoor versus indoor, again, limiting crowds to a certain percentage of capacity as we see at the Shanghai Disney Resort reopening this week and other measures that that the people you work with are talking and thinking about.

Peter Madonia:

Great. Thank you. Look, everybody's facing the same space limitation challenges and financial challenges. People are trying to keep their workers employed and then certainly in terms of the cultural institutions, they have to keep their employees working to keep the facilities up and operating at least internally, even if there are no patrons. In terms of getting what reopening looks like, the two I can speak particularly clearly about are the two institutions that are surround and part of the ecosystem of Belmont, Little Italy and the Bronx, the zoo and the garden.

Peter Madonia:

I mean, they have a little bit of an advantage. They have enormous public space but they also have attractions that are indoors. So they're going to have to think about all the things that everybody is thinking about. How do you get people in and out? Is it time ticketing? How do you maintain social distancing inside your facility and how do you reopen safely which is sort of underneath everybody's... Other than the retail industry and I'm talking about the food retail industry right now that's had to figure it out on the fly, quite frankly whether it's supermarkets or in the case of Belmont, the butchers and the bakers, and the other facilities.

Peter Madonia:

But at least some of the bigger facilities can start to measure. You can actually do the arithmetic of measuring how much space do you have inside. What will it take to keep people socially distanced and how do you get them in and out safely? So I think that's the big challenge is doing the arithmetic of what it's going to take to get people in and out and manage them once they're inside or in your facility whether it's in a building or even in the open spaces like the zoo and the garden and other facilities around the city. So to me, that's the big challenge ahead of us. I think we figured it out and the sooner we do it, the better.

Nicole Gelinas:

Thank you, Peter. Also, a lot to return to there in the next half an hour. I want to go back to something that Cristyne brought up at first, but I'll start by asking Travis because I think it's a good question that the walking tour and outdoor tour companies must already be thinking about is Cristyne mentioned the tourists in your own town initiative after 9/11 and with global borders still closed with people not willing or able to get on a domestic airplane flight in many cases, Travis do you think that we will see pivot to hyperlocal and then local, and then regional, and then domestic, and then international tourism in... Are your walking tour management's people thinking that they're going to have to market for quite a while to New Yorkers who have been cooked up and then maybe people taking day trips and weekend trips?

Travis Noyes:

It's a hard answer question to answer and I think it's yes and no. A lot of the tourism clients, it's not a new thing to want to attract more locals to their products. For whatever reason, it's always a much lower percentage than it is, visitors. So I do think that there is going to be some... There is definitely some thought to how you can attract more locals into the scene, into those products.

Travis Noyes:

For example, our sailing company, we're going to do more of the events that the locals like, the sunset cruises maybe shorter outings so people feel safer. Change the way that the wine gets served, that sort of thing on the boats. But look, I think on some level, everybody can't plan for that to be the end all in the future because we're absolutely going to need a return of tourism for these companies to succeed over the long term.

Travis Noyes:

I do think that the ones that are going to succeed immediately have a couple characteristics to it. I think the outdoor functional work, while we just announced the opening of our beer garden at Empire outlets, which we thought about whether we're going to introduce it this summer or not, but it feels like people will be ready for spaces that are on the outside. So something that can attract that local, Staten Island and Manhattan population too will be important for places like that.

Nicole Gelinas:

Thank you, Travis. Bringing the same question back to Peter in trying to encourage local, hyperlocal and regional people to go out and hopefully eat at socially distanced tables and try to spend a little bit of money in their neighborhoods and in their cities and states in regions if they are able to. What kinds of things can this city do to help restaurants, help retail stores, perhaps in the Arthur Avenue corner and other areas of Belmont to encourage regional business pick up in outdoor activities.

Peter Madonia:

[inaudible 00:19:32]

Nicole Gelinas:

I don't think we can hear, Peter. I apologize if-

Peter Madonia:

Sorry. I know. My fault.

Nicole Gelinas:

There you go, okay.

Peter Madonia:

This has actually been a sweet spot for us because our clientele has been over, I would say the last 20 years growing as a regional clientele. New York, New Jersey, Connecticut, the five boroughs, the suburban areas. That's who our clientele is. We know it from marketing data we have. 83% of our people come from 10 to 40 miles away. So we know that that's who our clientele is.

Peter Madonia:

Now, I'm starting to think about in the context of what reopening looks like. So one of the things that came to my mind and I think the city can help do this is how do you create more outdoor space? And by the way closing streets isn't the answer for everybody. That isn't a one-size-fits-all solution because most of our people drive to us as they do to places like the zoo and the garden. So you close streets down. You limit ingress and egress, you actually hurt us. So how to do that smartly is a question I am sort of mulling around in my own head because I think there's opportunity there, but it has to be done smartly.

Peter Madonia:

The other option is I was thinking about this the other day. So I have across the street from my business, the bakery, there's a butcher shop next to me, we closed 6:00 or 7:00 at night. There are four restaurants directly across the street. What if I gave them my space? Now, if the city makes that hard to do then that would not be helpful. But if I could give them my space and there's places all over the world that carry food across the street. It's not the most complicated thing to do. You have to do it carefully, you have to do it safely, but it's possible.

Peter Madonia:

So I'm starting to think about things like that in a neighborhood like ours where we have this confluence of retail businesses and restaurants in significant numbers. We have 15 to 20 restaurants where we are. How to use the broader space around us more smartly? But the city is going to have to cooperate. That means not [inaudible 00:21:51] that obscure part of the building code or the health code or the consumer affairs code. If they want to allow business to come back and come back strongly because the more space you use outside, the more comfortable people are going to be, at least at the onset of reopening, I believe.

Nicole Gelinas:

Right. I think that's an excellent point and I was thinking that the other day too that maybe we should go to complaint-based only enforcement where you don't have to go and measure everyone's sidewalk café. I mean, if someone is taking up the whole sidewalk and people complain, sure go out and talk to them but maybe not have to do inspections by the book at least for the foreseeable future. Cristyne, I'd like to go back to Broadway again. You were the chairperson of the Broadway Association, an industry that obviously has a very unique challenge right now in a densely packed enclosed environment with very low operating margins.

Nicole Gelinas:

Can you talk a little bit about what Broadway is thinking about ranging from ideas like could we do some limited outdoor theater starting in the fall? Will we have to reduce seating capacity and what does that mean for ticket prices? Could they do things like Peter was talking about and maybe borrow bigger spaces. I mean borrow a stadium so you can put a performance on with the socially distanced audience. So just curious as to what the industry is thinking through.

Cristyne Nicholas:

Sure. Look this is such a great industry that they're thinking through a lot of these issues and I give credit to Charlotte St. Martin who is really leading the Broadway community through the league and I think she mentioned that she's on 12 different task forces. God bless her. Her whole day is from call to call to call. Just from seeing what the Broadway community has been doing online and through streaming, it's become very creative. They're allowing more and more shows that were taped before now to stream.

Cristyne Nicholas:

One idea could be you bring in a show that can go back to the theater without an audience, but then you show it live on television or maybe it's a pay-per-view type of situation so then that money raised could go towards the actors fund which would go into the actors who were unemployed or need healthcare during this period of time.

Cristyne Nicholas:

Maybe there is an opportunity to open up open-air pavilions that could have Broadway type of openings. Shakespeare in the Park, they've already called it for the summer, but maybe something like that could be resurrected. Maybe something larger. I mean right before COVID, Death of a Salesman was in... It wasn't Death of a Salesmen, I'm sorry. It was at Madison Square Garden, but it was the first time that a show, a Broadway show actually performed at the garden.

Cristyne Nicholas:

So it is possible to do a larger stage, larger audience and my money is on Broadway. It's the most creative community. They will stop at nothing. Remember, they were the first group to go back to work after 9/11 and it wasn't easy for many of them. They had to act. They were suffering. They had lost friends, but they didn't and that was the sign to the world that we weren't going to stop.

Cristyne Nicholas:

If you recall after each show, the audience would stand up. They held hands and they sang God Bless America. Now obviously, we can't do that now, but if I had to guess, Broadway will come back and it will be one of those few industries when it is able to open that'll open and you're going to have a tremendous demand and it will be tremendously successful once again.

Nicole Gelinas:

Yeah. I think you're right. I feel like many people miss going to play once a month or so. I also want to point out that although we're talking about tourism, tourism cross-subsidizes industries that New Yorkers really want to see come back and this is partly what makes people live in New York is this opportunity to see live theater, see live music and go to restaurants that wouldn't be possible economically without the tourist dollars that people bring in.

Nicole Gelinas:

So thank you, Cristyne for that perspective. I wanted to ask all of you about what do you think of federal aid packages so far. I start with Travis and then we can go over to Peter. Has the CARES Acts helped? Has it been too bureaucratic or both? Have some of your clients benefited from other federal aid including the higher unemployment insurance for people who are self-employed for example. What might you suggest for future federal aid?

Travis Noyes:

Well, I'd say there's some good and some bad out of it. I've worked with six different applications across companies and most actually have been fortunate to receive the aid. I think it kind of goes into three separate components. One is the disaster loan component and then there's the PPP which has a more forgivable portion to it, and then the third tranche of the most important one will be the Main Street facility which will be coming out hopefully in a couple of weeks.

Travis Noyes:

So I think that I can certainly say that a lot of people that I know wouldn't be in business without those loans coming on as quickly as they did and certainly was really messy. There was a lot of favoritism and all those sort of things that went into this, but at the end most of them ended up getting the money that they needed to at least stay in business for the shortest period of time.

Travis Noyes:

I think the biggest drawback that we're seeing especially with the PPP is that the forgivable period of eight weeks is at times where they actually can't be open. Most of their payroll is spent actually on staff who either give tours or sailboats or those sort of things. Most of those people are on unemployment right now and they both can't come back because there's no jobs to come back to and they're making enough right now where they prefer to be at home safe for the next month or so.

Travis Noyes:

So I think what will be needed I think immediately is a change to that program in which they extend the forgiveness period on payroll out by a couple months so that people can actually use it in an effective way because a lot of people I know, they're just scared to use it because they're worried that it's going to convert the debt and that they'll not be able to pay it back.

Nicole Gelinas:

Yeah. I mean, it seems like if people have already gone through the whole bureaucracy, one of the easiest things congress could do is just extend it for people or businesses that have already been approved. Peter, how how about you? Has the non-profit side been able to access any federal aid and what would you propose for a future round of federal rescue money?

Peter Madonia:

There are a couple of things and for me it's more about the small independent business people who generally prefer not to deal with government if they can avoid it. Although I think [inaudible 00:29:50] but much like Travis, the restaurant business I mean, I know restaurateurs who have kept people on and some split shift taking money out of their pockets quite frankly and they're using it to paint to clean and remodel and do things to get ready.

Peter Madonia:

By the way, with no assurance of what reopening will look like and whether people are going to want to eat out again, but they're going to believe that that's going to happen. But giving them PPP money now is paying people who are not earning, right? There's no earning happening so they're paying to keep people on payroll which they're doing because they believe it's the right thing to do. It's how you build loyalty among your team, but this has to extend further out in order for it to be beneficial to that particular industry.

Peter Madonia:

That's a gigantic industry in New York City. And the number of people that work there, I'm stunned by the numbers as I hear them in terms of the number of restaurants, 20,000, 25,000 restaurants, the number of employees, the GNP of that business and the people who work there are probably somewhere in the lower rung of earners in this town. I think while well-intentioned, I think there has to be some extension to that to reopening, to allow the restaurant business to regenerate itself, and I don't know what that's going to look like or take and I don't think anybody does.

Peter Madonia:

In order for them to survive, they work on a low profit margin. If you reduce occupancy, it doesn't mean you reduce payroll in that business. And certainly rent and insurance don't change. So if it's meant to help restaurants in particular and businesses like Travis is describing, then I think it has to be extended out because the notion of it becoming even a 1% loan doesn't help if the business isn't there to support the long-term.

Nicole Gelinas:

Right. So some consensus on just extending this program. Cristyne?

Cristyne Nicholas:

Well, I think what the PPP did in the first round was really, it wasn't thought out properly and it made people distrust the government, distrust the banks. Because what you saw is large companies applying for this and they corrected it later on and said, "Look, if companies can have access to capital then they shouldn't be applying for this." But they gave the money away. They gave the money away to universities that had endowments in billions.

Cristyne Nicholas:

They gave money away to publicly-traded companies, restaurant groups that... I understand what they were doing and each restaurant was its own, but it just looked bad, and it made people feel like this was just another boondoggle, another payout. You see that the federal government is bailing out these big industries and it made people distrustful. So I think they kind of got it right.

Cristyne Nicholas:

I give a whole lot of credit to Danny Meyer for stepping forward, for returning the money and I think that's what started the trend of other companies returning the money. But who knows who hasn't returned the money. So the second iteration it seemed to go a little bit smoother, but it would have been so simple if the federal government would just say, "Okay, this is intended for small businesses. What is a small business? It's a business that has 500 or fewer employees or maybe it's a thousand or fewer employees. It's a business that is 10 million or below. These major companies that had 50,000 employees applying for this, they knew they weren't a small business, but they wanted to grab it and grab it they did.

Cristyne Nicholas:

Shame on them. Shame on the federal government for not being... They had time to deal with it too. It's not like it was so rushed that they weren't able to put just simple guidelines in that. So I think it's created a lot of distrust in how the money is being dispensed and then also not really understanding what small businesses are going through like what Peter and Travis said that you have to spend this money by July 1st, but your employees aren't working or your company is not going to be open depending on which region you live in.

Cristyne Nicholas:

A lot of unanswered questions and a lot of ambiguity. If it's supposed to serve as a stimulus package, a lot of the businesses are holding on to the money because they're afraid of it reverting from a grant to a loan and then getting hit with the interest rate or having to pay it back even worse. So it's not serving the intended purpose of actually stimulating the economy.

Nicole Gelinas:

Right. Any future rounds would benefit from clear consistent rules on what is and what is not a small business. I'll ask one last question before we take some questions from the audience. I have many questions here from people who are listening and watching. Please do, if you have a question, please submit it and we'll try to get it to our three panelists. Cristyne, I'll come back to you because I know this is a topic that you've thought about a lot.

Nicole Gelinas:

The issue of mass transportation, how important is mass transit to getting the tourism industry back in terms of people being able to go out to nightlife and be able to have mass transit to go home. Also, could we potentially replace some airplane flights with socially distanced regional bus trips in the next few months?

Cristyne Nicholas:

Well, to answer that particular question, yes. I do believe with the number of buses that are sitting idle right now, you could get them back on the road and there are ways of distancing. I also think the airlines could do a better job of making sure that they are adhering to the distancing rules. I think that photo from United Airlines was really something stunning that a doctor took who was returning to Los Angeles. That is a five-hour flight and they had the middle seat.

Cristyne Nicholas:

I thought the rule was they weren't going to do the middle seat, there was going to be some distancing. They packed them in. If they're getting federal money, they've been bailed out. They should adhere to some guidelines that will make customers feel safer flying. I think the former Obama press secretary did a great job on Good Day New York with Rosanna Scotto the other day going over the things that the airline industry is doing to clean up and make sure passengers feel secure.

Cristyne Nicholas:

But then again, a picture is worth a thousand words. That one photo just kind of eroded all of that trust. I do think mass transportation for New York City is crucial to reopening. There's been a lot of talk about it. I also want to go back to my earlier point about market and demand because unfortunately the truth is so many people have lost their jobs in New York City that when we can reopen, I think mass transit will, not for the right reason, but mass transit will be much lower. The numbers will not be there.

Cristyne Nicholas:

Metro North, Long Island Rail Road, these areas have been devastated as far as job loss. So you will be able to distance. I think employers and employees are going to be much smarter about this. They are going to be wearing masks. They will hopefully stagger the workday and the work week so that we can work together. Overall, I think the public especially here in New York and the tri-state area, they've gotten very smart to this and they don't want to see the hospitalizations that we've seen, the death rates that we've seen. I think they're going to adhere to the rules and also to protect themselves, but also to just make sure that New York City can not only get back on its feet, but to stay on its feet.

Nicole Gelinas:

Right. You don't want to open up too quickly and then scare people away again. Before we get to questions, I'll just ask Travis. The issue of refundable tickets. I know a lot of attractions used to sell non-refundable tickets and for good business reasons because you have to plan out your revenue. You can't have unpredictable cancellations. Do you think that a lot of tourist industry businesses are going to have to sell refundable tickets for the foreseeable future so that people aren't scared, they're going to buy something that they can't get their money back if the restrictions go into place again or if they or their family members were to get sick?

Travis Noyes:

Yeah. I think absolutely. It's going to be important. We're really thinking through what the strategy is on that, but I think you know what you're going to see even more than that is really the shortening of the booking cycle for everything, for flights, for hotels, for attractions, for reservations, and that's a trend that's been happening over the last decade and I think that's really going to accelerate that people are just going to wait until the last possible minute before they book. Number one, because we've given them the ability to do that. But number two, they just don't want to risk it.

Nicole Gelinas:

Yep. And Peter, last question from me for you. Do you think we should postpone congestion pricing next year or should we go ahead with it?

Peter Madonia:

That's a complicated question, Nicole. I think people are going to want to get in their cars [inaudible 00:39:59] the speaker isn't going to want it, but I do think people are going to want to get in their cars and test the waters for a while before they get on mass transit. I'll go out on a limb. I don't think you're going to see the subway reopen between 1:00 and 4:00 and 5:00 in the morning, again, if at all, but certainly not for a very long time.

Peter Madonia:

So I think how you support the transit system, I don't know without congestion pricing, but at the end of the day, it won't matter if people don't want to get on trains. Right now, I don't think people want to get on trains. So postponing it, is not the worst idea in the world, but I don't know how you support the transit system without federal bailout. So the whole federal bailout comp question is very, very complicated and goes way beyond transit, right?

Peter Madonia:

There's going to be a bunch of municipalities around this state that are going to be in deep, deep financial trouble. That's a very complicated question. The congestion pricing is one piece of a much more complicated set of issues.

Nicole Gelinas:

Yep. Fair enough. Now, we have some questions from our audience members. I'll start with a question put to us by Stanley Goldstein. "What percentage of New York State's gross domestic product derives from tourism directly and indirectly?" I think if anyone is qualified to answer this question, it's probably Cristyne. So I'll let you take [inaudible 00:41:43].

Cristyne Nicholas:

I do know that New York State tourism is huge. It's a $114 billion industry and 1 in 10 jobs in New York State are tourism jobs. And it is the third largest industry in New York State. So New York State is heavily dependent on tourism. Now, the good news is here, New York tourism also when you look at even New York City, about 55-60% of tourism is from within the state itself. So it won't totally be leveled out even when we can start opening regionally. There'll be the opportunity for tourism growth to happen this year.

Nicole Gelinas:

Good. That's good to hear and I'll also just mention to Stanley that New York City derives about $6 billion a year in direct tax revenues from tourism. Everything from a big portion of the sales tax to the hotel tax and that's 10% of our $66 billion in local tax revenue, so very important to New York's local tax revenue.

Nicole Gelinas:

Another question, the Guides Association is launching this summer, Tour Your Own City, focusing on giving small walking tours to locals. What should guides be thinking about doing to make that work? I guess, I'll ask Travis or our audience member will ask Travis. This is an anonymous person asking this question.

Travis Noyes:

Sure. To attract the locals, I think that with a lot about things like this is that what is the opportunity in this disruption? I'm not sure exactly what the answer to that, but I think especially if it's a local market, it's going to be things that are more unexpected, right? So it's less of the kind of traditional, go to the Statue of Liberty which kind of an adventure than it would be, find the unexpected streets throughout New York City. I also do think that there's an opportunity here with the restaurants to have these food tours in their own way really to kind of take off in a unique way now that seating is probably going to be a little more limited. So I do think exploring some ideas on how to bring locals to restaurants at a unique way could be something that thrives.

Nicole Gelinas:

Okay. Thank you, Travis. Here's a difficult question, but one that I'm sure a lot of people are thinking, so we have to think about it too. "Are tourists going to be afraid to come to denser areas such as New York City including boroughs such as the Bronx which are much denser than they may be used to and where they live in different parts of the country?" That's a question from Olga Luz and I'll put that to Peter.

Peter Madonia:

I mean, look, I think there's going to be a certain amount of fear out there. I also think there's a certain amount of pent-up demand to get out, out there. So that's why I think rethinking how we use our sidewalks, our streets, public spaces in cultural institutions that have become... As a first step to get people out and establish some level of comfort within the context of all the right health guidelines is really critical. The first opening, what reopening looks like at the first iteration to me is incredibly important, and using outside... When I think about Little Italy in the Bronx, I talk about it is we're an outdoor shopping market which feels good.

Peter Madonia:

People like being out on the street because you're in open air. You go into a store and you come out. So I think there are advantages to that and using those as the first foray into reopening is important for public mindset. Not as a competitive advantage but as a public mindset on it's okay to go out, let's do it smartly, let's do it this way first and let's build to the more complicated indoor spaces that we're going to have to get to including Broadway somewhere down the road.

Peter Madonia:

So, yes, there is fear out there. I also think there's enormous pent-up demand to get out, go out and eat, go shopping, be outside, be in public spaces that are safe. I certainly know I feel that, but I believe I'm not alone there.

Nicole Gelinas:

Yeah. So back to what we started with really is baby steps with outdoor attractions. We have a fiscally oriented question from Owen Stone. "The city is going to have a massive budget shortfall. To what extent will companies in this industry have to foot the bill in terms of increased taxes and should the burden be on them?" I guess we'll start with Cristyne and then Peter because you both have so much experience directly in government.

Cristyne Nicholas:

I think to tax our way out of this crisis would be a big mistake. We've seen municipal governments do it in the past and it has just created more misery. You're going to have to allow businesses to flourish. This is going to sound somewhat radical, but you might want to ease some of the restrictions on doing business, ease some of the tax burdens and let the businesses generate income and therefore taxes, which will help in the long run. I think you have to be extremely careful.

Cristyne Nicholas:

There are ways to cut budgets. You should look at the costs and look at that side of the ledger sheet to be able to save some money, which would then in the long run help. I know that you know there's been a lot of talk about getting people outside and which is not only healthy, but get people going outside so now you look at the latest budget cuts. I noticed that the parks department has been cut, I think by $6 million which isn't a whole lot, but part of that could be, and I don't know for sure but it could be because they were anticipating closing the beaches and the pools, which I think is a big, big mistake.

Cristyne Nicholas:

If people are going to need the beaches, they're going to need to get... And the beaches are big, and as I said before people know how to distance now. We've gotten the memo. We're adults. We can figure it out. We can hopefully monitor ourselves, but I also think that the pools need to be open. They can do that in a smart way with reservations or with time ticketing. I have young kids and we go to these trampoline parks and they have to wear colored wristbands and then the announcement comes along. "Anyone with an orange wristband, you've had your two hours. It's time for you to leave."

Cristyne Nicholas:

I think New Yorkers will respect that because they know that it's a privilege. Considering that it's right now being closed. Then Adrian Benepe, the former parks commissioner, he's been talking about how dangerous this is if you do not open up the beaches or the pools because kids will do what they did back in the '20s and the '30s before we had public pools. They'll start swimming in the east river and the Hudson River. That'll end up killing many more people than this whole thing is intended to try to save, which would be a tragedy.

Nicole Gelinas:

And the mayor shutting down beaches for fiscal reasons rather than public health reasons, also tells people with resources, they should get out of town for the summer which is not the signal we need from a budgetary perspective. Peter?

Peter Madonia:

So I guess the first thing I'd look at is where was the growth in government over the last eight years and other places to cut? But you can't cut your way out of a hole that the city is facing right now. I don't believe it. We're having done this or tried to do it in 2001 after 9/11. You can cut, you can borrow. I think there's got to be federal and state money coming. It's just not possible to get to 7 billion. The credible base of the city's budget is in the most critical services, police, fire, sanitation.

Peter Madonia:

And even if you start cutting those things, you're never going to get to the that kind of a macro number. So this is, again, a much more complicated and bigger conversation about how is this nation going to look at places like New York City that were the epicenter and what do they want it to look like a year or two years or three years from now?

Peter Madonia:

You can go ask the mayor and the council to cut all the fat out of everything and they could and there's probably plenty of fat. There is plenty of fat just by definition, right? [inaudible 00:51:00] but it's never going to be enough to close a gap that the city has right now. So there's going to have to be a bunch of very hard choices made not just cutting, not just borrowing. Some of it has to come from the state and feds. And if it doesn't, we're in big trouble.

Nicole Gelinas:

Right. It's just not realistic for any city to be able to withstand basically a quarter of almost complete economic shutdown. We have two hotel related questions. What advice do you have for private clubs in the city that rely heavily on hotel and catering business including corporate events and weddings. That's another anonymous question. Then we have a question about hotels. Can you address hotels being empty in all of the five boroughs and any strategies to use that space for the hotels if not any strategies to redeploy their employees? Another anonymous question. So I'm not sure who might like to take a hotel. Cristyne, you have your hand up.

Cristyne Nicholas:

Sure. I think the mayor actually announced today that there is the empty hotel rooms, many of them will be used for people who don't have COVID, but their loved ones or people that they're living with do have COVID so they need a safe place to go. You saw that also with the front line workers that some of the hotels were being utilized for that. I think there are some ways that you can put programs like that into effect which are safe temporary uses for the hotels.

Cristyne Nicholas:

I do have concern with hotels being used for homeless services because as we know, hotels just do not have the infrastructure and the services that they need to get back on the road to recovery for them. Frankly, it's just not fair to them to put them in hotels that do not have any access to food or affordable food or some of the services that they need.

Nicole Gelinas:

Peter, any advice on the banqueting side of the hotel business, corporate events, weddings, how and when might we see that industry come back?

Peter Madonia:

I'm sorry. I didn't hear the question. It broke up.

Nicole Gelinas:

Just the banqueting side of hotels, how when and when might we see the corporate event and the wedding side come back?

Peter Madonia:

I think people are just going to have smaller weddings. I do business with some catering houses and right now they're out of business. So they're going to have to figure out how to scale down in a way that [inaudible 00:54:04]. Business entrepreneurs will figure out how to run their businesses if they are given the clear and consistent guidelines. [inaudible 00:54:15] What you can is distinctions. One person gets to do it this way but I have to do it this way.

Peter Madonia:

If there are clear guidelines on what size, what occupancy looks like in a given space, entrepreneurs will figure out how to run their businesses. Or they're closed. I mean it's not more complicated then. They don't have endowments. They don't get federal aid. They don't get government money. They have to figure out how to earn. And what's enough to earn for me to stay in business and take all the risk and all the responsibility of running a business. But I believe they will. I've talked to both restaurateurs and caterers about can you figure this out? And the answer has always been, yes, if they give us enough room and enough clarity on what we have to do to maintain public health.

Peter Madonia:

Then if they don't torture us, that's government in terms of like piggyback stuff when I'm running my business. So I think that's where government is going to have to do something that's very hard for government to do which is take their foot off the gas pedal a little bit. The public will complain if they're not happy. If you don't run your business right, if your restaurant is dirty, if you're catering house isn't following the rules.

Peter Madonia:

Especially with social media now, the public will let everybody know, not just the government. [inaudible 00:55:39] drive who survives and who flourishes going forward around the rules of the road. But the rules of the road have to be really clear from the public health side.

Nicole Gelinas:

Right. Travis is speaking of entrepreneurial flexibility. We have Jonathan White via YouTube asking, "Do you think that virtual tours will be a bigger part of the tour guide landscape?"

Travis Noyes:

Yeah, actually I do. I've been skeptical on a lot of the virtual experiences out there whether they're sustainable over the long term or you can make money off of them. But I think this is one that actually has a real opportunity and there's a lot of creativity that's going on. I think it's an area that if done right can also stimulate demand for actually traveling to places and experiencing them as well.

Travis Noyes:

I think that's one bright spot that's going to come out of this is the ability for people who really understand a location to be able to broadcast that to people who aren't otherwise able to come, and to kindle in their hearts the reasons why they want to come visit in the future.

Nicole Gelinas:

Okay. So good news opportunity, hopefully for virtual to turn into physical. And in our last moments, I'll give everyone the opportunity to make their positive case for why this industry is going to come back, and I'll start with you, Peter. While Peter gets his microphone on, let's start with Travis.

Travis Noyes:

I think that the reasons why people have always loved to travel, it's not going to change. I know as a way of example, I know my wife and I we love Italy. We can't wait to go back. I think that really some of it is just going to be driven by when a vaccine comes, and hopefully that's in the near future. But I think once people start to feel safe again that they're going to realize how precious this opportunity that maybe we've taken a little bit for granted over these past few decades of being able to fly over the world to wherever we want. I think that I'm very confident that maybe it's 18 months, that we're going to see a real rebound in tourism and travel.

Nicole Gelinas:

Good. And Cristyne, you get the last minute and the last word.

Travis Noyes:

Well, I'm always bullish on New York and I think the tourism industry is going to lead the recovery as it did in 9/11. Even after 2008, we saw a recovery because of the small businesses and tourism-based businesses. And I agree with Travis and with Peter before that there will be a pent-up demand to come to New York. I think that we can do it. I would say I would give it until 2022.

Travis Noyes:

I don't necessarily think that we're going to see the numbers that we saw in '19 and I think the growth for tourism was just so strong, and it's going to take a lot of international tourists. I do think that that's going to be a little bit slower to come back. I also am concerned about the baby boomers and up. That generation may be a little skittish to travel because they're the most vulnerable. But I do think that tourism will come back. It'll be steady growth and market will meet the demand and therefore I think it will be a safe growth together.

Nicole Gelinas:

Okay. Thank you, Cristyne, Peter and Travis. Hopefully 18 months from now, we will be sitting here complaining about all of the tourists [inaudible 00:59:25] our restaurants and our subways again. So again thank you to everyone for making time to watch our Manhattan Institute e-event and thank you to my Manhattan Institute colleagues and for our panelists for making this happen. Thank you. Good afternoon.

Travis Noyes:

Thank you, Nicole.

Nicole Gelinas:

Thanks, Nicole.

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