Businesses around the country are facing nearly unsurmountable challenges due to the coronavirus-mandated closures. Unemployment numbers are staggering, millions of workers are furloughed, and many businesses that remain open have seen sales fall by 80 percent or more. National statistics are reflected locally. Businesses in Newport Beach are experiencing challenges of their own.
NB Indy writer Richard Simon corresponded with Steve Rosansky, president and C.E.O. of Newport Beach Chamber of Commerce, and created a Q&A with Rosansky to illuminate readers on how the Newport Beach business community is responding to the coronavirus situation. Among the many challenges is one positive note: the Chamber-sponsored Christmas Boat Parade this December will go on as planned—possibly with viewing modifications.
Q: Coronavirus has had an incredibly damaging impact on the nation. What effect is it having on Newport Beach businesses?
A: Businesses in Newport Beach are suffering to an equal or greater degree than most other areas of the country. Business owners are struggling with having to pay salaries, rent, insurance and utilities with little or no revenue stream, forcing them to dip into limited cash reserves. To a large extent we are a tourism-based economy, and those are the industries that have been hardest hit by the nationwide lockdown. Most of the major hotels in town are closed. The remaining hotels are seeing occupancies of less than five percent. Although a significant percentage of restaurants have been able to remain open with limited take-out and delivery options, the inability to have a dining in option has hobbled them.
Fashion Island closed over a month ago and all the major retail centers in the City have seen a fifty percent or greater closure of non-essential businesses. Another significant portion of our business economy, automobile sales, has also seen a huge drop-off. It also remains to be seen what impact the shutdown will have on the local real estate industry. Anecdotally, I understand that residential real estate activity has seen a significant reduction and that the commercial real estate market is already seeing drops in asking rents for office and retail space. What the long-term impact is on prices remains to be seen; but in the short run, we may see declines in real estate prices for the first time in years. In addition, many residential landlords are experiencing an uptick in tenants either unable or unwilling to pay rent. This trend has been accelerated by temporary governmental prohibitions on evictions.
Q: Have you heard of anyone in Newport Beach going out of business?
A: At this point I only have heard of one business that has closed up shop and moved on Balboa Island. The Chamber sent out a survey about a week and a half ago to our membership. We received 66 responses back and when answering the question if any had closed permanently, none said that they didn’t plan to reopen at some point. However, as we move forward, I fully expect that there will be two waves of business closures. The first wave will be businesses that will not reopen their doors when allowed to do so. The reasons may vary: not enough business capital, inability to reconstitute their workforce; lagging supply chain issues; lack of desire to re-open a business that was losing money prior to the pandemic, among others.
The second wave will be businesses that manage re-open but, in many cases, lack the ability to operate profitably. Restaurants are marginally profitable in the best of times. As we allow these businesses to re-open with limited dine-in options, many will not be able to generate sufficient sales to operate profitably. Other businesses will experience a decline in sales due to a loss of customers who are still unemployed or who have migrated to other retail options such as online shopping which has accelerated as a result of closures and bankruptcies as a result.
Q: Do you have any unemployment reports for Newport Beach?
A: I am not aware of any unemployment reports as of yet that specifically breakout Newport Beach figures. Even if we had one, I don’t think it would adequately reflect the employment downturn. Many Newport Beach residents are self-employed and have no incomes. For years I was self-employed but when those times occurred when business dried up, I didn’t think of myself as unemployed, only as losing money. Clearly, many workers have either been fired, laid-off, furloughed or working less hours and/or for reduced pay.
Q: What are the fiscal challenges facing the Chamber right now, or in the near future?
A: Like any other business, the effect of the nationwide shutdown has made a significant impact on the Chamber. As a membership organization, we rely on the voluntary financial support of the members to fund our operations. Basically, as we send out renewal invoices, we are asking our members to pay if they can. A very select few (the “Amazons” of the world) are still doing well and we hope they will continue to partner with the Chamber. Others are struggling and we are willing to work with them to keep them as active members of our organization. In addition, we derive a significant portion of our revenues from events and sponsorships. Unfortunately, we have had to cancel all of our meetings since the middle of March. Some we have postponed, like our 500 person Police Appreciation Breakfast and the City Employee Appreciation BBQ. Others like the Scholarship & Athletic Awards Dinners have been cancelled outright. At this point we have no date set for reestablishing these type of activities.
Q: How is the Chamber planning for the reopening of businesses?
A: Up until about a week ago our primary focus has been to act as a conduit of information to our membership in such areas as obtaining grants or loans from the federal government though the SBA disaster relief programs such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan program (EIDL) among others. We have also helped them by providing resources related to working remotely and updating them on the latest information coming out of the local, County, State and Federal agencies affecting their businesses.
Lately, we have begun to re-establish some of our meetings through the use of Zoom and webinars in order to allow them to network their businesses and to share best practices. Going forward, it will be our goal to provide information to our membership on how to reopen responsibly by planning for a safe customer experience when visiting their businesses as well as a healthy environment for their employees through the use of best health and safety practices. We will also be working closely with the City Council’s Economic Task Force to develop a plan to re-open business in Newport Beach.
Q: What can the Chamber do in this financial situation to support business?
A: The Chamber remains open and fully functional. We are here to act a resource to our membership and as an advocate for the Newport Beach business community.
Q: How many members are in the Chamber, and do you think the numbers will remain steady?
A: As of March the Chamber officially had a total of 690 business members. While our goal is to retain every one of them, inevitably there will be some that go out of business as a result of the COVID-19 pandemic. However, even in the midst of the shutdown, we have seen a couple of new businesses join the Chamber. As old businesses leave, new businesses will open to replace them, and we are confident that they will see the value proposition in being an active member of the Newport Beach Chamber of Commerce. Keep in mind that our Chamber was formed in 1907 and has weathered the Great Depression, recessions and wars.
Q: Will the Chamber sponsor the Christmas Boat Parade this year, or too soon to tell?
A: We have already had discussions within our organization as to whether there will be a 112th Annual Christmas Boat Parade this year. I am happy to announce that we fully intend to host the parade in December, and I have already spoken to City Council members and City staff in that regard. Depending on the situation that exists as we get closer, some accommodations might have to be entertained with regard to the health and safety of the boaters and the spectators. But even if we have to revert to the first Christmas Boat Parade and row a rowboat around the harbor with a lantern hanging off the end, the Parade will go on.
Q: What long-term impact do you think the business stoppage will have on the city?
A: Out of all that has happened, I have been inspired by the ability of the City, whether it is the residents, businesses or the City government, to adapt, to improvise and to eventually overcome, the business stoppage. I liken the business carnage caused by the Coronavirus Pandemic to an Economic Earthquake. Out of the destruction that we have self-imposed in order to get the virus under control, we will re-build stronger than before. Of course, the new economy may be somewhat different as we adopt new ways of doing business. As some businesses leave, others will come to take their place. All of the factors that make Newport Beach one of the most desirable places to live, work and play are still here and unaffected.