Post-Katrina economic woes continue in southern Louisiana

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The Creole Queen and the Cajun Queen, two grand paddle-wheelers that ply the Mississippi out of New Orleans, were running seven jazz and dinner cruises a day, seven days a week, with up to 700 aboard, before Hurricane Katrina ran over the city last August.

Nearly a year after storms devastated much of the Big Easy as well as Southwest Louisiana and the Gulf Coast, the riverboats are navigating the river channels again. But they are doing so with skeleton crews -- 20 instead of 125 -- and turning in skeleton-like numbers as the company struggles to adhere to three cruises a day, Fridays thru Sundays.

The rest of the week, sales are too small to support fuel and employee costs for trips down the river. The belt-tightening is an attempt to chart a course to survival, particularly over the next two months.

Last week, instead of the full jazz band, we had a duo, said John Abbot, director of sales and marketing for PaddleWheelers, the company that operates the riverboats for a pair of local owners. People were still whooping and hollering to the music -- theyre having a great time. But the numbers sure arent where they were. We are down to about 100 or so passengers per trip. We might have to scroll things back a little more.

In a city where tourism traditionally withers as heat, humidity and the odds of a tropical storm rise, even nine cruises a week -- down from 49 at pre-Katrina high tide -- could seem busy as the summer drags on.

Even if the coming hurricane season provokes nothing but anxiety this summer, the city is facing a light convention calendar on top of the traditional seasonal slowdown, and this year the industry is battling lingering perceptions that New Orleans remains a troubled city unprepared for tourists return. All are eating away at the odds of survival for many smaller tourism businesses.

The riverboats offer just one example of how tourism providers in New Orleans and the rest of southern Louisiana are faring. Tourism officials concede that the industrys recovery, though improving, remains fragile and that many businesses are at risk as they wait for an upturn in traffic this fall.

The next two-and-a-half months are going to be critical for a lot of places, Abbot said. Its not just the restaurants and hotels that are having trouble, it is the tour operators and suppliers. How many of them can make it through the rest of the summer, I guess were going to see.

Officials said they are concerned especially for small and minority-owned operators and suppliers that have struggled to remain viable since the storm, only to see visitor numbers drop so rapidly this summer that they might end up going under anyway.

Results of a recent study by economists at Louisiana State University -- numbers that state tourism officials said are estimates, but the best available to date -- show that about 9,200 tourism-related businesses were operating in the storm-affected region at the end of 2004. Of that number, about 1,410 have gone under since Katrinas visit.

We are very concerned about these business losses, and these estimates look reasonably correct to me, said Angele Davis, Louisianas secretary of culture, recreation and tourism. It is very difficult to determine the exact numbers of closings, unless you go door to door. But the estimates themselves raise a serious concern.

Of particular worry are threats to small venues, because potential losses in the arts and cultural communities could damage the character and charm of the region.

Many of these small businesses make up the unique fabric [of Louisiana], said Davis, a native of Baton Rouge. That fabric is so important to us if we are to remain the authentic tourism destination we are so famous for. Many of those small businesses are art galleries, museums, music venues, small restaurants and the like. If we lose them, we will not be the same.

Federal funds

As with other sectors of the citys recovering economy, the tourism industry is suffering from delays in getting federal money and financial help into the hands of those who need it. Earlier this month the Louisiana Recovery Authority approved a plan to distribute about $30 million in federal funds to 13 heavily affected parishes, to be used for marketing tourism in those areas.

The money will come from community block grants administered by the U.S. Dept. of Housing and Urban Development, part of a unique plan to allow the federal monies to be invested in marketing campaigns to help jump-start a more normal flow of visitors to the region. The marketing campaigns will be directed by convention and visitor bureaus and other tourism promotion organizations in the regions 13 affected parishes, aiming the funds at regional, national and international visitors.

The funds are awaiting final approval by HUD before they can be distributed.

Davis said the state has spent about $7 million in marketing since Katrina, and this month it won approval from the LRA to seek another $40 million in small business assistance funding from HUD. That request is also awaiting review.

Our small businesses have had lot of challenges to find financial help, Davis said. Many dont qualify for [Small Business Administration] loans. Many cannot qualify for a loan, period. And you are talking about small-business owners whose homes have been damaged or destroyed, who are trying to take out second mortgages to keep going. It is a very critical time.

ChiQ Simms, owner of DIVAdend Entertainment, a company that plans events and provides marketing and public relations to tourism organizations in New Orleans, has seen the worst of it so far. She relocated to Atlanta after the storms and has worked since to re-establish her operations, without much success.

My former New Orleans clients are all in the same boat as I am, Simms said. I am honestly exhausted with the long lines, busy phones, disrespect. You feel lost, empty and often as if you are begging. I was turned down for an SBA loan, and I dont know anyone like me who has received one. I am hopeful Mayor [Ray] Nagin can do better this time around, but that all remains to be seen.

Nagins office did not return calls.

Waiting for the fall

Simms, meanwhile, is organizing a New Orleans Weekend next month to gather displaced Louisiana residents in Atlanta for an observance of the one-year anniversary of Katrina. She said she wanted to put the issues aside for the moment and allow fellow New Orleans refugees to celebrate survival.  

Although the HUD-financed marketing campaign is seen as a tide that will lift all boats, the approvals have come too late for the summer season, leaving some complaining that the marketing funds should have been distributed in the spring to boost the summer trade.

Abbot said that those hanging on take cold comfort knowing they share the same situation. For example, his competitors across the river, the New Orleans Steamboat Co.s Natchez sternwheeler and its more modern John J. Audubon cruise boat, also locally owned, have imposed similar cutbacks, according to schedules posted on the companys Web site.

If we can survive through September, we can survive in good shape, he said. October looks good for us, at least on the business we have from group bookings, convention, associations and those that book well in advance. The open question is what will happen with walk-up business, which is about 51% of our business altogether.

There are conventions on tap for August, including a conference of the Full Gospel Baptist Church, a gathering of psychologists and another of realtors, events that are expected to bring upwards of 60,000 visitors to New Orleans by summers end.

The number of business failures since the storms is hard to pin down, because some owners are still scattered around the country and their phone numbers are no longer in service. Some remain optimistic that they will eventually be able to return. Some are gone forever. Davis said a flag shop popular with tourists, the oldest of its kind in the nation, was among the failures.

A story in the New Orleans Times-Picayune last month said nearly a quarter of the membership of the New Orleans Multicultural Tourism Network, a group that links minority and small tourism businesses in organizing activities for groups, conventioneers and family reunions, has become inactive.

Toni Rice, president of the Multicultural Network, did not respond to requests for comment.

In June, Rice, Lt. Gov. Mitch Landrieu, New Orleans Convention and Visitors Bureau President Stephen Perry and others in the tourism community gathered on the dais at the American Librarians Association convention to mark the event as a turning point in the redevelopment of the citys tourism industry.

During that event, Perry told reporters that while things were turning around, negative images still plagued the area long after most hotels, golf courses, fishing excursions, casinos and other attractions had reopened. Further, growing stress and the lack of marketing funds could make a traditionally slow summer period even more sluggish than normal.

Ready for business

The librarians convention brought an economic transfusion of some $20 million to $25 million from its 18,000 visitors, officials said. That boosted business for restaurants, hotels and the paddle-wheelers. But the spike faded quickly, and many businesses, like the riverboats, are again cutting days, hours and schedules to save money.

Davis confirmed reports that some hoteliers in the French Quarter/downtown area have closed upper floors to cut back on costs. But officials note that finding rooms is no longer an issue in the city, especially now that convention business is slack. Repairs and reconstruction have returned the majority of New Orleans hotel stock to service: More than 27,000 of the citys 38,000 hotel rooms are ready for guests.

Davis said the librarians conference proved that the city and the region could again handle a massive influx of visitors, especially since it capped a growing list of successful events, including Mardi Gras and the Jazz and Heritage Festival. Together, those events are helping to erode negative consumer perceptions. But it is an ongoing fight.

The librarians visit was a terrific success, but it is a good news and bad news situation, Davis said. The bad news is that peoples perception of Louisianas ability to host visitors is not a good perception.

That view comes from recent research that Davis office compiled, showing that the bounce the city received from Mardi Gras hasnt been sustained as strongly as the industry had hoped.

The research tells us that the likelihood of visits to Louisiana from key markets has declined a little, Davis said. It has regressed from the post-Mardi Gras survey that we did in March. The likelihood was 46% after Mardi Gras and rose to 50% in March, but in May it went back to 47%.

The planned $30 million in tourism marketing is expected to help alleviate that problem, she said, adding that the return of cruise ships to the Port of New Orleans in October would be another positive sign.

Looking back since Mardi Gras and the Jazz Fest, we are seeing success after success, and we remain optimistic that the recovery is going to grow, Davis said.

To contact reporter Dan Luzadder, send e-mail to [email protected].

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