A mass cancellation of large events could be a harbinger of future business shutdowns in Philadelphia, business owners fear.
On Tuesday, Philadelphia officials announced that all large public events, including the Broad Street Run and the Mummers parade, will not be held through the end of February. News of the cancellations comes amid surging COVID-19 cases across the country. The loss of events is a new blow to struggling businesses across the city, many of which reopened only two weeks ago when Philadelphia entered a modified version of Gov. Wolf’s green phase, easing many restrictions.
The cancellations present another threat to the survival of the city’s restaurants and retailers, said Larry Steinberg, a retail broker at commercial real estate firm Colliers International. Many shops and restaurants are barely scraping by after losing business that once came from workers in commercial districts, business travelers, and tourists, said Steinberg, who also serves as president of Rittenhouse Row, a merchants’ association in western Center City.
“Any time that you cancel events that are going to draw pedestrian traffic to the streets that in turn service the retailers and the restaurants, you’re putting a hurting on them,” he said. “It’s another nail in the coffin.”
But Jacob Cooper, of brokerage MSC Retail, said most shop and restaurant operators he’s spoken with had already assumed that there would be few large events over the next year or so and had adjusted their expectations.
“I can’t imagine that the retail and restaurant tenants in Center City were expecting and banking on these as large generators of business,” he said. “My sense is that everyone is focused on reduced capacity and reduced revenue streams well into next spring.”
The cancellations shouldn’t have a major impact on Philadelphia’s trajectory as a home for businesses, maintained Bill Luff, who leads commercial property consultancy CRE Visions in Philadelphia. Although local office landlords benefit from the buzz that’s partly fed by Philadelphia’s major events, cities that they compete with are also taking similar measures to limit spread of the virus.
“If you’re measuring the impact on Philly, you have to ask, where else can you do that?” he said. “And who can rotate on a dime and say, ‘Philadelphia doesn’t give me that today so I’m going to pack up and move to Chicago.‘”
The cancellations will hurt the hotel industry, too. Ed Grose, executive director of the Greater Philadelphia Hotel Association, said that although hotels don’t normally rely on large public events for big revenue increases, other losses this year made those events more important. “The business travel has pretty much stopped, all of our conventions have been canceled, and this was all we had left.”
Several area hotels suspended operations after seeing occupancy levels plummet to 22% in April. Some of those hotels, such as the Four Seasons and the Loews Philadelphia Hotel, plan to resume operations by the end of July. “There’s a good chance that this will delay a lot of hotels’ resuming operations,” Grose said.
Since the start of business shutdowns in March, several area hotels have laid off hundreds of employees, according to notices from the Pennsylvania Department of Labor and Industry. The number of permanent layoffs might worsen with these event cancellations, Grose said. “This is definitely a gut punch for our employees.”
The longer that hotels struggle to fully resume operations, the worse Grose thinks the impact will be on the local economy. “The hotel industry is a very viable economic engine for the city of Philadelphia,” he said. Loss of revenue for hotels also means loss of revenue for restaurants and museums, as well as for the city and state, which make money off the 15.5% hotel tax. Authorities will also miss sales taxes on drinks, food, and parking.
Ben Frank, executive director of the Center City Proprietors Association, agrees that hospitality and service companies will continue to suffer. “They’ve all been devastated anyway, in terms of canceled events,” he said. “This continues the damage.”
Frank notes that the various law and accounting firms he works with likely won’t be affected, because most are already working remotely. But he thinks the announcement will push other businesses to shift more permanently toward remote work. That could lead to a prioritization of co-working spaces over long-term leases in office buildings, and a lower volume of foot traffic in Center City.
The cancellations could also have negative implications down the line, Frank added. “Having everybody come and see how great Philadelphia is, and now having that not happen, is something that might prevent people from booking conventions here.”
Still, Frank agrees with the city’s efforts to keep everyone safe. “Obviously, it makes sense that those events would be canceled.”
Jeff Guaracino, president and CEO of Visit Philadelphia, is also glad the city made an early decision on these events. “By giving notice now to visitors and residents and producers, it gives them time to make a change in their plans,” he said.