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Fewer direct flights out of RDU could impact Raleigh’s hospitality industry for years to come. Meanwhile, airport improvement projects have been put on hold.
With much of North Carolina operating in shutdown mode for months, we’re beginning to see the effects that COVID-19 has had, and will continue to have, on the health of our local economy.
Raleigh has long been an epicenter for both leisure and corporate travel but it will now undergo a test: How quickly can the City of Oaks and the region bounce back in the wake of a worldwide pandemic once the state is fully reopened? With Raleigh-Durham International Airport seeing drops in flight services similar to what happened post-9/11, local tourism and airport leaders say they have concerns.
In April, travelers coming through RDU decreased by 96 percent, with only 40,000 passengers traveling through during the entire month; RDU typically sees roughly 40,000 passengers in one day. Prior to the COVID-19 outbreak, RDU offered 59 direct flights daily, including to five international destinations. As of late June, that number is down to 23 direct flights, none of which are international. Trends are showing a slight uptick in passenger volume, and the RDU Airport Authority predicts that number will increase to 27 direct daily flights for the month of July.
Industry analysts and RDU’s forecasts indicate it will take until the end of 2024 to recover to 80 percent of pre-COVID flight levels; for context, it took the industry six years after 9/11, and seven years after the 2007 economic downturn, to recover.
As a result of a significant decrease in revenue projections, RDU is curtailing several planned projects it had intended to start in order to keep up with what had been forecasted as a substantial surge in travelers over the last several years. Among the $96 million in planned capital projects were two additional lanes to be added to the security checkpoint in Terminal 2 and an expanded customs area; the reopening of four gates in Terminal 1 for Allegiant and Spirit Airlines, and a new car rental facility. Instead, RDU will delay new projects and focus on improvements to existing infrastructure such as runways and taxiways.
Airport officials predict 3 million people will come through RDU between June 1 and the end of 2020, totaling about 5.5 million travelers this year, a stark reduction compared to the 14.2 million travelers in 2019.
“Tourism was one of the first sectors that was impacted by COVID-19, and will likely be one of the last to recover,” says Dennis Edwards, president and CEO of the Greater Raleigh Convention and Visitors Bureau. “We are in a position where many of our demand generators are very limited, which will continue to impact the demand on flights.”
With indoor gatherings limited to 10 people, and outdoor gatherings limited to 25 as of late June, everything from weddings, to concerts, to festivals, to food truck rodeos have to be postponed or canceled. Corporate travel is one of the main draws to RDU and most business travel has been put on hold.
Experts predict the leisure market will be the first to bounce back, with people eager to visit friends and relatives, but Edwards says he guesses that people will still be somewhat wary of planes. With COVID cases and hospitalizations climbing and uncertainty still in the air as far as limitations on mass gatherings, Raleigh will likely continue to lose many of the few conventions and sporting events that remain planned for 2020.
“When consumers begin to travel, they will likely drive before fly,” Edwards says. “We think the leisure market will be the first to recover, followed by corporate travel, sporting events, then meetings and conventions. Forecasts are projecting that it will take five to seven years to return to our 2019 (travel) numbers.”
According to a June 8 report published by The Greater Raleigh Convention and Visitors Bureau and the Greater Raleigh Sports Alliance, the hospitality industry tax collections in April were at a historic low, with hotel occupancy around 35 percent. These drastic drops are a direct result of COVID-19 closing down restaurants and hotels, event cancellations and, most certainly, due to the drastic decrease in flights.
Considering the hospitality industry in Raleigh and Wake County generates 67,000 jobs and is vital to the local economy’s health overall, these numbers are staggering. The month of April marked the lowest hotel occupancy for a single month in more than 15 years, the report found. Typically, Raleigh and Wake County welcome 16.8 million visitors annually, who spend $2.7 billion, generating more than $268 million in state and local tax revenues.
“April was our first full month in shutdown mode,” Edwards says, “and the effects that had on tax collections is evident.”
The good news?
According to a national study by Destination Analysts, more Americans say they feel ready to travel, with upwards of 70 percent planning to take a leisure trip during the remainder of 2020, and four out of 10 corporate travelers say they would be willing to attend a convention in the fall.
Michael Landguth, president and CEO of the RDU Airport Authority, said in an interview with the News and Observer last month that, in May, “nearly 98,000 people flew in and out of RDU, and the number of seats occupied on a given flight averaged 37.4 percent, up from 12.1 percent in April.”
Landguth emphasized that RDU’s passenger levels are consistent with airports in other markets, where passenger traffic is also growing incrementally. Indeed, stores and restaurants within the terminals are beginning to reopen, with 42nd Street Oyster Bar and California Pizza Kitchen opening mid-June and others reopening at the end of the month.
Considering that the Research Triangle area touted a strong economy before the pandemic hit, we’re likely to see ours bounce back more quickly than in other regions.
“The health and safety of everyone at the airport is RDU’s top priority,” Landguth says. “As we head into the traditionally busy summer travel season, we are taking every precaution to allow passengers to fly with confidence. Our guests will see significant changes in the travel experience, including enhanced cleaning and disinfecting practices, signs and floor decals that remind passengers about social distancing and hand sanitizing stations throughout the terminals.”
COVID-19 Impact on Tourism in Wake County
March: 44 percent (down 42.6 percent over 2019)
April: 27.5 percent (down 64.2 percent over 2019)
May: 33.3% (down 57% over 2019)
164 meetings, conventions, and sporting events have been canceled at a loss of 189,750 attendees and 129,240 hotel room nights.
$80.8 million in economic impact.
All data from Greater Raleigh Convention and Visitors Bureau.
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