As you are aware, with nearly three quarters of British Columbia’s 19,000 tourism and hospitality businesses considered to be small enterprises, there is grave concern that a huge percentage won’t survive a prolonged crisis without some form of assistance.
In fact, the formula to ascertain whether a business will survive or not is pretty simple: No customers + no revenues + uncertain timeline + monthly fixed costs = mounting liabilities and closures.
While TIABC is not privy to any company’s financial statements to know if survival is possible, we do hear from many small operators…like the ones below…whose stories paint the picture of a grim future (no names have been included to protect privacy).
Normally at this time of the year, our seasonal campground (which typically opens in mid-May) is taking daily reservations. However, over the last two weeks we have had a total of five reservations and deposits paid along with a number of cancellations.
We’re only in our third season and depend on these deposits to prepare us for our upcoming season. We have zero cash flow and need financial support. We only have a four and a half month season and our campground is the sole source of my income. We have campground related expenses consisting of high insurance, vehicle and equipment lease payments, and my salary. As it is coming to the end of our winter, revenue from 2019 is depleted.
In our first year we felt the effects of the forest fires. Last year was a very wet season, and this year the potential loss of our European and American guests because of COVID-19 will set us back yet again. If this season does not happen, or even a late start, there is a good chance that we will close completely as we will have a tough time recovering.
Our business is unique in that we don’t open for high season until May 1
. We do all of our business over five months. Winter is not a big producer and cannot be relied on for catching up.
The next 30 days are critical. I expect we will get more cancellations and this is when it will get tough. Our mortgage and other fixed costs will be unmanageable if we have cancellations or have to close.
One issue we are facing is backlash from the local community if we allow guests from other areas to come and stay. We have already had comments from locals stating that we had better not put our bottom line first.
We have a limited company. My wife and I are the only employees. If we can open in May, we will have business, but it will be less than normal. If the situation worsens and we are not allowed to open our resort, then we will have no business income and no private income. We will not be able to pay the property tax and we will have no salary.
The borders are closed and we are predominantly a tourist-based business. We had money to start up the season, but that has been lost due to refunding our abundant amount of cancellations.
Our bills are roughly $15,000 per month when we are closed. That does not include any staff or operations. Those are just our hard costs such as rent. We have zero dollars coming in now and for the foreseeable future with the borders closed and governments asking for businesses to shut down.
As a tourism business, we face similar challenges to most others as not only have our bookings come to a full stop, we have a huge number of refund requests that are pending to be paid back to customers. This comes at a time when we are just coming out of our off-season where cash flow is negative for several months.
We have purchased equipment for the upcoming season with invoices coming due soon, as well as rent payments on our stores that are fully closed. With the upcoming season seemingly in complete jeopardy, the long-term commitment of rent, staff wages, and existing debt payments are our top priorities until the 2021 season is well underway and has hopefully bounced back.
While the federal government has announced several measures to help small businesses (albeit absent of details, timelines), and more provincial assistance is imminent, we continue to hear the stories of operators whose livelihoods have, or are disappearing by the day. Our aim is to stop the carnage before it’s too late.
Since the bottom fell out of the visitor economy, TIABC, sector associations, destination marketing organizations, bureaucrats and others have and will continue to beat the drum on financial assistance for tourism businesses so that the survival formula looks something like this for foreseeable future:
No customers + no revenues + uncertain timeline + monthly fixed costs
+ immediate financial assistance
(e.g. no interest loan, subsidy, grant, advance) = business sustainability.
While highly unconventional, it’s a formula that allows the visitor economy to survive until the crisis is behind us.