In bad economy, 'essential expendables' take a hit
Consumer budgets, like corporate ones, are taking a hit this year.
Costs for food, fuel and other essentials have reached levels where people are becoming choosier about where they spend their money.
More than ever, businesses that provide nonessential services — think landscaping and entertainment — are being forced to market themselves more aggressively to residents and to people within a one- to two-hour drive who are shelving travel plans for Walt Disney World this summer to save some cash.
Experts say it will be the Disney- and Six Flag-type destinations, with their bigger ticket and travel prices, that could be hurting by year’s end, while local outlets scoop up the redirected traffic.
The need for diversion
Arthur Cooper, director of sales and marketing for the Clock Tower Resort & Conference Center, said the hotel picked up 10 occupancy-rate percentage points during the Fourth of July weekend by marketing to Chicago and the suburbs. CoCo Key Water Resort, which is inside the Clock Tower, is hoping to see a boost in attendance this summer with people staying closer to home.
“Consumer confidence is horrendously low, and people are concerned about the future,” Cooper said. “They’re worried about not spending a lot of money on vacations and trips, but they still need to have fun and get the kids out of the house.”
Arts and entertainment venues are still sought after during times of financial challenge.
“People need to get some diversion and get away from things,” said Michael Goldberg, executive director of the Coronado Performing Arts Center. “It’s an opportunity to escape from the grind that still makes it attractive.”
When Goldberg joined the Coronado in 2007, one of his goals was to increase the number of performances; he’s boosted them 15 percent to 20 percent, compared with two years ago.
And he changed how performances are packaged. The venue is hosting big-stage productions and smaller-scale performances, such as comedy shows, that offer more choices and make tickets more affordable for buyers.
Ticket package sales are up slightly over 2007 because of the increase in the number of shows. The Broadway show sales are on target, Goldberg said.
“We understand that the combination of two tickets to a show, plus a baby sitter and night out, is now more than two weeks of gasoline. But it will cost you twice that much in Chicago. We’re hoping that in these difficult times, people still take the opportunity to come together, to come into a social environment where they can laugh and be entertained.”
Starlight Theatre at Rock Valley College is seeing comparable attendance numbers to 2007, theater Director Mike Webb said. Season-ticket renewals were flat, and regional sales were similar to last year, too.
“We’re not setting the world on fire in terms of growth,” Webb said. “But people are still coming to the shows.”
One growth area that surprised Webb: online ticket sales. Online orders come with a surcharge of $4.50 apiece, which people can avoid by calling and ordering through the box office. Still, more people are ordering tickets online than ever. “To me, that’s a true indicator of the economy.”
Rockford to benefit
David Preece, president and CEO of the Rockford Area Convention & Visitors Bureau, said there’s always a “knock-on-wood kind of hope” related to economic uncertainties and the effects on tourism.
Based on consumer behavior post-9/11 and past recessionary trends, Rockford can benefit from seemingly counterintuitive situations because of its proximity to larger areas.
“Rockford has a legitimate visitor experience portfolio,” Preece said. “You couldn’t make that case for a small town someplace that’s so remote. That type of place isn’t going to benefit the same way a city like Rockford can. ... Residents in other markets already view Rockford as a short-term getaway, and that gives us a platform to increase the amount of business we get from the leisure market.”
Preece said the region won’t know the true effects of the economic squeeze until after the summer. But marketing changes were made this year with the economy in mind. The bureau’s advertisements reinforce staying closing to home with language like “low-mileage vacation,” “great value” and “nearby Rockford.”
With tourism, it’s also a case of wants versus needs. A generation ago, Preece said, big vacations were a rare privilege. Now, they’re a birthright.
“It’s not if we’re going on vacation, it’s when and where. That bodes well for the travel and tourism industries in general. When you get an economic overlay like right now, it doesn’t keep people from doing vacationlike things. It just forces many of them to make modifications to their plans, and those destinations that are closer to home are in the position to take advantage of that.”
Stay at home, work in the yard
So let’s say families shelve their plans for road trips and big-ticket vacations to stay closer to home. That means they spend more money locally, and if the house is acting like a hotel this summer, you want it to look good.
That’s where home improvements might see some boost this summer, a trend that Betty Ackerlund of Ack Ack Nursery has identified.
“People are a little fussier about how they spend their money, and they’re making smaller, more prudent purchases,” she said. “We can benefit from that. People are coming in and doing more than a shrub here and there. They’re asking for design advice, and they’re doing so on a planned budget.
“It’s important for us to maintain prices at a fair level and put our best foot forward.”
Mike Sanders, owner of Crimson Valley Landscaping, has tried recently to expand his business toward the Chicago suburbs and west toward Freeport. That translates to increased fuel costs, but, more importantly, it expands his client base and potential for repeat business.
Business has been good for 2008, but landscaping is another industry hit hard by the slowed housing market. Custom residential business has tapered off, but Sanders is targeting residences that haven’t had landscaping work done in several years, or homeowners looking to add backyard patios, fire pits or similar projects.
“As a company, we’re aware of the trends and we watch the market,” he said. “We have to stay ahead of those trends. Instead of waiting for people to come to us, we have to go to them. It’s hard because new construction was strong for so many years.”
Sanders said customers still are requesting landscaping work, but they’re scaling back to save money. What would have been a bigger project a few years ago is a smaller one today.
“Everyone has concerns, but it’s not a panic or worry yet. It’s not that bad right now. I think next year will be harder than this year.”
Melissa Westphal can be reached at (815) 987-1341 or firstname.lastname@example.org.