March 11, the day coronavirus was officially declared a pandemic, will be remembered as a turning point for Birmingham.
“When we talk about dates that live in infamy, we have Sept. 11, Dec. 7, and I think March 11 will go down in our industry as a day as significant as the Great Recession that began in 2008 and Sept. 11 in how it affected travel and tourism,” Greater Birmingham Convention and Visitors Bureau President John Oros said.
While the reality of how business closures will impact Birmingham’s economy is grim, officials have some hope the economy will bounce back as confirmed cases of the virus decrease.
Alabama’s largest city is also the metro area most vulnerable to an economic downturn in the wake of coronavirus. The city’s banking, healthcare, construction, technology and manufacturing sectors should weather the financial storm. With so much of the downtown workforce stuck at home, Birmingham’s downtown daytime population has plummeted. With many working from home and stay at home orders in effect, small businesses will feel the crunch.
The city of Birmingham expects to lose $9.2 million in revenue over the next 60 days, said Director of Finance Lester Smith. A majority of the city’s revenue comes from sales and business-related taxes, making the city vulnerable to economic downturn.
About 71 percent of the jobs in the seven county Birmingham metro area are consumption-based jobs—those that rely on people leaving their homes and spending money, said Josh Carpenter, director of Birmingham’s Office of Innovation and Economic Opportunity.
If people don’t spend money, these workers don’t get paid. Birmingham’s many small businesses and restaurants are part of this sector of the economy.
Restaurants and small businesses have been forced to layoff workers as revenues plummet from mandated closures and curbside-only mandates.
Victor King, co-owner of The Essential and Bandit Patisserie, said laying off around 35 of his employees was “truly not awesome.” The restaurants, which he co-owns with Kristen Hall, have combined into one for now. The two are operating as one business with a handful of employees from each working to fulfill online curbside orders.
On top of laying off workers and fretting about finances, many Birmingham restaurants now face the challenge of switching their operations to curbside-only in effort to keep revenue coming in.
Changing to a curbside-only operation sounds simple if you’re a pizza place. For restaurants like The Essential and Bandit, which make most of their sales from dine-in customers, it’s not simple.
“Really, we’re all doing something we’ve never done before. All the restaurants are doing curbside and delivery--something none of us have thought too much about or considered,” King said.
While restaurants are still selling food through take-out revenues aren’t near the levels of typical dine-in revenues.
Hall is the pastry chef and executive pastry chef for both restaurants.She said she hopes the public realizes how restaurant and hospitality workers add value to their daily lives.
“You sort of go about your business, you do your thing, but you don’t realize there are a lot of people who help you do your thing in life. The restaurant and hospitality industry in general play a huge role in that,” Hall said.
Some restaurants have already closed. Both Mile End Deli in downtown Birmingham and Babalu Tacos in Lakeview announced the restaurants will be closing.
A different kind of downturn
The layoffs and plunging markets resemble what happened after 9/11, but the coronavirus downturn is different. After 9/11, people were still allowed to travel and go to work. People came together to grieve in restaurants, bars and churches. Now, residents are told to stay home as much as possible, with some cities, including Birmingham, under “shelter-in-place” orders.
Travel and tourism supports 31,000 jobs in Birmingham and drew $2.3 billion of economic impact to the city in 2018. Though numbers for 2019 aren’t yet available, Oros said he expects 2019 figures to be higher. Trends for 2020 pointed toward even more dollars flowing into Birmingham.
Jefferson County was the first region of the state to see a big spike in COVID-19 cases. Now, the industry is at a standstill.
“Consumers are the driver for the economy in the Birmingham area. With the lack of demand, our economy will wither,” said Jefferson County Commission President Jimmie Stephens. “It’s very, very important that we work together and to try to bring some semblance of order in a short manner where we can get our people back to work and get the economy regenerated. If indeed this is going into a prolonged event, it will severely cripple the Birmingham area.”
For March 15-21, hotel occupancy in Jefferson County was down 47.7 percent compared to the same week last year, according to data from the Greater Birmingham Convention and Visitors Bureau. Other tourism markets have also seen steep declines. Hotel occupancy in Atlanta was down 56.8 percent, New Orleans was down 82.7 percent.
Oros explained hotel occupancy is a key measure of the health of tourism in a region.
But whether it’s an 82 percent decline or a 47 percent decline, it doesn’t make much of a difference, Oros said.
“We’re all suffering,” he said.
Until the coronavirus pandemic shut down dozens of businesses and put up to 66,000 workers in Jefferson County without income, tourism in Birmingham was stronger than ever.
“We were having a record year until March 11. We had just finished up the Bassmaster Classic at the BJCC, had a slate of conventions and tournaments booked. All have been canceled or postponed for the time being,” Oros said.
“Then, there were still some people traveling, but hotels can’t be sustained on numbers like this,” Oros said.
He doesn’t see the situation improving in the short term, but he hopes to see positive movement by fall and into 2021. Health experts are unclear when the extraordinary measures to limit the spread of COVID-19 will end.
Although Oros’ outlook for the short-term is grim, he thinks because the pre-coronavirus economy was healthy, the rebound could happen faster than after 9/11 or the Great Recession. The U.S. Travel Administration is hopeful for a "V" shaped rebound in the 3rd and 4th quarters.
“Once the traveling public feels better and is comfortable with traveling again, we could get a rebound in the late third or fourth quarter. Until then, it’ll be difficult,” he said.
“During the Great Recession of 2008, even though there was high unemployment, kids were still going to sports tournaments, people were still people taking cruises, businesses still had meetings and conferences going on. Now, people are told to stay home. Nobody is traveling. The impact of this is just enormous.”
The question no one can answer right now is if and when the rebound will happen, said Kim Carter Evans, of TruFund, a nonprofit financial service company focused on serving minority and women-owned small businesses. The company has an office in Birmingham.
“The challenge is getting them to survive until then. For the people laid off, are they going to be available to come back to work or will they have found other positions? This is totally unprecedented and it’s changing by the hour,” Evans said.
The Small Business Administration has officially declared Alabama a COVID-19 disaster area. Small businesses can now apply for emergency loans. The Birmingham Strong small business loan program is also up and running. The first deadline for loan applications was March 27, but officials say they’ll open up another round of applications if there’s enough available funding.
Even nonprofits are experiencing huge revenue losses. For many nonprofits, their springtime galas and events have been canceled. Those events generate large sums of revenue for many nonprofits, said Chris Nanni, president and CEO of the Community Foundation of Greater Birmingham.
“The reality is, if they don’t get the capital they need, several small businesses won’t make it out,” Evans said.
Many businesses aren’t able to look further than the immediate needs of paying their staff and their rent.
“If it’s a finite disaster (like a tornado), we know what happened and we can assess the damage. Because this crisis and pandemic is so fluid, we’ve not gotten to a stopping point where we can assess all damages,” Evans said.
Stephens agrees a rebound at the end of the year is likely, but the length of the downturn is crucial to both businesses and the government.
“We (Jefferson County) are well positioned to weather a one to three month downturn. If it goes past that, we’ll have to look at our spending and adjust accordingly,” he said.
Beyond the next two to three months, leaders aren’t sure what will happen.
“It’s going to rely solely on the length of this downturn,” Stephens said.
Larger companies better positioned
The virus has changed the way larger Birmingham companies like Alabama Power, Regions and Shipt do business. Unlike many businesses, Shipt is hiring.
Two of Birmingham’s largest employers, Alabama Power Company and Region’s Bank, have made major changes to customer services and sent many employees to work from home. Linemen are adhering to social distancing guidelines, too.
Both companies are no longer directly interacting with customers in-person. Region’s is offering drive-through banking and online banking. In-office services are available by appointment only. The bank is also offering relief for customers with mortgages and other loans.
Alabama Power customers can still pay bills online, by mail, phone call, at self-service kiosks and drop boxes outside Alabama Power offices or at a designated payment location. Customer can still interact with a person at drive-through payment location. The company says it won’t disconnect service for customers who’ve lost income due to coronavirus.
Neither company has laid off workers.
“The Federal Reserve, FDIC, and other key governmental entities have taken significant actions to support lending and are encouraging banks to work with their customers. In this environment, our customers can take comfort in the safety and soundness we offer by being a regulated and insured financial institution,” said Evelyn Mitchell, vice president and Head of media relations and issues management for Regions.
Officials with the Birmingham-Jefferson Convention Complex, the state’s largest entertainment and convention center, have not yet commented on how COVID-19 will impact the organization. The BJCC has had around 90 events cancel or postpone their dates since the second week of March.
On Tuesday, the BJCC furloughed more than half of its full time staff for 60 days. The company will continue paying employees’ health, dental and long-term disability insurance.
"The BJCC values our entire team and the work that each employee contributes to the success of our operations. Unfortunately, COVID-19 has taken a huge toll on every entertainment and convention venue in the U.S., and the BJCC is no exception,” the company said in a statement.
“All of our events in the foreseeable future have been postponed, rescheduled or canceled outright, and there’s no way to predict at this point when our business will resume. As a result, we were forced to make the difficult decision to furlough 78 of our 127 full-time employees for 60 days. We know that people are foundational to the success of any organization, and no organization faces these types of decisions lightly.”
Last year, the BJCC began building its new, nearly $200 million stadium and will soon begin the renovation of Legacy Arena. Officials say both construction projects will continue unhindered by coronavirus. The construction costs are paid for with proceeds from bond sales.
“COVID-19, and its impact, is still very much an evolving situation, so it would be premature to try and place a value on the lost business, but it is certainly fair to say it has been significant,” said Christina Frantom, director of marketing and communications for the BJCC.
“We are continuing to monitor the situation closely. The spread of COVID-19 has initiated a period of unprecedented uncertainty in our industry. The health and safety of our clients, guests, visitors and employees continues to be a top priority.”
Officials with Brasfield & Gorrie, the Birmingham-based contractor building Protective Stadium says they’ll continue working on projects, but are adhering to social distancing guidelines outlined by the CDC. Construction is deemed an essential business, so all projects will continue as planned, the company said in a statement. The company has not laid off or furloughed any workers at this time.
The company isn’t able to forecast how the shutdowns could impact the company’s bottom line.
The World Games 2021, which were set to be held in Birmingham in July 2021 has been moved to July 2022.
The shift was prompted by the International Olympic Committee’s (IOC) decision last week to move the Tokyo Olympics from July 24-August 9, 2020 to July 23-August 8, 2021 over concerns for the health and safety of athletes, coaches, officials, and fans during the COVID-19 global pandemic. Birmingham’s World Games 2021 board of directors voted to approve the postponement on Wednesday afternoon.
Hope in the face of despair
It’s become clearer than ever how much Birmingham’s business prosperity is interrelated. With the city’s biggest companies working from home, the small businesses that rely on a bustling downtown are turning to each other.
And despite the doom and gloom, leaders in the business community say there’s a fresh sense of camaraderie and kindness even among competing businesses.
“We're seeing the community rallying like a force,” said Taylor Clark Jacobson, director of recruitment and growth for REV Birmingham. She also mentioned a Birmingham Small Business Resiliency Facebook group, where small business owners are working together to share information and advice.
Some restaurants have even set up GoFundMe accounts and relief funds for laid off restaurant workers.
After restaurants were ordered to close their dining rooms, King said other businesses owners began calling one another to share ideas about how to make the switch to curbside-only orders.
“We’re seeing collaboration with business owners and people being more neighborly,” Evans said. “Small businesses are all in a layer of competition, but we’re not seeing that right now. Business owners are being neighborly, seeking advice and sharing information. They’re being supportive of themselves but also of the greater community.”
In addition to inspirational messages decorating the sidewalks, other businesses have sold merchandise and hung signs with inspirational messages on them.
Paper Doll Bar on First Avenue North hung a sign that says, “Birmingham, we will overcome, not immediately but definitely.”
Updated at 10:08 p.m. April 6 to clarify where and how Alabama Power customers can pay bills.