Impact of COVID-19 on Outdoor Recreation Economy
National Outdoor Recreation Economy Impacts
The pandemic profoundly impacted national, state, and local economies, and changed consumer behaviors as well. With over 10 million jobs lost compared to pre-pandemic levels, more than 32 states experienced job loss worse than the Great Recession and the gross output of every state declined, too. [(Ettlinger and Hensley, 2021)(Pg. III-1)]
According to the report, “The pandemic response of outdoor recreationists, the businesses that serve them, and the cities and towns that host them, have been mixed.”
This resulted from limitations on travel during the pandemic and closures throughout recreation areas. Throughout the pandemic, recreationists and businesses catering to them have adjusted to changing restrictions and have modified behavior to reduce the risk of COVID.
The report goes on to explain that the travel restrictions and restricted access to public lands and other outdoor amenities “led many outdoor enthusiasts to reduce the frequency of their participation in outdoor recreation, reduce the distance they traveled to participate in the activity, and reduce the average size of the group they participated in the activity with.” [(Rice et al. 2020)(Pg. III-1)]
Over the course of the pandemic, this caused fluctuations in visitation to these areas. As an example, Montant saw about 50% of visitors cancel their trips or at least consider canceling at the beginning of the pandemic. However, by June 2020, visitation soared to over 25% of 2019 levels! [(MBQ, 2020)(Pg. III-1)]
This showed a desire by people to continue recreational activities despite the crisis.
This rebound occurred in Nevada as well, in some cases to the extreme, causing certain areas to limit access to avoid overcrowding due to the unprecedented demand. This included Lake Mead National Recreation Area and Red Rock National Conservation Area, which closed multiple times during 2020 and now requires reservations to access the scenic Loop Road.
However, despite this increase in visitation in places like these, many outdoor recreation businesses across the country saw little to no sales due to the public health and safety restrictions placed in the state.
According to the report, a national survey of outdoor recreation businesses conducted by Crame-Krasselt, a marketing firm, found the following:
- 79% of businesses reported facing significant impacts from the pandemic;
- 88% of these businesses reported laying off staff to reduce the pandemic’s financial impact on their business;
- 94% of businesses said they experienced a decrease in sales as a result of the pandemic;
- ~25% of businesses reported that they’d experienced at least a 50% reduction in sales. (Pg. III-2)
The report goes on to state that in Nevada, “businesses faced the same impacts others were reporting across the nation.”
In particular, industries such as lodging accommodations (like the Best Western Hotel in Boulder City), transportation and tourism operations (like National Park Express in Las Vegas), and outdoor retailers (like Gear Hut up in Reno) saw drastic drops in occupancy, customer volume, and sales as a result of the pandemic and the resulting shutdown and restrictions.
As these restrictions eased, businesses reported that customers returned, though the demand specifically increased for close-to-home recreation.
According to the report, nationally, “Some businesses, like outdoor gear retailers, saw large increases in business as outdoor enthusiasts bought equipment like bicycles, tents, hiking boots, and other gear that would let them get outside while remaining socially distanced. In contrast, businesses that relied on groups of people were not doing nearly as well. Businesses like fishing and hunting outfitters, transportation companies, and other hospitality-oriented businesses have continued to see lower customer volumes compared to pre-pandemic levels.” [(Market Place, 2020)(Pg. III-2)]
Here in Nevada, businesses reported much of the same. For example, Desert Adventures, a tourism outfitter operating around Lake Mead, reported seeing “more local visitors than at any time in the company’s existence” when they reopened.
In addition, outdoor retail businesses also report a dramatic increase in retail demand. LV Cyclery, opening in Las Vegas, shared that when the state lifted restrictions, “demand for outdoor equipment was so strong the company sold a year’s worth of inventory in only three months.” However, businesses serving groups of people continue to struggle. For example, National Park Express reported that despite the lifted restrictions, “its customer volume remains low and the company continues to operate at a loss each month.” (Pg. III-2)
Lastly, gateway communities across the country such as Moab, Utah, and Lake Tahoe in the Sierra Nevada Mountains spanning both California and Nevada. Both of these communities saw an overwhelming influx of visitors, particularly in the beginning months of the pandemic when restrictions were most severe.
According to the report, “Many of these towns, fearing that an influx of visitors would lead to a spike in infections that could overwhelm their healthcare systems, made public pleas for visitors to stay away until conditions improved [(KUTV, 2020). Lake Tahoe experienced similar issues when residents protested the impacts of increased visitation in August 2020 (Tahoe Daily Tribune, 2020).” [(Pg. III-2)]
“This put both local businesses and the communities themselves in difficult positions since visitor spending is an important source of employment, income, and tax revenue for local governments. Some of the impacts could be offset by increased local spending, but local spending alone could not offset all the impacts of reduced visitor spending and the associated reductions in tax revenues.” (Pg. III-2)
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COVID’s Impact on Nevada’s Outdoor Recreation Economy
Overall, the pandemic impacted our state’s outdoor recreation economy by causing a reduction in demand for this entire industry. In general, fewer people traveled out of state last year to Nevada for their outdoor recreation, meaning that this industry generated less revenue.
Per the report, “While local visits have increased, local spending has not risen enough to offset the reduction in spending by out-of-state visitors. This has caused businesses to reduce their staff sizes or close their business entirely.” Though, as the report mentions, this impact has not been equally distributed across various industries. For instance, retail and transportation businesses experienced smaller impacts than restaurants and lodging.
While some retailers actually increased their sales during the pandemic, others, like the accommodations and foodservice industry, experienced larger impacts than other sectors of the economy. In addition, the loss of tax revenue heavily impacted local governments. (Pg. III-3)
Many different trends were observed in the report and broken down once the data was collected. These included arrivals, visitation, spending, revenue, number of small businesses in operation, and employment across the top five industries in the outdoor recreation economy.
“These trends are used to estimate the pandemic’s impact on the number of jobs, wages and salaries, and value added created by the state’s outdoor recreation economy.” (Pg. III-3)
Visitor Arrivals
In general, the number of out-of-state visitors to Nevada fell due to the pandemic.
According to the report, “Between July 2018 and June 2019, more than 55 million visitors arrived in Nevada. Between the same months in 2019 and 2020, respectively, only 42 million visitors arrived in the state, a difference of -13.7 million visitors.” (Pg. III-3)
In addition, arrivals in April 2020 were 92% lower than April 2019, a dramatic decrease from the previous year. The majority of this decrease occurred via people who arrived out of state by plane, whereas vehicle traffic counts went mostly unchanged, save for April 2020. PEr the report, this suggests that more visitors likely arrived in the state by car. In particular, businesses reported an increase in visitors from neighboring states like California and Arizona.
Park Visitation/Time Spent at Parks
With fewer visitors to the state, this resulted of course in fewer visitors to our public lands at the beginning of the pandemic.
The largest decrease occurred in April 2020, with restrictions at their highest levels. When these measures loosened, visitation recovered but remained below the 2019 trend. This recovery was uneven though, with overcrowding in popular areas like Lake Mead, Red Rock, and Lake Tahoe. (Pg. III-4)
According to the report, “In total, residents spent about 13% less time outside of their home compared to pre-pandemic times. However, the amount of time residents spent at restaurants and retail establishments, and parks decreased by much larger percentages.” [Pg. III-5]
Furthermore, as of January 8th, 2021, residents spent ~22% less time at restaurants and retail establishments compared to January and February 2020. In the early period of the pandemic, residents spent as much as 40% less time at these establishments.
Regarding visitation, the report stated that “Park visitation improved throughout the summer and fall months, but the return of winter saw park visitation decline again as colder weather and a more intense period of the pandemic began.” [Pg. III-6]
Hotel/Motel Occupancy
With the shutdown, accommodation services like hotels and motels received one of the most direct impacts as a result of the pandemic, with fewer visitors from out of state and visitors to the parks and public lands.
In some parts of the state between March and May 2020, hotel occupancies plummeted to nearly zero. Though, as the report states, “As the economy began re-opening in May, hotel occupancy began to recover, reaching about 50 to 60% of its pre-pandemic levels by June.” [Pg. III-6]
There’s no additional data available after June, but trends are expected to continue as restrictions lift. Though, in the late fall and winter months, it’s expected that it likely fell as normal during that time period.
Consumer Spending
Consumer spending supports our outdoor recreation economy in a number of ways. In addition to the sales tax revenue generated, consumers contribute to job creation, wages, and business in general. Consumers are vital to our state’s growth and economic stability.
When the pandemic caused a reduction in consumer spending, this caused a cascading effect on our economy. We lost jobs, businesses closed down, less money circulated our local economies, and tax revenue dwindled for public services and programs in our state, like education.
Overall, the industries affected the most in our state’s outdoor recreation economy were the transportation, accommodation and food service, and arts, entertainment, and recreation industries.
In particular, the AE&R industry declined about 60% at the beginning of the pandemic and continued to remain low throughout the study period. Moreover, spending in the A&FS industry also declined by about 60% in the beginning.
However, according to the report, due to federal stimulus funds and less restrictive COVID guidelines, we saw “consumer spending in the industry recover to about 80% of its pre-pandemic level.” [Pg. III-7]
We also saw consumer spending decrease with transportation, with a 40% reduction in spending from pre-pandemic levels. The study observed this as late as December 2020.
The report states that “In contrast, retail sales have increased since the start of the pandemic after dropping slightly in the first few months. As of early December 2020, retail consumer spending was about 7% higher than its pre-pandemic level.” [Pg. III-7]
Small Business Revenue
Depending on the type of business, the pandemic impacted small businesses in different ways.
According to the report, “While retail consumer spending has remained relatively buoyant throughout the pandemic, transportation spending has not. As a result, the combined small business revenue of the retail and transportation industries is down about 7% compared to its pre-pandemic levels. This is less than the overall reduction in small business revenue, which was still 30% below its pre-pandemic level as of late December 2020.” [Pg. III-8]
As mentioned previously the AE&R and A&FS industries, under the umbrella of the leisure and hospitality sectors, saw a decrease of more than 80% at the beginning of the pandemic and a ~60% revenue reduction as late as December 2020.
Employment
Due to health and safety restrictions, many businesses closed down and/or reduced their staff sizes. Ultimately, this was in response to the loss in revenue resulting from closures and reduced capacities.
The greatest number of job losses by far occurred in the accommodation and food service industry with almost 48,000 jobs lost since March 2020. This directly reflects the loss of revenue from the reduction of visitor arrivals.
Closely following the job loss in the admin support and waste services employment sector, local government employment placed third with approximately 12,000 jobs lost since the pandemic began.
Collectively, the next three industries in our outdoor recreation economy with the highest loss of employment – transportation, AE&R, and the retail industry – accounted for a combined 9,000 jobs lost during this time period. The transportation industry saw the greatest loss out of the three. [Pg. III-9]
Above is a graph of the overall change in employment by industry throughout the state of Nevada in 2020, per the Bureau of Labor Statistics.
Small Businesses Open
Despite reducing staff to try and offset lower revenues, the continued revenue loss forced many businesses to close permanently.
As the report mentions, “small businesses are particularly vulnerable to prolonged downturns in consumer spending because they often keep smaller reserves of capital on hand and face higher borrowing costs compared to larger businesses.” [Pg.III-10]
On December 30th, 2020, the study found 27% fewer small businesses operating in Nevada than in January 2020.
In particular, “small businesses in the retail and transportation sectors fared better than small businesses as a whole, with only about 7% fewer small businesses operating. However, the umbrella of the leisure and hospitality sector saw 41% fewer small businesses operating in December compared to January. [Pg.III-11]
Labor Income
With the loss of employment and small businesses closing down either temporarily or permanently, the loss of labor income further compounded the state’s economic downturn. Unfortunately, many of these jobs include low-wage industries and ultimately put the workers in these jobs in a vulnerable position as they often lack access to financial resources and savings.
The report cites a survey of low-wage adults that found that only about one in four have any form of financial savings compared to 48% of middle-income and 75% of high-income adults (Pew, 2020).
The same survey, conducted in the Spring of 2020, found that about 53% of lower-income adults said they would have trouble paying some of their bills in the current month. [Pg. III-12,13]
With fewer jobs available due to restrictions and business closures, many people found it difficult to find a new job. And for people with lower-wage jobs, losing a job or income can make paying for housing, food, and healthcare sources of ongoing stress or put them out of reach entirely. [Pg. III-13]
In Nevada, the A&FS industry not only saw the largest job loss of any outdoor recreation industry, it saw the largest loss of any industry in the state. As expected, the loss of income of weekly wages from this loss also plummeted.
Per the report, “the average worker in the accommodation and food services industry earns about $656 per week or about $32,800 per year assuming 50 weeks of work per year. While workers in the arts, entertainment, recreation, and retail industries experienced fewer job losses, they also live on modest wages compared to workers in other industries. Local government workers earn the most per week of the top five industries in the outdoor recreation economy, average about $1,404 or about $70,200 per year assuming 50 weeks of work per year.” [PG. III-12]
Below is a graph of average weekly wages and the changes in employment across all industries in Nevada in 2020, per the Bureau of Labor Statistics.
Cumulative Impacts on Outdoor Recreation Economy
“The figure below shows an estimate of the cumulative economic impacts of the COVID-19 pandemic on the outdoor recreation economy in Nevada in terms of lost jobs, income, and value added. The estimates assume that businesses in the outdoor recreation industry will experience job loss at the same rate as businesses in their broader industries. Employment figures for each industry in the outdoor recreation economy were taken from the Bureau of Economic Analysis’ Outdoor Recreation Satellite Account. Job loss data was collected for each industry from the Bureau of Labor Statistics. Estimates of lost income and lost value added were calculated by multiplying income per worker and value added per worker by the number of jobs lost in each industry,” [Pg. III-13].
“In total, the estimates suggest the outdoor recreation economy lost about 6.0 percent of its total jobs between the start of the pandemic in March and the end of December 2020.” The overall percentage represents about 3,566 lost jobs, with the largest loss stemming from the accommodation and food service sector at 14%, with an estimated 2,017 lost jobs. Compared to broader national trends of job loss in this sector, high loss from accommodation and food service remains consistent across the country, (BLS, 2021)” [Pg. III-13]
The reduced labor income of these job losses equates to approximately $161.5 million on an annualized basis. Following the trend of job loss, the accommodation and foodservice industry lost the most income of all the industries looked at, with more than $67.5 million lost. The next two industries with the most income loss were the local government sector and the arts, entertainment, and recreation industry. These industries lost $29.4 million and $25.6 million of income, respectively. [Pg. III-13,14]
According to the report, the outdoor recreation economy’s output has also declined as a result of the pandemic. On an annualized basis, the economy’s output declined by $282.9 million since the pandemic began. The accommodations and food service industry lost the most output. Local government and the transportation industry both saw declines in output of more than $40 million. [Pg. III-14]
Altogether, this shows a devastating impact on our state’s economy and on industries working around our recreation economy.
