Tuesday, May 28, 2024

Round table: Top state travel and tourism leaders discuss labor shortages, waterfalls, golf’s rebound and other industry issues

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With its long-touted “mountains to the coast,” slogan, North Carolina is one of the five most-visited states in the country. Attracting all segments of tourism takes new approaches. This is true more than ever as the state’s hospitality industry struggles with immense labor shortages. Business North Carolina recently gathered top travel and tourism experts to discuss what’s happening across the state. From Serena Williams’s retirement announcement and the global resurgence of golf, to increased interest from foodies and new waterfall photo shoots, many components for drawing visitors are at play from mountains to coast.

Explore Asheville, Greenville-Pitt County Convention and Visitors Bureau, Pinehurst Resort, Convention & Visitors Bureau for the Pinehurst, Southern Pines, Aberdeen Area,
VisitNC and Visit Winston-Salem sponsored the discussion. It was moderated
by Business North Carolina Publisher Ben Kinney and edited for brevity and clarity.

Can you give us an overview of how tourism is faring?

Tuttell:  The pandemic was fascinating for North Carolina, because we have everything people wanted during that time. We saw people flock to the mountains and to the coast. Leisure travel wasn’t so good for some of the urban destinations, and meeting and business travel just dried up. So we had a really interesting situation in the state since we had some people barely able to contain the business they were getting yet others weren’t getting the business they were accustomed to. I think that’s leveling out now, but it’s not completely leveled out yet. Business travel hasn’t come back as far as we would like, meetings and events are coming, but international travel hasn’t come back yet. What’s really fascinating is the way different areas have adjusted to it. The mountains and the coast are adjusting to staffing shortages. Some of the urban areas are adjusting so they now have leisure travel, instead of business travel being a prominent way of people visiting there.

WERZ: We’re seeing a boost. Even with COVID, there was a huge boost for our destination, just because we can socially distance and golf enjoyed a global resurgence. Now with the USGA coming into town (building a second headquarters and sprawling campus) that accounts for what the N.C. Department of Commerce has predicted will be a $2 billion economic impact on the state through 2047. So there’s a great future ahead for the destination, we’re just dealing with some growing pains and how that’s going to work out over the next five to 10 years.

MINGES: I hate to be the Debbie Downer in the room, but I hear a lot of challenges from business owners and they run the gamut. But first of all, I think it’s important to know that during COVID, our industry took on significant losses. Many businesses are still struggling, still underwater. And if you look at the rest of North Carolina’s economy, it’s up considerably. Individual business owners (of hotels and restaurants) have taken on a whole lot of debt. And now they’re finding that those loans are coming due. Profit margins are slim and they face significant supply chain disruptions and labor shortages. We’re seeing a number of closings in recent months that we didn’t even see during COVID. While sales may be up, the cost of labor, the cost of food, and the cost of supplies are so high it’s impacting profits. There’s pressure to not increase menu prices. Hotel rates seem to be increasing and the demand (for rooms) is strong. The biggest concern that we are experiencing right now is the worker shortage. Some restaurants across the state are closing two or three days a week and they used to be closed just one day a week. We have many hotels in the state that have had to take rooms out of inventory, because they don’t have workers to service those rooms. I know of a particular hotel that has 100 rooms out of inventory today. They’re profitable without those 100 rooms. But what if they could operate at full capacity? It’s a very interesting conundrum. But, we’re positive. We’re growing. But we’re not back to where we could be. We’re not actualizing our real potential. One of the things that we pride ourselves in is this amazing southern hospitality and outstanding service that people have enjoyed in our state. And when you don’t have the people to service in the way that you’re accustomed to, it’s a challenge and a concern.

TUTTELL: We see the labor shortage as well, especially in the restaurant industry. Everyone is working hard on programs to get people back to work. When restaurants are closed, it’s hard for the visitor. They come to town to find this place is closed today, but they were here two months ago, and it was open on this day. So it makes it a little bit difficult from a scheduling standpoint, and when you’re promoting and marketing a destination. We’re trying to build our destination as one of the best foodie and golf destinations in the country. 

Across the state we increased employment in what we consider tourism jobs by 10% this year. That’s still down 18% from where we were in 2019. So even though tourism and travel are coming back, employment just hasn’t been back.

TAMBELLINI: We’re seeing workforce challenges as well … community restaurants and hotels are still struggling a little bit. Even in our offices, the struggle to get employees is real. It’s one of the big issues we’re all dealing with right now. We have seen visitors come back in droves. And, as Lynn indicated, there are places they want to go to that they haven’t been able to, because they’re closed. It’s been very challenging to accommodate everyone who wants to eat out or enjoy specific activities. Even some of our attractions continue to have to limit the number of people who are walking through the door each day. Fortunately, we have other assets, mostly that are free and easy to get to in the great outdoors. And so that continues to be a really big drawing card. People are taking advantage of that. That is what helped us through COVID. People were using the short term rentals, the Airbnb the VRBO, then being able to complement that with an outdoor excursion or experience. We’re starting to see a little bit of leveling off in terms of the demand. It’s up for the year, but it’s flattened in the last couple of months. Our concern right now is dispersal. We’re really working on longer length of stay so that we can get people out into the entire county, not just all downtown at the same time. We’re seeing a lot of development along the river corridor in the River Arts District. West Asheville is also really coming into its own right now and is a gem spot in the community.

KEEFER: We did not do well during the pandemic. We were down about 58% from a monetary standpoint, but I’m very happy to say it’s a very different story than we were sharing with you this time last year. We’re coming back in a big and bold way. We were very dependent on meetings and conventions to drive our hotel occupancy pre-pandemic. Obviously then, the mass gatherings were off limits. But we started seeing when people felt comfortable to come back to travel, they just needed to get away but they didn’t want to go too far away. Our market traditionally is Raleigh, Charlotte and in the five-hour-concentric-circle range. So the good thing our research shows is once someone comes to Winston-Salem and has the vacation getaway experience, they have a high repeat visitation. A silver lining is the diversification of our base of business, and that’s really going to help us in the long run. Corporate is not back. But meetings and conventions are starting to come back in a little different pattern. We’re starting to actually see higher levels of hotel occupancy and higher rates. Our inventory has pretty much stayed about the same.

How is the meeting and convention business changing? 

KEEFER: We’re almost back to where we were in 2019, which was our best year.

TAMBELLINI: I’m gonna say this with the caveat that we’re primarily a leisure destination. Within the framework of our meetings and group business we hit our goal at the end of June for the last fiscal year by the skin of our teeth, but we hit the room night goal. We’re starting to see that business coming back and I don’t see that dissipating.

WERZ: In Pinehurst at the end of September through September, we recorded 19 straight months of record occupancy tax and increased customer inquiries and collections. So coming out of the pandemic, we’re seeing increasing occupancy or ADR (average daily rate). It’s doubled in the last year. So it was 55% business and 45% leisure basically before the pandemic. It’s about 60% to 65% leisure now. Maybe we’ve missed this all along. … The leisure demand is huge. So it creates an interesting dilemma because when you have so many groups who want to come and get a negotiated rate, but (the hospitality businesses) can get a full rate for hotel, for golf, for spa and for everything with leisure travel. So right now they’re just riding the wave and the destination is riding the wave because a rising tide floats all boats. Short term rentals have doubled in the last year. We have over 600 in Moore County, and over 400 of those in Pinehurst alone.

TUTTELL: I think that’s fascinating for meetings. So many things have changed since COVID. These destinations now have leisure travelers so the discounts they need (to lure meetings) isn’t as strong. 

MINGES: I think in the travel segment, the piece that is hurting most nationwide is transient business travel. It used to be that a sales rep would cal land want to meet, have lunch, visit my office and meet with the team. Now we schedule a Zoom. And so that means they’re fewer people coming into a market to stay overnight. And that’s happening nationwide. I think, as we look at North Carolina, leisure travel is strong, but transient and business travel is projected to be down double digits in 2022. The good part of that for North Carolina is that we’re not nearly as dependent as other states on business travel. Leisure travel accounts for over 90% of all travel statewide. That’s huge. So while other destinations around the country are going to really experience that lack of business travel, I think we’re going to fare a lot better overall. 

Do you see the downturn in transient travel (individual, mid-week, short term stays) as long term? And how is remote or hybrid work affecting the travel and tourism? 

MINGES: If we look at urban areas like downtown Raleigh, uptown Charlotte, Winston-Salem or Greensboro there’s less foot traffic downtown. People aren’t coming into offices the way they were before. Restaurants are missing that traffic for breakfast, lunch, dinner and entertainment. We’re seeing restaurants in particular expanding in suburbia. So it’s kind of the reverse of what we had before when everybody was flocking downtown to open new restaurants. Now we see these incredible chefs and retail business owners scaling back in the urban areas and building out in the suburbs.

KEEFER: Winston-Salem just peaked with about 4,000 rental properties downtown. So it’s a little different. That’s helping the downtown restaurants and retail to a great extent. I think that’s proof that the $2 billion that’s been invested over the last 20 years in the downtown area has really started to pay off.

it sounds like there are lots of opportunities depending on the city? 

TAMBELLINI: Yes, I was out to dinner with a friend the other night. It was last minute. It was a Wednesday night and we couldn’t find (an available table) anywhere.

MINGES: But there’s another issue. There’s a shrinkage. The reality is, a year ago, they probably had a seat for you. Now, they’re not taking as many customers. “We’re full” doesn’t mean “We’re full to capacity.” “We’re full” means “We can’t service any more people.” That is an everyday issue I’m hearing from all around. The N.C. Department of Commerce just came out with a study on the shortage of restaurant employment. It shows that we really need about 40,000 to 50,000 more hospitality industry employees based on the projections for growth, and the opening of new restaurants and hotels.

KEEFER: We are trying to elevate the level of the careers in tourism and hospitality and the perception of that kind of work and opportunities for advancement within our local academies and public schools … through our community colleges and some private organizations that are doing training.

How is marketing changing given all of these impacts? 

TUTTELL: We found in the pandemic that everybody wanted to get away, but a lot of people went to the same place and it became where everybody was. Visit NC created a whole new program called “Outdoor NC” where we focused on “leave no trace” principles to help destinations deal with overcrowding. We’re trying to get people spread out all across the state and to vary the times when they come to certain places. It’s not just private businesses that have these issues. State parks and federal parks have these issues. So we’ve gotten into more of that managing, as well as marketing to try and get people to come at the right time and do the right thing.

TAMBELLINI: In the last year or so we’ve completely stepped back from how we were doing things and reevaluated how we could be more responsive to the community while still being mindful of the legislative mandates that we have to generate visitation. We’ve got specific imperatives: balancing sustainable growth, safe and responsible tourism, engaging more diverse audiences, and then supporting our creative efforts. Everything we’re doing, falls within those areas. We’re really putting mandates for ourselves in terms of generating those longer stays that I mentioned previously, and then dispersing people throughout the county. We may be doing bigger content partnerships, we’re able to tell a larger story, put people in different spots in the community and start to inspire people to go to places that are a little bit further out. We’ve looked at our marketing around the diversity sector. We pledged that we would spend $1 million dollars with Black-owned publishers and creators. 

WERZ: Going over to Pinehurst Resort and practicing there on weekends, I would deliberately walk through the parking lot and I would see no less than 12 to 15 license plates from other states early on in the pandemic. But we still focused our marketing early on, on just the Carolinas, the primary markets here in the state, and maybe down into the Columbia area. But then Atlanta and D.C. were kind of a sweet spots for us. … We don’t have a whole lot of podcast sources so we started our own. We just recorded one with Ben Owen, from Seagrove and Elizabeth Hudson, from Our State magazine. Of course social media has been a big focus with video content. So being able to do a ton of content and get a lot of views on our YouTube channel is important. We are being innovative and creative and marketing the destination aside from just golf. In fact, one of our hashtags is “more than just golf.”  We’ve done videos on how local chefs work with our local farmers, and how you can get the freshest products right here in Moore County. Being part of the visit NC farms app, which focuses on that agritourism aspect of the county has been a big boost to the farmers in northern Moore County.

KEEFER: We started communicating to our industry partners on a weekly basis as opposed to monthly just to gauge how they were doing, what product offerings they may have, and what we could then promote. … We just had a new photo shoot at our state parks. At Hanging Rock State Park, it looks like you’re in Asheville, but you’re really just 20 minutes from downtown Winston-Salem. … We’re using a lot of radio broadcasting, especially with our National Public Radio affiliates.

Marla, tell us about Asheville’s U.S. Open tennis marketing. 

TAMBELLINI: Yes, that also goes into those bigger content partnerships. That was an opportunity for us. Winston-Salem had already hosted the Billie Jean King Cup, so this was an opportunity to continue and strengthen our ties with USTA, and the hopes that other tournaments may come down the road. And it was an opportunity to go back to New York and meet with media and meeting planners. It was a compelling invitation. We may not have had those people to sit down with us otherwise.  … We were fortunate that Serena Williams announced her retirement because that created a huge amount of exposure. …  Our logo appeared in newspaper articles and imagery. We’ve already had interest from a couple of groups from meeting planners.

Is there anything else you’d like to mention as we wrap up? 

WERZ: I’d say that we’re very fortunate to be in a state that is in the top five most visited in the United States. I tell my board regularly what we do with the budget we have compared to neighboring states that have significantly more funding and resources is a miracle. We all talk about the mountains to the coast, and everything in between. North Carolina has everything for everybody, and that’s why we’re so fortunate to be in this state. … And (the various tourism promoting arms) aren’t not competitors. We want everybody to succeed and we want all these destinations to do well.

What is the state of the travel and tourism industry today in Greenville-Pitt County?

Travel and tourism in Greenville-Pitt County has rebounded quite well since the height of the pandemic. In fiscal year 2021-2022, our sports commission set a record by booking 64 tournaments generating an estimated economic impact of $22.1 million dollars. Our conventions and meetings business is back to pre-pandemic levels and Greenville is consistently adding hospitality amenities increasing our leisure travel within the arts, entertainment and outdoor adventure markets. The CVB is also increasing its focus on DEI, diversity, equity and inclusion.

What are the lingering effects from the pandemic?

As in most cities across the United States, the corporate travel market in Greenville-Pitt County has not fully rebounded from the pandemic. With many still opting to use one of the many available virtual meeting platforms, our corporate travel is currently about 50% of what we saw in 2019.

What new methods are you using to attract in-state and out-of-state visitors?

For the first time, our CVB has created a 30-second commercial spot to generate interest from both in-state and out-of-state travelers. The spot ran 126 times on ESPN during the 2022 Little League Softball World Series in North Carolina, South Carolina and Virginia. In addition, we are utilizing audio streaming via Spotify and TV Streaming/OTT (over-the-top content from the internet) to increase our reach and engage new audiences. 

Here’s a link to the 30-second commercial spot: 

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