Although the scope of the economic backlash from the coronavirus outbreak is still hard to determine, the hospitality and service industries are already feeling the impact.
Since Mayor London Breed declared a state of emergency over COVID-19 or the coronavirus in February, the City has seen a wave of conference and event cancellations and the temporary closure of venues.
Restaurants and hotels have seen a fast decline in business, prompting the SF Chamber of Commerce to devise a plan to petition the city government for an economic stimulus package to protect those who have suffered major losses due to the outbreak, according to President and CEO Rodney Fong.
“We’ve seen the devastating impact in a short period of time. Businesses have lost millions in just a few days,” Fong said. “If it goes on for much longer, and businesses are in jeopardy we’ll have to find a solution with the government to deal with the catastrophe to economic conditions.”
Fong said the package would include reductions in fees for small businesses like sidewalk fees that can add up to be a financial burden. The Chamber of Commerce would be finalizing the details of the plan next week, Fong said.
“The virus was already curtailing the number of diners coming in to eat, drink and socialize since the past week,” said Laurie Thomas, executive director of the Golden Gate Restaurant Association, whose members include approximately 800 restaurants in the City. Thomas said her two restaurants in Cow’s Hollow saw a 40 percent decline in business last Thursday.
City officials on Friday urged residents to avoid large social gatherings, private businesses to cancel events and companies to let employees work from home to prevent the spread of the virus. Tech companies like Twitter have asked employees to work remotely and limit business travel.
But for employees in the service and hospitality industries, avoiding social contact or working remotely is impossible. Restaurants have implemented extra hygiene methods to comply with city health recommendations and to quell fears of employees and customers.
“We have to wear gloves constantly and there are extra hand-washing stations set up,” said Catie Kirk, a server at Alamo Drafthouse. “I see customers bringing Lysol wipes and being very cautious, they’re nervous, everyone’s nervous.”
Restaurants in Chinatown have been especially hard hit following extensive news coverage linking the virus to China. Elected officials including House Speaker Nancy Pelosi, Mayor London Breed and District Attorney Chesa Boudin have all called on residents in recent weeks to reject xenophobia and continue patronizing Chinese-owned businesses.
But nerves aren’t the only thing keeping customers away from restaurants.
“The work from home orders from tech companies and social distancing also has a devastating effect on restaurant businesses,” Thomas said.
Thomas said restaurants downtown, in Union Square or Hayes Valley rely on private business events from corporate conferences and traffic from museums and venues to thrive. Venues are announcing closures on a daily basis. The Walt Disney Family Museum and the SF War Memorial Opera House are among the growing list of closures.
Less traffic from visitors at those venues means slower business hours for surrounding restaurants. Because of the lack in business, some restaurant owners have had to reduce staff working hours or even lay off employees, Thomas said.
“The hospitality industry is taking the brunt of the fallout,” Thomas said. “Everyone is trying to do the right thing. We don’t want to lose staff, finding good staff is already hard enough in San Francisco.”
Lost hours, wages and ultimately jobs due to the rippling effects of the virus are still hard to quantify. Conferences have announced cancellations all the way until May. The Game Developers Conference, IBM and Google have all cancelled events, costing an estimated 189,000 room nights at hotels in the City, according to SF Travel.
Hotel employees who staff banquets and private events for conference visitors would be a labor excess. For employers like hotels, employee levels are based on occupancy and hourly employees are the ones immediately affected, president and CEO of the Hotel Council Kevin Carroll said.
“Employees are the first at risk,” Fong said. “Hotels and surrounding businesses are going to have to trim expenses.”
The Chamber of Commerce, GGRA and the Hotel Council are in discussion with other service and hospitality agencies to see what relief from the city government would look like in the short term and long term, Carroll from the Hotel Council said.
For now, the angst of not knowing what comes next with the outbreak is keeping everyone on their toes, Thomas said.
“We haven’t seen anything like this before,” she said. “It fundamentally screws with businesses that need people to operate.”