SXSW cancellation having domino effect on Austin’s hospitality industry

News

AUSTIN (KXAN) — The loss of South by Southwest means lost reservations for local hotels and restaurants.

The Texas Hotel and Lodging Association told KXAN they’re in an “unprecedented scenario” and are “not quite sure what to anticipate” when it comes to how many people will keep their hotel and restaurant reservations and will still come to Austin during the month of March.

“That period, in Austin, is the highest demand period of the year,” said Paul Vaughn at Source Strategies. The San Antonio-based company analyzes hotel data. Vaughn explained, “For March, I would expect that you’re going to see probably at least a 20% drop in revenues with the corresponding drops in rates and occupancy for those hotels.”

He said hotel cancellations will have a domino effect.

“[If] they have full hotels, they get a pretty high dollar per room, and it allows them to have maximum staff,” Vaughn said. “So you’re definitely going to see an impact, not just on the hotels, but in all of the service workers who work at those hotels.”

He said bars, restaurants and rideshare drivers will feel the impact as well.

“If they’re not coming to Austin, if they’re not staying at the hotel, they’re also not doing any of those other activities. They’re not taking a cab. They’re not taking an Uber. They’re not going out to eat. They’re not going to a bar,” Vaughn told KXAN.

Stuart Thomajan owns restaurants like Swift’s Attic, and Wu Chow Austin. He said he’s already had several companies cancel their event space reservations.

“We’re in the restaurant business, so we’re always trying to stay nimble,” Thomajan said. “We keep track of all of our expenses pretty closely as a general rule, but in a general situation like this, we move into a little bit more conservative response.”

Losing hotel reservations also means losing the Hotel Occupancy Tax revenue, which the city uses to promote arts and tourism.

According to SXSW, direct bookings by SXSW alone generated nearly $1.8 million in hotel occupancy tax revenues for the City of Austin in 2019.

John Riedie, CEO of the Austin Creative Alliance, pointed out, South by’s contribution is a small portion of the total Hotel and Motel Occupancy Tax revenue.

In Fiscal Year 2019, the City of Austin reported about $112 million in the hotel tax revenue.

“For the Austin Creative Alliance members, we just want to put their mind at ease that this is not apocalyptic, yet,” Riedie said. “We can sustain this if there’s no further damage to the tourism economy.”

Riedie said, “Assuming that this outbreak is put under control in the same amount of time as others, we should be fine,” referring to previous outbreaks of respiratory illnesses.

Riedie hopes the outbreak can be contained soon without a devastating impact on the global economy.

“You can’t say what’s going to happen next week nationwide,” he told KXAN. “If all other factors are okay, South by’s cancellation should not cause a decline in cultural funding in next fiscal year.”

Vaughn said, “Once this crisis is over, the local leaders need to get together and figure out how can we bring tourism back.

We also spoke with a short-term vacation rental company TurnKey.

Its Co-Founder and CEO John Banczak said in a statement:

“We’ve seen a slight uptick in cancellations, but not overwhelming. A private vacation home is resonating with travelers as the ideal place to stay now and over the summer. A lot of travelers are still coming to visit Austin. It is a great town to visit, even if you don’t get the chance to be in a room of more than 2,500 people at once! Plenty of smaller venues are keeping their schedules, bands are coming, and even larger venues like the Moody Theater announced many of their shows will go on. There are a lot of folks in Austin putting in hard work to make the best of the situation.”

The City of Austin told KXAN it is too early to speculate what will happen to its hotel tax revenue. They’re waiting to see what the actual impact will be.

Austin music venues banding together to keep the live music scene alive

Tuesday night, thousands of people packed the Frank Erwin Event Center on the University of Texas at Austin campus to watch rapper Post Malone perform.

School officials told KXAN Frank Erwin’s capacity depends on the set up, but for concerts, you can have more than 10,000 people in attendance.

UT Spokesman J.B. Bird explained because the university is a state agency, it’s not limited by the City of Austin’s new large gathering guidelines.

The City of Austin announced recently, because of the new coronavirus outbreak, it’s prohibiting events larger than 2,500 people if the event does not have a mitigation plan for infectious diseases.

“We are really concerned about the health of our community, and we are working  in close consultation with public health authorities nationally and locally,” Bird said. “We are not under city jurisdiction because we’re a state agency. Everything, right now, is business as usual. But we are going to come out in the next couple of days with our, you know, our version of the city’s restrictions on events.”

A few blocks down the road from Frank Erwin, venue owners on Red River Street told KXAN they’re working together to keep the shows going.

“This is the epicenter of the Live Music Capital. Red River has more stages and more venues than anywhere in the city. For us to be quiet at this time, that doesn’t’ work for us,” said Ryan Garrett, General Manager of Stubb’s BBQ and Operating Partner of Beerland.

Cody Cowan, Executive Director of the Red River Cultural District, told KXAN, “The great thing about Red River is that we’re just a scrappy bunch of DIY, creative home grown music people. We’re used to responding in real time to changes daily.”

When the city announced the cancellation of SXSW, Garrett said the days immediately following were an emotional roller coaster.

“A bit of a shock Friday afternoon, but by the time venue operators got together and started having discussions about what kind of options are out there, we started to pick up the pieces and figure out a way to move forward,” he said.

He said the amphitheater at Stubb’s can accommodate about 2,200 people. He’s not sure yet how he’ll use the big stage this weekend and next week, but “on our smaller indoor stage, we definitely will be hosting showcases.”

Cowan told KXAN, “We’re talking to mayor and council daily and everything that they’re telling us is go for it, go hard, stay open, make money, keep Austin the Live Music Capital of the World.”

He said the Red River venues are smaller than 2,500 people, so the city’s event size rule shouldn’t be an issue.

“SXSW may be cancelled. We’re open for business,” Cowan explained. “The music must go on. And we’re ready to go and throw fun, safe events and parties for everyone.”

“The message is that we’re being diligent on providing sanitation stations for our patrons. There will be hand sanitizers throughout the district,” Garrett explained.

He added, “We’re partnering up with the Downtown Austin Alliance to get sanitizers out on the street, so people, when they check in at the door, they’re able to access that. Utilize that.”

Cowan said, “All the hand washing, all the sanitation. We’re going to be extra sure that everyone is 100% with that.”

The Red River Cultural District is teaming up with other groups to still help raise funds for bands impacted by the South By cancellation. You can go here to learn more.

Around Austin, other community events are still going on as scheduled as well.

MediaATX said SIGNAL 2020 will take place this Friday at the Thinkery. “The SIGNAL event is a celebration of the Austin creatives. It’s bringing together all of the film producers, music producers, journalists and publishers,” Josh Rubin said.

He explained the event was never a SXSW event, and they’re working closely with local health officials to ensure a safe event.

“We’re also making it very clear that you need to wash your hands. If you’re not feeling well, you’re not welcome. We love you, but if you’re not feeling well stay home,” Rubin said. “Our goal with this event is to celebrate everything. Be safe while doing so and listen to the state, local and federal authorities as to what best practices are.”

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Austin-Travis County

More Austin-Travis County News

Coronavirus Resources

More Coronavirus Resources

Trending Stories

Don't Miss