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Pandemic, closures place economic drag on visitation, tourism spending in Montana

Pandemic, closures place economic drag on visitation, tourism spending in Montana
Posted at 11:11 AM, Aug 19, 2020
and last updated 2020-08-19 13:11:28-04

The COVID-19 pandemic and its economic impacts have taken a bite out of Montana’s tourism economy, slashing spring visitation at the state’s national parks and the spending that often follows.

The accommodations industry also has seen a drop in reservations but campgrounds remain full. Spending on fuel remains uncertain, according to the University of Montana’s Institute for Tourism and Recreation Research.

While the latest report released Tuesday by the institute offers something of a mixed bag as the main tourism season winds down, it’s point is clear: When the tourism industry does well, the local businesses that rely upon nonresident visitation generally follow.

“What we expect to see is a change in nonresident spending patterns for 2020,” said Jeremy Sage, the institute’s associate director. “For example, with nervousness about dining in, we expect higher spending in the grocery and snack categories and less in restaurants and bars.”

While nonresidents spent more than $3.7 billion across Montana in 2019, marking a 5.4% increase over the prior year, 2020 has revealed a different story.

Much of the Second Quarter was closed to travelers this year, either through stay-at-home orders or the mandatory quarantine of new state arrivals. Combined with general travel skepticism, it has all taken a bite from visitor spending, and deeper into the year.

The Second Quarter generally accounts for more than 20% of annual travel spending in Montana.

“It’s on part with this whole year in that every single aspect of the industry, every sector, you’d think you know how it will respond and it surprises you,” said Racene Friede, president and CEO of Glacier County Tourism. “It might be better than expected or it might be worse than expected.”

Data released by the National Park Service marked large visitation declines in June in both Glacier and Yellowstone national parks. Glacier was down 62% in June compared to the same month last year, and Yellowstone was down 32%.

The Glacier and Yellowstone travel regions accounted for nearly two-thirds of all nonresident visitor spending last year.

“In 2019, both those regions received over 30% of traveler spending,” said Kara Grau, the institute’s assistant director of economic analysis. “We expect those regions to continue to lead the state in nonresident spending in 2020 but realize that overall, traveler spending will take a big hit this year due to pandemic-related travel restrictions, closures in the parks and consumer hesitancy in travel.”

The drop in nonresident visitation has led to a decrease in revenue earned by local accommodations, such as bars and restaurants, along with lodging. Roughly 78% of businesses owners offering accommodations reported a 52% average decrease in August reservations when compared to the same month last year.

September reservations are down on average by 61% while winter reservations have fallen 66%, according to Tuesday’s data.

While the figures are down in the Glacier County tourism region as well, Friede said they’re not as bad as initially feared.

“They were surprisingly higher than we anticipated, and we don’t know why,” she said. “We were expecting approximately 15% of normal, with April and May being most concerning and things picking up in June and July. We ended up only 55% down.”

Fuel has generally been a high expenditure by nonresidents visiting Montana, but this year gasoline prices are lower than they have been in the past 20 years.

How the year shakes out remains unknown, and that could have implications on the fuel taxes collected in the state and some counties, including Missoula, to fund transportation improvements.

“The conundrum for fuel spending is that the pandemic actually encourages people to drive around more for sight-seeing while on vacation and spend less time stopping at museums and other attractions because they are either closed or people are uncomfortable being in indoor settings,” Sage said.