By Janaki Chadha
December 31, 2020
Tim Dolan was about to celebrate the 10th anniversary of his business, which runs Broadway-related walking tours, when Covid-19 hit New York City last spring.
The company, which offered a roster of tours for theater-goers and maintained a small gift shop in the heart of Times Square, felt like it was on an upswing during the first two months of 2020. Then, over just a few days in March as the public health risks of the coronavirus became apparent, all of it came to a screeching halt: Broadway closed its doors, cancellation requests for tour reservations came pouring in and the area surrounding Dolan’s shop became a ghost town overnight.
“Nothing in my life had ever prepared me for the feeling of, suddenly every single source of income that you have worked for a decade to build has in a matter of hours dried up, with no end in sight,” said Dolan, who built the business from scratch.
Nine months after the shutdown, Broadway isn’t expected to return until at least next summer, and Dolan estimates the financial toll so far on his business, called Broadway Up Close, has been upwards of $250,000. As the crisis drags on, countless business owners like him, in some of the city’s most-important industries, are struggling to survive.
The hotel sector is still reeling as tourism and business travel remain far below typical levels, and the industry is seeing unheard-of occupancy rates. Most restaurants have been falling behind on rent payments, according to recent surveys, and industry leaders say many are on the brink of closure if they don’t receive substantial government assistance.
The number of tourists visiting the five boroughs is down 66 percent from 2019, according to a recent report, and the industry isn’t expected to return to last year’s benchmarks until 2024. Meanwhile, companies have been slow to return employees to offices, leaving the neighborhoods that catered to them hollowed out and spooking the city’s multibillion-dollar commercial real estate market.
While new vaccines are a cause for optimism, industry leaders and business owners say prospects for the year ahead are very uncertain. And a new round of restrictions put in place amid rising Covid-19 cases and hospitalizations has left many businesses in an even deeper hole.
“We’re in for a very challenging couple of months entering January and February,” said Andrew Rigie, executive director of the NYC Hospitality Alliance, which represents restaurants, bars and nightlife establishments. Indoor dining remains banned in the five boroughs, leaving restaurants to rely on outdoor service during the coldest months of the year. Rigie said many establishments on the verge of closure are being kept alive thanks to stopgap measures like the state’s moratorium on commercial evictions.
Without more government help, Rigie says, “we’ll see thousands of more restaurants unnecessarily shutter, people losing their livelihoods, and countless more New Yorkers out of work.”
A report from the Hotel Association of New York City found that at least a quarter of the roughly 700 hotels in the city have closed since March, at least temporarily if not permanently, and many are expected to go out of business completely. About 200 hotels have been occupied through government contracts to house homeless individuals or first responders, but those arrangements are temporary.
“If you tease all of it out, the actual tourist business is under 10 percent of hotels that are open,” said Vijay Dandapani, president and CEO of the hotel association. “It does not look like we’re going to pick up in any meaningful way until somewhere near the end of the second quarter [of 2021].”
An October survey from the Partnership for New York City, an influential business consortium, found just 10 percent of Manhattan office workers had returned to their physical workplaces at that point, and only 15 percent were expected to return by New Year’s Eve.
“I think the question now is what happens in the next three months in terms of both the distribution of the vaccine and the resurgence of Covid,” said Kathy Wylde, president of the partnership.
While the long-term consequences for the size and location of office footprints are still unclear, the share prices of publicly traded commercial landlords have been down since the pandemic hit, and Manhattan’s office market has been thrown into a tailspin.
“The scale of the drop-off in activity is much higher than what Manhattan had gone through” during the 2008 financial crisis and following the 9/11 attacks, noted Franklin Wallach, a senior managing director for research at Colliers International, a commercial real estate firm.
The decline in tourists, office workers and other activity in what were some of the city’s busiest neighborhoods has dealt a serious blow to many businesses who relied on that foot traffic and the workers they employed.
Retail workers have been hit particularly hard, said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union. The pandemic has accelerated a shift towards e-commerce and driven even large, national retail stores to shutter locations.
“Workers are concerned about whether or not their employer is even going to be able to continue to exist,” Appelbaum said. “We’ve seen so many stores being closed. Sometimes it’s the whole chain due to bankruptcy, sometimes chains are just eliminating a lot of their jobs.”
Smaller businesses also face a tough road ahead without additional relief as they struggle to keep up with rent payments and other costs. The Brooklyn Chamber of Commerce found in a November survey that nearly half of business owners in the borough owed back rent from previous months.
While the new round of Paycheck Protection Program funds in the latest stimulus bill has been welcome news to owners and industry groups, most say the program will be a drop in the bucket compared to their needs.
“By the time these funds hit, which will probably be in late January, it’s not like they’re going to carry everyone through the next few months and make everyone whole,” said David Rosen, a bar and restaurant owner who also sits on the city’s nightlife advisory board. “Just because we hit the spring and the red light switches to yellow and we see a path to green, it’s not like we’re going to recover to 100 percent of revenue.”
In the meantime, many owners have been left in limbo without a clear sense of how to map out their future.
“We are burning through at the moment — it’s very depressing — something like $100,000 to $150,000 a month,” said James Mallios, owner of the Manhattan restaurant Amali. “You ask how long we can go — I’m not sure how much debt I’m willing to personally take on.”
“I used to think 50 percent of restaurants closing was batsh– crazy,” he added. “Now, 50 percent seems optimistic.”