Businesses grapple with decreased revenue and uncertain future
The COVID-19 pandemic has had implications far beyond public health. One of the most prevalent impacts, on national, state and local levels, has been to businesses. According to a COVID-19 Economic Impact Survey conducted by Kawerak Inc., over 90 percent of businesses in the Bering Strait region reported a disruption in business due to the pandemic and about 35 percent claimed that their revenue from the first half of 2020 will decrease significantly compared to 2019.
To offset COVID-19 related economic losses, the City of Nome allocated a portion of the federal Coronavirus, Aid, Relief, and Economic Security, or CARES, funds to local businesses. The Nome Common Council grappled with a method as to how to allocate that money. The first round of CARES Act funds were distributed to businesses and local residents in form of utility credits to their NJUS accounts. For the second round of CARES funds, the Council decided on a blanket stimulus payment, meaning that businesses receive grants based upon last year’s revenue. Councilman Jerald Brown, however, pushed for CARES funding to be distributed on a needs-basis. “We’ve got a limited amount of funds to assist the community, I would like it to go to [businesses] that need it the most,” he said of his position. Brown wanted businesses that suffered most from the pandemic to receive more money than those that were unaffected or even benefitted. For example, he explained that small, part time businesses may end up being better off with the pandemic relief funding than they would have done without the pandemic. “It doesn’t seem fair to businesses that really got hit hard,” Brown said of the way the Council allocated money.
The hard-hit include those that depend heavily upon tourism. Many establishments in Nome—such as gift shops and hotels—depend upon business from tourists who visit town each year during Iditarod and in the summer to get through the winter. The virus arrived in Alaska mid-Iditarod and has cancelled the summer tourism season, so most businesses lost their two busiest and most lucrative times. Most non-essential businesses were ordered to close in March and, even though the majority of Nome establishments have reopened —(at least at limited capacity— many are still struggling to compensate for the loss of income during the closure and with a substantial decrease in business in the subsequent months.
With no end to the pandemic in sight, owners are left grappling with uncertainties and fears about whether business will ever return to pre-pandemic levels and whether their businesses will even be able to survive the pandemic. While relief funding is helpful, it is not a long-term solution. As Brown explained, the ultimate purpose of routing relief funds toward the more heavily impacted businesses is to keep them afloat for next year. He is not confident that the money businesses received from the City will be sufficient to get those hurt the most through, adding that he thinks a number of Nome businesses will be forced to declare bankruptcy.
Hotels, because they depend entirely upon outside visitors, were the hardest hit by the pandemic and pandemic-related restrictions.
Larry Pederson, Vice President of Nome Operations for Bering Straits Native Corporation, said the Aurora Inn has been “extremely impacted.” Both the hotel and car rental closed in mid-March. Car rentals have been available since June 1, but the Aurora Inn did not reopen until August. Pederson said that the hotel is currently only open at about a third capacity, so 22 of its roughly 50 rooms are available. Even though the rooms are open, Pederson said that the pandemic “continues to have an impact” as business has been slow, with the inn averaging about five customers per day and the car rentals eight. According to Pederson, the months-long shutdown has led to a large decrease in revenue. Pederson said they applied for PPP relief funding to cover staff salaries during the closure. But “that money dried up,” prompting BSNC to reopen the Aurora Inn. BSNC plans for a tiered reopening of the hotel, which means opening up an additional 10 rooms every few months if case numbers decrease. But if there is an outbreak or a spike in cases, they will need to shut down again.
Judy Martinson, owner of the Dredge No. 7 Inn, said that travel restrictions have led to a “complete unprecedented downturn in business.” The inn is currently housing critical workers and Martinson said that she saw an uptick in customers when travel permits were relaxed. Despite this, however, occupancy remains “significantly down.” She applied for relief funding from the State and City. Though helpful, the money “certainly doesn’t come close to the loss of revenue we have occurred,” a loss which Martinson described as unprecedented. Martinson said she is concerned for all Nome businesses, adding that she believes the loss of summer business could be devastating.
Jessica Farley owns and operates Noxapaga Suites. Farley said that the business has not been harmed too badly by the pandemic. Occupancy is above the state average, which is in part because there are only two rooms, and she is currently booked through September 27. However, revenue has decreased because Farley drastically reduced prices. The worst months were March and April, during which Farley said she returned “tens of thousands of dollars in refunds.” However, Farley said she encouraged cancellations because she wanted to minimize unnecessary travel into Nome.
Moreover, Farley soon found another way to fill the rooms: as a quarantine space. “It’s perfect for a pandemic, you never need to see another person,” she said of the way the building is designed. From the end of March until May, people could rent a room in which to quarantine. Her customers have not been tourists, but instead essential workers such as construction workers. Noxapaga Suites is not eligible for pandemic relief funding, other than the utilities grant, because the business was not open last year. Overall, Farley said she thinks the remainder of 2020 will be challenging but remains optimistic about 2021.
Unsurprisingly, also heavily impacted by the pandemic and the loss of visitors were tour businesses. Carol Gales owns Roam Nome, which focuses on nature tours—mainly birding, but also day hiking and snowshoeing. Gales said the loss of the tourism season has impacted her business “hugely.” Gales had to cancel all of her tours for this summer due to the pandemic, but said that some customers have already rebooked for next year. In its second year, Roam Nome was on track to triple its business from 2019. Gales took over Iditarod tours from Nome Discovery Tours, but because “Iditarod was basically cancelled,” she lost all of these as well.
Restaurants and Bars
Patrick Krier, who owns the Polar Cub Cafe and the Polar Bar, is concerned about the future of his business. “I’m not making anything near what I used to,” Krier said, stating that he has experienced a 50 to 60 percent decrease in income. Krier attributes this decrease to both the lack of summer tourism and to the fact that people are not going out as much as they did pre-pandemic. The Polar Bar was closed completely from March 11 until May 11, and the restaurant was only open for takeout orders during that time. The shutdown cost him around $70,000 and he had to let all his employees go in order to be able to pay the bills. Krier has since been able to rehire half of them, but business has “definitely been impacted.” When he first opened up in May, business “was slow, people were cautious.” Since then it has picked up a little, but Krier is keeping the Polar Cub and the Polar Bar at partial capacity. He noted that he could open up more, but wants to maintain social distancing measures of six feet. Krier said he has applied for Economic Injury Disaster Loan and Paycheck Protection Program funds, and is applying for CARES funds from the City of Nome. But this is somewhat of a band aid fix. Krier said he doesn’t think business will return to normal levels until there is a vaccine.
Other restaurants have not opened their doors at all. For instance, Jang Ahn, owner of Husky Restaurant, said that the business is still only doing to-go orders and does not plan to open for sit-down business yet. Ahn said that they are averaging around 20 orders a day.
Most Nome shops have also experienced a decrease in revenue, but because they do not rely solely upon visitors in the same way hotels do, shops seem to be better able to adjust to the restrictions imposed by the pandemic.
Robert James, who manages the gift shop Maruskiya’s of Nome, said that the business is “doing ok.” The store closed mid-March, causing Maruskiya’s to lose out on Iditarod tourism. This was a hit, but James said that the timing of the shut-down ended up being fortuitous because he was able to cancel summer merchandise orders. The store reopened on June 1 and, while there has been a significant decrease in tourist customers, Maruskiya’s has had some business from people who are in Nome for work. There has also been a decrease in supply. James said that fewer regional artists have been selling their work to the store because people are not traveling to Nome from the villages in the same numbers. Overall, though, Maruskiya’s is coping. Throughout their closure, James said the business has been “more aggressive online,” and has increased sales through their website. Moreover, according to James, the main reason Maruskiya’s has been able to weather the pandemic thus far is because the store is well established. Art collectors provide the store with a secure customer base. As James put it, “We’re not in danger of shutting down.” Maruskiya’s received PPP funds, but whether these are sufficient or not “remains to be seen,” because James does not yet know how much the store will need to pay back.
Trinh Johnson owns three businesses: a flower shop, a coffee shop and a tanning salon. Johnson said all of her businesses were shut down for two months. She is currently doing curbside pick-up for coffee and flower deliveries, but, in order to protect her employees and the community, people are not allowed inside her businesses. This means that the tanning salon remains closed. During the shut-down, Johnson continued to arrange flowers for funerals and delivered coffee. And, because she was selling far fewer flowers, Johnson said that during those three months she would give away flowers to people in the community who needed them. A non-monetary loss during the pandemic has been the loss of interaction and connection, which Johnson said are central to both flowers and coffee. For example, Johnson typically sits down with a family to discuss flower arrangements for funerals. She had to conduct these conversations over the phone, which proved challenging due to the number of dropped calls. People are still buying coffee, but the loss of tourists, in particular bird watchers and cruise ship passengers, has heavily impacted Johnson’s businesses. Johnson said she applied for relief funding in order to pay her employees during the time she was completely closed, and has also struggled to recruit new workers. Interestingly, Johnson said that more Nomeites have been buying coffee because fewer people are going on vacations this summer. But even so, revenue is down at least 50 percent. “It’s hard, we really rely on tourism,” said Johnson.
Kristine McRae, who owns the shop Bering Tea & Coffee, said that she was closed for six weeks beginning on March 15. Losing Iditarod business was a “financial hit for sure,” she said, because along with summer tourism, Iditarod visitors are an important source of revenue for Bering Tea. She applied for a PPP loan, which allowed her to rehire and pay all her staff and helped the business catch up on rent and utilities for the period it was closed. At the end of April, McRae opened for to-go orders only. McRae said that business has been steady throughout the summer. “Although COVID has been hard for everyone, we continue to see the spirit of Nome prevail, through the window, one person at a time. Customers have been loyal and, truthfully, the tremendous support has allowed us to stay afloat,” she said. She is unsure what will happen in terms of opening for sit-down customers once the weather gets colder. “At this point we can’t logistically operate through the window and have customers inside, so we’re taking it month by month,” said McRae.
There is at least one success story of the economically and emotionally challenging past few months, however. Kirsten Bey, owner of the fabric shop Sew Far North, said that her shop has not suffered due to the pandemic. Since COVID-19 has made fabric masks a part of life, Bey said that business has increased because organizations and businesses have been buying mask supplies in large quantities. Her business was initially impacted by a shortage of materials, such as elastic and bias tape, and she could not resupply quickly enough to keep up with the demand. Bey has also noticed an increase in fabric sales for personal sewing projects. She attributes this uptick to the fact that people have more time on their hands. “I think people have maybe done a little more personal sewing this summer than in the past because people are somewhat more limited in their activities and sewing and other crafts are good projects to do if stuck at home,” said Bey.