August 16, 2022

No Vacancies, but Some Reservations

The numbers tell a similar story, with many tourism-related businesses having their best summer in years.

BP felt obliged to note this officially. Last week, in a court filing that included a detailed list of indicators of “the strength of the gulf economy,” BP argued that “there is no basis to assume that claimants, with very limited exceptions, will incur a future loss related to the spill.”

The response here: Hold on, it’s not that good.

Since the spill last year, messages from the coast have been somewhat mixed, with some businesses arguing that it is continuing to hurt the coast and that more assistance is needed, and others, often led by tourism officials, emphasizing the positive to entice visitors and consumers.

This is not necessarily contradictory, as the effects of the spill were infuriatingly uneven, and a business does not have to be empty to be hurting. But the summer of 2011, a strong one by a variety of measures, has made this balance harder to strike.

BP has long taken issue with the formula created by Kenneth R. Feinberg, who oversees the Gulf Coast Claims Facility, which is dispensing BP’s $20 billion compensation fund. Under the formula, settlements would generally be double the demonstrable losses from 2010, with money previously paid by the fund subtracted.

BP has been arguing that this “future factor” is too generous. That argument is revisited in its 29-page filing, pointing out the strong revenue figures for lodging in coastal tourism areas in the fall and spring, most surpassing figures from comparable times in 2009 and early 2010.

BP makes the same argument in regard to the strong performance of much of the seafood industry, though the filing devotes less attention to it — possibly because unresolved questions about the long-term ecological effects of the spill, as well as a lingering nationwide skepticism about gulf seafood, have made its recovery more debatable.

Tourism, on the other hand, seems rather straightforward.

Taxable lodging revenues from rentals in Gulf Shores and its neighboring resort town, Orange Beach, fell by more than half last summer.

After months of aggressive marketing, largely paid for with the tens of millions of dollars that BP sent to states for that very purpose, tourism officials are now boasting of record, or near-record, numbers: going in to the Fourth of July weekend, tourism officials here reported vacation rental occupancy rates that hovered near 100 percent, all above — and some far above — rates at comparable times in 2009.

These figures would seem to bear out BP’s assertion that the recovery has firmly set in, to the chagrin of some coastal residents.

“Our state and local leaders have been so quick to declare that the beaches, seafood and Gulf Coast are doing fine that we may have screwed up the chances of the remaining outstanding BP oil spill claims to be paid,” Rick Outzen, publisher of the Independent News, an alternative weekly in Pensacola, Fla., wrote on his blog. Business owners here acknowledge that it has been for the most part a good summer. But they are quick to add that the effects of the spill are more complicated than they may appear.

The tourism business is a lot like farming; it is seasonal and involves managing a financial cycle between fat and lean seasons.

Up to 90 percent of the income for many Gulf Shores businesses is made during June, July and August; by winter that money is largely gone and businesses usually take out lines of credit to prepare for summer.

This was the case going into the summer of 2010, which was itself projected to be something of a recovery year after 2009, a down season of recession and high gas prices.

But in 2010, there was no summer. Hotels sat empty or filled rooms only by offering steep discounts. Smaller businesses like beach chair rentals went under; charter boat operators barely hung on. The whole spend-save-borrow cycle was thrown off.

“What happened last winter was a lot of lenders stopped the line of credit because they didn’t know the impact of what the spill was going to be,” said Sheila Hodges, owner of a real estate firm in Gulf Shores. “We barely survived the winter. Some didn’t survive the winter.”

While initial BP payments and a strong fall and winter helped, some business owners are still carrying around bad credit ratings from those lean days, or paying off loans, or working under franchise agreements that were renegotiated to their disadvantage.

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