Coronavirus

With Coachella & Coronavirus 1-2 Punch, Indio’s Local Economy Faces Hard Road Ahead

Coachella
Frazer Harrison/Getty Images for Coachella

A general view of atmosphere during day 2 of the 2014 Coachella Valley Music & Arts Festival at the Empire Polo Club on April 19, 2014 in Indio, Calif. 

One in four jobs in the Greater Palm Springs region are linked to the tourism industry. "Our phone lines have stopped," says one cab company manager.

"I think it's gonna put a lot of people who were just barely making it out of business. It's like the worst time of the year for this to happen."

On the day I speak with Glenn Miller, mayor of Indio, California, he's dealing not just with the Coachella and Stagecoach festivals' postponement due to the coronavirus pandemic but something much more immediate and only slightly less rare for this desert community: a literal downpour.

"Everything is flooded," says Miller as he navigates his Mini Cooper through the city's saturated roads. "We probably got an inch and a half of rain in an hour."

The storm could be a metaphor for what Miller and this town of 90,000 full-time residents are dealing with in the wake of the massively-popular music festivals' rescheduling from April to October last week under orders from Riverside County and local health officials. That's causing no small amount of anxiety among business owners who are anticipating a sharp drop-off in business as a result.

"We're gonna have people that are going to be affected by it, how much we don't know," says Miller. "I'm not worried as much for the large corporations ... but I really am [worried about] our mom and pops and our day-to-day workers that we rely on daily, and they rely on that tip money or extra hours."

In the 21 years since Coachella first set down roots on the sprawling Empire Polo Club grounds in Indio, the annual gathering has become a pillar of the city and its surrounding communities, whose residents have come to rely on the hundreds of millions of dollars in revenue the festival generates every April. But with the festival and its country-music equivalent Stagecoach now rescheduled for autumn due to the coronavirus pandemic, public officials are scrambling to deal with the loss of income for a substantial chunk of valley residents and businesses who rely heavily on the tourism industry for their financial well-being.

According to the Greater Palm Springs Convention & Visitors Bureau, one in four jobs in the region are linked to the tourism industry, from hotels to restaurants to transportation, including taxi companies and shuttle services. And with Coachella and Stagecoach generating an estimated more than $700 million in overall economic activity in 2016 alone, businesses and workers in the tourism and hospitality sectors will feel the hit, at least in the short-term, from the festivals' postponement.

"I think hotels are gonna get slashed," says Tara Lazar, founder and chef at Palm Springs hospitality group F10 Creative, which runs three restaurants, two bars, a boutique hotel and a catering business in the city. "And I think the people who are gonna feel it the worst are gonna be hourly employees, like housekeeping [staff]."

Lazar's concerns extend to the restaurant sector, particularly so-called "dive" establishments, which she believes could suffer from a "perception [that they]…maybe aren't as proactive about corona[virus] as other restaurants are."

"People bank on April to get their coffers up, and then they can coast for the rest of the year," Lazar continues, noting that she's "mildly terrified" about the prospect of being forced to lay off some of her staff due to the downturn. "I think it's gonna put a lot of people who were just barely making it out of business. It's like the worst time of the year for this to happen."

Thanks to Coachella and Stagecoach, April is a huge month for the region's massive tourism industry, which dies out in the summer due to temperatures that regularly hover above 100 degrees between June and September. Workers and businesses depend on the money they make in the spring to tide them over during the low season, but with the postponement of the year's two major music festivals -- not to mention the cancellation of the BNP Paribas Open tennis tournament in nearby Indian Wells, which was slated to take place this month -- many will be left wondering how to pay their bills.

"We just need to see what we can do about working with our government agencies and our utilities to help with any kind of roll back that we could do," says Miller, who says he's looking to work with the county, state and federal governments to help local residents affected by the postponement. "Maybe a little forgiveness on time frame for people to be able to pay their electric and water bills and stuff like that."

As for Indio itself, Miller says the city can handle the delay of the $3.5 million-plus in tax revenue -- a substantial chunk of its $81 million budget -- generated by the Goldenvoice festivals each April by dipping into the city's $20 million reserve fund.

"We're able to utilize that to ... subsidize our budget, and then when the concert comes in October, we're able to put that money back in our reserves," he says. Had Goldenvoice not "been as willing to reschedule" the festivals, he adds, the city would have had to absorb those extra costs in order to keep up the "quality of life" residents have become accustomed to.

Still, given the summer tourism drought that happens across the region, those affected by the move may be facing some tough times in the short term. Perhaps the hardest-hit sector will be the valley's many hotels, as well as homeowners who count on an Airbnb windfall during spring festival season (an estimated 10,000 people stayed in Airbnbs during the festivals in 2016). Each year, hotel room rates skyrocket during Coachella season (rooms in the Coachella Valley went for an average of $240 a night in April 2017), while short-term rental during Coachella can bring in hundreds, if not thousands, of dollars in a single weekend for homeowners, many of whom now won't be seeing that money until October.

"The economic impact of losing the festivals has already been substantial, with massive refunds of rooms, events and sponsorships already underway," said Arrive Hotels & Restaurants CEO Matt Steinberg, which hosts an annual Coachella pool party during the festival each year, in an email to Billboard. "The revenue we generate from major events like Coachella and the BNP Paribas Open is a significant part of our business. We also expect the extended impact of this outbreak to be quite serious on our small business and, especially, on our employees who rely on high-season tips to make ends meet."

Because the festivals were postponed well outside the 72-hour cancellation policies employed at the majority of area hotels, most festival goers will be able to cancel without penalty -- though many are choosing to simply reschedule their reservations for October. Based on an informal survey of hotels in the area, the majority are allowing festival goers who made reservations during the three weekends in question to reschedule for the same rate in the fall.

Short-term rental services like Airbnb and Vrbo are also updating their policies in light of the coronavirus pandemic. On March 10, Airbnb introduced "More Flexible Reservations," a suite of tools and programs designed to allow hosts and guests to "navigate uncertainty and meet their needs to cancel or postpone" their reservations on the service. Since both Airbnb and Vrbo leave it up to homeowners to decide on the strictness of their cancellation policies up front, they also give them wide discretion in determining how to handle cancellations over coronavirus-related concerns. That said, Airbnb is offering incentives to homeowners who allow cancellations outside the scope of their specific policies, including refunding host fees and offering promotions that make those homeowners' listings more visible on the platform in order to drive future bookings.

Transportation companies are also taking an enormous hit from the cancellations. According to Anna Maria Julianelli, general manager at Yellow Cab of the Desert in Palm Desert, her drivers have been seeing drops in income of up to 80% since the cancellation of the BNP Paribas Open, which had been slated to run in Indian Wells from March 4-17. Now, with Coachella, Stagecoach and other major events later this spring postponed or outright canceled, the region's summer low season has kicked off over two months early.

"Normally right now, our phones would be ringing, drivers would be doing tons of business," says Julianelli, who notes that drivers who normally make between $2,500 to $3,500 a week during the spring festival season have been averaging just $780 over the past week. "And our phone lines have stopped."

Julianelli adds that since the slowdown, they've been forced to make "major cuts" at the office and, since the Coachella and Stagecoach postponements, will also be taking about 20 taxis off the road. That's bad news for the drivers, who like most cabbies are classified as independent contractors, meaning most aren't eligible to receive unemployment or disability benefits from the state -- a situation that could change if the federal government declares an emergency and makes federal disaster unemployment assistance available for independent contractors across the country. (Two separate bills that would allow independent contractors and those who are self-employed to qualify for unemployment benefits are currently making their way through the House and Senate.)

In light of the upheaval, Lazar is doing her best to remain optimistic. "April is a really busy month for us anyway, it kind of stacks everything for us," she says, noting that the springtime brings the region's "nicest weather" all year, and with it a horde of tourists. "I'm mildly relieved that [Coachella and Stagecoach are] moving to October just because we're not as busy, so we have a little bit more bandwidth to take on the normal April business."

But with everything shutting down and paranoia increasing the wake of the growing coronavirus outbreak in the U.S. and California -- the state has more than 200 cases, while over 2,000 have contracted the virus in the U.S. -- the Coachella Valley tourism industry will almost certainly fall short of normal levels for this time of year. And as far as Miller is concerned, that's probably for the best in light of the real dangers presented by the disease.

"Music's something we can always have," he says. "Your health and well being is something that you can't replace."

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