Friday, August 30, 2019

Glaciers, Gondolas, and Slot Machines: Attracting Tourism Jobs Means Making Tough Choices

There may be no area of employment more modern, substantial, and promising than catering to people traveling for pleasure.  For all the beefing about air travel conditions, fares are lower in constant dollars than they have ever been.  Worldwide prosperity, on average, is way up.  A shift from valuing objects to valuing experiences means that more and more people travel.  And the rise of the 1% has opened up a new high tier.

With that said, here are three places where that has not worked out as planned.  The first was featured in Peter S. Goodman and Liz Alderman’s August 25th New York Times “Iceland’s Purple Planes Are Grounded, and With Them, Its Economy.”  The piece, about a remarkably steep fall in that country’s number of visitors from discounter WOW going out of business, drew this immediate reaction from me:  Wait a minute!  Wasn’t it just yesterday that Icelanders were complaining about too much tourism?  Word was that visitors, often ill-mannered (of course), were overtaxing their delicate ecology, taking up too much Reykjavik space, preventing locals from getting hotel rooms when they themselves traveled, and so on.  And now “the sudden shortage of Americans – widely celebrated as a free-spending people – is bemoaned by merchants of Viking-themed tourist tchotkes (sic), by whale watching tour operators and by real estate agencies.”  Oh well.

The problem I have always sensed with Iceland’s tourist industry – and I have been there four times – is its ambivalence.  Some would like to make their country, the size of Kentucky with one-fourth the population of metropolitan Louisville, as close to an environmental preserve as sanely possible.  Others see its ample open spaces as opportunities to add industry and other businesses to help their standard of living.  It has often seemed gratuitously high-end to me, with a lack of bed and breakfasts and other low-priced non-hostel hotel rooms, little fast food, and sit-down restaurant meals seeming to start at about US$28 per person.  Except for the fine Bonus supermarket chain and a competitor or two, prices in stores will surprise you.  To sell more Eric the Red refrigerator magnets they can cut their $10 price in half with business-friendlier public policies… if they decide that’s what they want.

The opposite problem has plagued Venice.  Spearheaded by cruise ship passengers spending far less per capita than other visitors, they have just plain had too many – 36 million international ones alone, or 138 per permanent city resident, in 2017.  With demand for related goods and services distorting the business atmosphere the city runs the real risk of becoming a theme park, with a thousandth glass-animal shop pricing out the likes of a dry cleaner or an insurance agency.  Normally supply and demand would kick in, with hotel rooms and restaurants charging more, but with waterborne visitors not using much of either they have been able to clog the streets cheaply.  Two years ago the city banned large ships from docking, and next year they start a three-euro entrance fee for those not staying there, but those will only solve part of the problem – watch this classic destination for more developments.

The third tourism issue is here in the Catskills.  Locals clearly wanted the Resorts World casino, which, at my visit last year looked modern, busy, and full of people gambling, but it is losing so much money that the major stockholders are resorting to declaring bankruptcy, while staying open, to stiff its lenders and stay, at least for a while, in business.  Why has it done so poorly while seeming so good in principle and in real life?

One problem is that Resorts World, with what was a $129 per night hotel-room minimum, became yet another place failing to realize that one thing making Las Vegas great was its quantity of cheap accommodations, facilitating longer stays translating into more gambling.  Its publicity efforts have always seemed inadequate, without any massive push to bring in New York-area Jews with good childhood Catskills memories, and an apparently failed effort by the Malaysian owner to attract high-rolling Asians.  Prices such as the $16 nachos can also cut back repeat visits.  And, to keep bored patrons interested, like any other large casino it requires massive periodic infrastructure spending, meaning it needs way-high amounts of business just to break even. 

However, I suspect the largest problem is something else.  People came to 1950s and 1960s Las Vegas to gamble.  They would play, play, and play.  Long hours, as close to around the clock as they could stand.  Some thought they had systems assuring wins, but few people did that – it wasn’t called Lost Wages for nothing.  Gambling’s appeal is totally different now.  The GI and Silent generations forming not only the backbone but most of the body of Las Vegas punters have been replaced by Generation X and Millennials, who care for gambling vastly less.  Casinos are all over the country now, and the novelty is no more.  Instead of tacitly encouraging problem gambling, people who cannot handle it see a variety of announcements offering them help, including the option to bar themselves.  Roulette, blackjack, craps, and slot machines, after 70 years still the mainstays, are all old hat now.  It has become the norm for people to both know intellectually and feel emotionally that they cannot win over the long term.  Low-stakes entry points, such as $20 buy-in poker and nickel slots that don’t try to get people to play 20, 50, or 100 coins at a time, have gone away.  The clank of coins into metal trays is a thing of the past.  Despite, or maybe even because of, the proliferation of American and world casinos, gambling itself is in big trouble – the choice here is how casinos can change to accommodate that.

Obviously, tourism will continue to grow – but in what ways?  We will see.  Not all the jobs it generates will remain.  We wish it the best, but it may have many more hard times ahead.

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