Legislative committee hears about challenges facing hospitality industry amid coronavirus

Hannah Grover
Farmington Daily Times

AZTEC — As the COVID-19 pandemic plunged the world into a major economic recession, the hospitality industries including restaurants and hotels in New Mexico have been hit particularly hard.

New Mexico Hospitality Association CEO Kathy Komoll said some hotels laid off 90% of their employees as the occupancy rates, which were restricted by public health orders, reached record lows.

Komoll presented information about the hospitality industry during the Economic and Rural Development interim legislative committee on Aug. 3 that was broadcast online at nmlegis.gov.

The Economic and Rural Development Committee will have virtual meetings in all four corners of the state leading up to the legislative session, which starts in January. During the session, the Legislature will be tasked with creating policies to help the state recover from the economic crisis. 

The hospitality industry has been hit hard by the COVID-19 pandemic.

Tourism has plummeted, especially following a public health order that requires everyone entering the state to quarantine for 14 days.

Komoll said the current forecasts project it will take four to five years for the hospitality industry to recover from the pandemic. Prior to this year, it was the second largest industry in the state and had seen steady growth.

In New Mexico, the hospitality industry lost 30,000 jobs due to the pandemic, although some of the employment is now returning, Komoll said.

Komoll said there is some good news. The hospitality industry tends to be fairly elastic and people want to travel. The pandemic, she said, could allow New Mexico to gain ground in attracting tourists once it is safe to encourage tourism once again. 

Fly fishing on the San Juan River below Navajo Dam is one of San Juan County's top tourism draws, as anglers come from all over the country to try their luck there.

Economist: Public health orders have economic consequences

Meanwhile, Christopher Erickson, a professor of economics at New Mexico State University, said the public health orders have a cost-benefit trade off. The restrictions save lives but hurt the economy.

“Ending the economic crisis requires controlling the pandemic,” he told the legislators.

There are three ways he said this could happen — adhering to mandatory face masks and social distancing, therapeutics that can reduce the risks for people who catch COVID-19, or a vaccine.

“Until the pandemic is brought to heel one way or another, there will be no recovery,” he said.

Erickson described the economic crisis as the “deepest and sharpest recession in our lifetime.”

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he longer the pandemic lasts and restrictions remain in place, the more difficult it will be for the economy to recover, he said.

Erickson encouraged legislators to use reserves.

“We keep these for a rainy day,” he said. “Well it’s raining now.”

He said the state should prioritize maintaining programs, especially programs to support low-income households.  Erickson said this should be done to help maintain the consumption of goods in the state and keep the economy going.

Tax increases, Erickson said, should be favored rather than program cuts and he encouraged gross receipts tax reform, such as converting gross receipts tax to a value-added tax.

Restaurants struggling amid pandemic

Carri Phillis, owner of The Salt Yard restaurants in Albuquerque, said New Mexico’s food and beverage industry will need a bailout. Phillis sits on the governor's economic recovery council.

State Rep. Rod Montoya

She also encouraged revising the liquor laws, including allowing delivery of alcoholic beverages and reducing the liabilities businesses face if a patron is charged with driving while intoxicated. Several legislators highlighted how hard it is to get a liquor license in the state, including liquor licenses selling for $500,000.

Rep. Rod Montoya, R-Farmington, said he was glad to hear the legislators discuss possibilities for liquor license reform. Montoya is not a member of the committee, but he called in and commented at the end of the meeting.

Phillis said she anticipates restaurants in the future will have more patios, however she does not see outdoor-only dining as a sustainable method for restaurants to operate.

New Mexico is one of three states currently prohibiting indoor dining, and Phillis said that means there aren’t other models to look to for improving outdoor dining.

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Clancy's Irish Cantina, located at 2701 E. 20th St. in Farmington, extended its outdoor dining area along the side of the building. New Mexico's reinstated indoor dining ban remains in effect through at least August.

In addition, Phillis told a story about going to eat at a restaurant and having a monsoon storm hit with high winds. On top of the monsoon storms, she said the heat complicates the ability to have outdoor dining in the state.

While there are ways to cool an outdoor patio in the summer heat, Phillis said it will be much more challenging to keep patrons warm in the winter if indoor dining is not allowed.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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