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Bracing for coronavirus fallout: Sonoma County businesses anticipate deep impact

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How To Reduce Your Risk

Local health officials urge practicing good hygiene to reduce the risk of becoming infected with a respiratory virus, such as the flu or coronavirus. This includes:

• Washing hands frequently with soap and water for at least 20 seconds
• Avoid touching your eyes and face
• Cough or sneeze into your sleeved elbow
• Stay home when ill
• Get a flu shot, and it’s not too late this season

Source: Sonoma County Department of Health Services

For more information, go to sonomacounty.ca.gov/Health/Information-About-Coronavirus.

Questions or concerns can be directed to the county’s 24-hour information hotline at 211 or 800-325-9604. You can also text "COVID19" to 211211 for coronavirus information.

For more stories about the coronavirus, go here.

GEYSERVILLE - Corey Beck stood at the entrance of Rustic, the restaurant at the Francis Ford Coppola Winery. Every other table was occupied. That was by design, said Beck, the winery’s CEO.

The idea was to create space between parties. “What we’re learning about the virus,” he said Friday, “is that space is our friend.”

A day earlier, in a morale-boosting email to the winery’s 400 employees, Beck touched on other crises the nation, county and wine industry have weathered: 9/11, the 2008 recession, the floods and fires that have beset the North Bay in recent years.

“At least with the fires,” he said the next day, “you knew how much or how little they were contained.

“This one is different. It’s like a ghost.”

Like a valley fog that obscures the road ahead and won’t soon lift, the coronavirus pandemic — declared a national emergency by President Donald Trump on Friday — threatens to strike at one of Sonoma County’s economic pillars: the tourism industry that pumps $2.2 billion a year into the local economy. Wineries, hotels, restaurants, wedding venues and visitor attractions are bracing for a steep downturn just as spring arrives, a time that ordinarily signals a welcome upswing in visitors arriving from around the country and world.

As anyone knows who watched the stock market crater last week, the financial toll ultimately extracted by COVID-19 likely will inflict pain on the county economy far beyond the realm of tourism.

Susan Gorin, chairwoman of the Sonoma County Board of Supervisors, expressed concern the local virus-related economic fallout could be three or four times greater than that seen by the 2019 Kincade fire and rolling PG&E power shut-offs, a hit pegged at $725 million. From Petaluma to Geyserville, at businesses ranging from wineries and hotels to bakeries and bowling alleys, the anxiety last week was palpable.

$50,000 loss in one day

At the Coppola winery, Rustic was half full — not bad, considering just a day earlier the 43rd annual Wine Road barrel tasting event had been canceled. That came as a painful blow to the event organizer, which now must refund $150,000 to ticket holders, and for the 100 participating wineries, including Coppola, which will miss out on much of the $3 million in sales generated by the event.

Cancellations are mounting swiftly at area hotels and lodging properties. The Flamingo Resort & Spa, a fixture in Santa Rosa since 1957, lost $50,000 in revenue in one day last week, said Michael Gibson, director of food and beverage, who called it “a fraction” of the resort’s losses.

“Cancellations keep coming in,” he said, noting that some were from Europeans planning to arrive in April, May and June.

After wiping down the coffee station counter in the stylish lobby of Healdsburg’s Harmon Guest House, front desk supervisor Dylan Sanders spoke of his ominous inkling that “bigger wheels are starting to turn.” On Thursday alone, he said, that hotel and its two sister properties, the h2hotel and Hotel Healdsburg, had gotten around 100 cancellations.

The occupancy rate at standalone lodging properties in Sonoma County during the week of March 1 to 7 was down 5.6% from the same time last year, according to the latest report from STR, which tracks the hospitality industry worldwide. The rate declined a whopping 16.9% at hotels and motels considered to be full service.

How To Reduce Your Risk

Local health officials urge practicing good hygiene to reduce the risk of becoming infected with a respiratory virus, such as the flu or coronavirus. This includes:

• Washing hands frequently with soap and water for at least 20 seconds
• Avoid touching your eyes and face
• Cough or sneeze into your sleeved elbow
• Stay home when ill
• Get a flu shot, and it’s not too late this season

Source: Sonoma County Department of Health Services

For more information, go to sonomacounty.ca.gov/Health/Information-About-Coronavirus.

Questions or concerns can be directed to the county’s 24-hour information hotline at 211 or 800-325-9604. You can also text "COVID19" to 211211 for coronavirus information.

For more stories about the coronavirus, go here.

Restricted air travel will “definitely knock down occupancy rates,” said Robert Eyler, an economics professor at Sonoma State University. The hotel losses, he said, will ripple through the local tourism industry, hitting restaurants, wineries and retailers.

The loss in hotel tax revenue alone could be staggering. Taxes on tourist spending in 2018 amounted to $194.8 million and the tourism/hospitality industry supported 22,300 jobs, one in 10 jobs in the county, according to a study by Dean Runyan Associates, a Portland, Oregon, economic specialist.

The pandemic’s effect on the broad tourism sector will be “significant,” agreed Claudia Vecchio, president and CEO of Sonoma County Tourism, a nonprofit that promotes the county as a destination. “It’s not something we can market our way out of.”

“It would be irresponsible of me not to be worried. It’s an uncertain time,” said Joe Bartolomei, co-owner of the upscale Farmhouse Inn in Forestville.

The 25-room inn, with its Michelin-starred restaurant chef, has received some cancellations and a larger number of requests from guests to move their reservations a week or a month ahead, he said.

“There is a lot of fear out there and a lot of concern, but there isn’t much data,” said Bartolomei, vice chairman of Sonoma County Tourism, regarding a full measure of COVID-19’s effect on tourism.

The virus that erupted in China in December has infected nearly 2,800 people and caused 59 deaths in the United States, with 368 cases and five fatalities in California, as of Saturday night. But the unknown factor in calculating its health and financial harm is how long the pandemic will last.

Dr. Anthony Fauci, the top infectious disease expert at the National Institutes of Health, said Friday that coronavirus cases were continuing to surge and the crisis could last anywhere from two weeks to two months.

Empty bowling lanes

While the county’s Economic Development Board has no financial figures yet on how the virus is hurting local businesses, you don’t need a survey to see that times are getting rough.

At 9:35 p.m. on Friday, exactly one of the 40 lanes at Petaluma’s Boulevard Lanes bowling alley was in use — despite the Herculean labors of an employee named Dawna, who’d spent the previous hour with rags and a bucket of disinfectant, cleaning 100 or so bowling balls.

Up north, traffic was brisk at the Downtown Bakery & Creamery in Healdsburg on Friday afternoon. Large, common tables were two-thirds full, the line at the register five deep.

Still, owner Kathleen Stewart is feeling a pinch. “I would say I’m down a 25%,” she said of her March sales. Stewart, once a pastry chef for Alice Waters at the famed Berkeley restaurant Chez Panisse, employs 30 people at her business on Healdsburg Plaza. In the near future, she may need to cut some of their hours. Should that happen, she’s encouraged them to file claims for state unemployment benefits.

Some businesses are thriving despite the public health scare as more and more people hunker down at home. At Outer Planes Comics and Games, on Mendocino Avenue in Santa Rosa, employee Lauren McCormick noted an uptick, over the previous week, in sales of the store’s role-playing board. “That’s one thing people are going to be doing at home.”

Real estate fallout

Real estate agents, meanwhile, are in their industry’s version of “March Madness” — the time of year in the county when people put homes on the market.

Mikki Cardoza, founder of the firm MikkiMoves of Santa Rosa, said she had a full weekend of appointments to show homes to prospective buyers, with sellers willing to show them off — “as long as we clean off door knobs” and other surfaces.

Mortgage interest rates on 30-year loans around 3% are encouraging for buyers, Cardoza said, but if people wind up losing paychecks or jobs in the next five or six weeks, the situation could change just as the spring selling season typically heats up.

“I’m anxious to see what next weekend brings,” she said.

The construction industry is feeling some discomfort, said Keith Woods, chief executive officer of the North Coast Builders Exchange.

The timing of the virus outbreak couldn’t be worse for people stlll trying to rebuild after losing their homes in the 2017 North Bay wildfires. One contractor reported that more of his workers are staying home when they feel ill. Another builder reported that it is taking six times longer than before to get LED lighting equipment shipped from manufacturers in China, Woods said.

From a national perspective, Moody’s Analytics warned the coronavirus has “slammed business confidence” and is “the latest in a string of geopolitical threats that already had businesses on edge” that could prompt them to rein in operations.

Consumers here and across the country are also growing wary, including the large baby boomer cohort unhappily watching the erosion of their stock and mutual fund portfolios, a big part of their retirement nest eggs, according to a report last week by Moody’s renowned economic analyst Mark Zandi.

The slide in stock prices since mid-February has wiped out about $5 trillion in stockholder wealth that, if sustained, will curb consumer spending this year by $225 billion, Zandi’s report said.

Stock market woes aside, county Supervisor Gorin is alarmed by the prospect of small county businesses failing and their employees losing income, with low-wage workers the most vulnerable.

A consumer spending cutback, Gorin fears, could trigger a contraction on par with the 2008 recession.

Things may not get that dire, Eyler said. Should the coronavirus crisis abate in a few months, there might be “a wild snap back in the second half of the year,” the economics professor said. In the meantime, “it’s going to be a bit wobbly.”

Ample parking, short lines

“Thank you for braving the coronavirus,” said Dominic Foppoli, mayor of Windsor and winery operator.

He was in the tasting room of the Christopher Creek Winery, which he co-owns, addressing a couple who were happily sipping a single-vineyard pinot noir.

“Thank you for being open,” replied Dan Nisenbaum, who’d driven up Friday from Santa Clarita for Wine Road, arriving in Sonoma County just in time to learn the event was canceled.

It was still early — before noon — but staff outnumbered customers 3 to 1. Coronavirus made for ample parking and short lines. Foppoli mentioned a group of serious buyers who’d become “freaked out” by the bad virus news, and chartered a plane back to Montana.

“The nice part about it is, they stocked on a bunch of wine first,” he said.

Foppoli shared some advice he’d gotten from his cousins in Italy, where a nationwide quarantine is in place: “They said, if you’re in your home for two or three weeks with your family, you’re gonna go through a lot of wine.”

Back in the Coppola tasting room in Geyserville, Beck the CEO echoed the notion that wine can be a coping mechanism in tough times.

If a simple glass of vino “can add a smile to somebody’s day, or take their mind off things for just a moment,” he said, “well, we did our job.”

On a large screen behind him, in a scene from Coppola’s “Apocalypse Now,” a patrol boat chugged upriver, into a foreboding unknown.

You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com. On Twitter @guykovner. You can reach Staff Writer Austin Murphy at 707-521-5214 or austin.murphy@pressdemocrat.com. On Twitter @Ausmurph88

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