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Tourism remains a drag on Napa economy with coming of winter, COVID-19 surge
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Tourism remains a drag on Napa economy with coming of winter, COVID-19 surge

From the Napa Valley Wine Insider Digest: Nov. 20, 2020 series
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Napa River Inn

Napa County hotel occupancy and revenue have dramatically declined since March, when the coronavirus pandemic triggered shelter-at-home orders and other safety restrictions. These staffers helped some Napa Valley visitors check into the Napa River Inn in September.

Napa’s slow recovery from the job losses wreaked by the coronavirus pandemic is being held back by continued weakness in the city’s hotel, restaurant and hospitality businesses, an economist reported to city leaders on Tuesday — the same day that onerous new state restrictions took effect in the wake of fresh outbreaks.

While the local jobless rate has pulled back from the depths reached during the first COVID-19 lockdowns in the spring, unemployment in September remained at 8% in the city of Napa and 7.6% for the county as a whole, according to Robert Eyler, the Sonoma State University economics professor who has been advising the city government during a year marked by business shutdowns and the resulting sharp budget cuts.

And while the housing market remains on an upswing, tourism and leisure employment has remained down by nearly a third from the levels of a year ago — and area hotels are still less than half full — as businesses also dealt with two major wildfires that fouled the Napa Valley air and drove off visitors, he said during a report to the City Council.

Overhanging any hopes for a quicker recovery is how soon Napa County can bring down its infection rate enough to reverse a ban on indoor dining, wine tasting and other activities that took effect earlier Tuesday, with the county’s fall to the strictest “purple” tier in California’s four-level scale of COVID-19 spread.

The rule changes are arriving with the approach of colder and wetter winter weather that may render much of the county’s newfound open-air dining, wine tasting and other activities impractical.

“How long we will be in purple is the big question going forward,” he told council members during a video call to City Hall.

Employment in the Napa County hospitality sector in September was off the 2019 level by 33.1%, after being down more than 45% in April early in the lockdown. Non-farming employment was running 10.3% below the level of a year earlier, although retail jobs were 9.4% more plentiful than in 2019 — an exception Eyler speculated may be a product of more telework and time spent at home during the coronavirus emergency.

A slight fall-off in the state jobless rate from August to September was reflected by similar small improvements in Napa and much of Northern California, with the share of out-of-work residents ranging from 6.5% in Marin County to 9.7% in Solano County, compared to the state level of 10.8%

A major reason for the slowness of Napa’s recovery has been a continuing glut of hotel rooms as travel restrictions and health concerns triggered by COVID-19 persist, Eyler said in his report. Napa County’s occupancy rate in September was 42.9%, well off the 78.1% rate for the same month in 2019, while revenue per available room plunged from $279 to $146.

Occupancy rates have edged upwards since April, when most non-essential businesses were under state lockdown orders, but smoggy late-summer and early fall conditions during the Hennessey and Glass fires likely undid some of that progress, according to the study.

As other parts of the economy remain hobbled by the pandemic, home sales in Napa are likely to remain vigorous, with demand likely powered by more people working from home, Eyler added. His report forecasted a 5% rise in median home prices through September 2021 in both the city and county.

Such increases indicate little relief in sight for lower-income Napans already pressured by ever-increasing home sale prices and rents, and historically tight supplies, even before the virus’ arrival. Napa County’s median home resale price reached a record $867,000 in August, according to the California Association of Realtors, and the city’s rental vacancy rate dropped to 1.4% in the most recent survey completed in September.

Even before the return of more COVID-19 restrictions, the economic improvements in Napa appeared tentative at best to Councilmember Liz Alessio in the face of layoffs, furloughs and business closures.

“Coming out of the recession in the fourth quarter (clashes) with what I’m seeing, especially with our move to purple,” she said. “I sense our businesses are teetering; some of them are talking about shutting down in the winter months and I don’t know how many of them can reopen when it’s over.”

Napa County’s purple classification requires restaurants to offer only outdoor dining, carry-out service or delivery, and wine tastings must take place outdoors. Bars and breweries must shut down unless they also offer meals. Hotels may continue operating with restrictions, as may retail stores at up to 25% of normal capacity.

Napa scrambled to overhaul its budget after losing about $9 million in anticipated revenue through June, as restaurants, hotels and other businesses closed or reduced operations due to stay-at-home orders. The city froze hiring and suspended projects like a planned new city hall and police station, which were expected to cost $124 million.

WATCH NOW: EXPERTS: HOUSEHOLDS ONLY. VIRTUAL THANKSGIVING GATHERINGS ARE BEST

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Complete coronavirus coverage from the Napa Valley Register, St. Helena Star, and The Weekly Calistogan: Fall/Winter 2020 edition

This webpage contains all Napa County coronavirus coverage as featured in the Napa Valley Register, St. Helena Star and The Weekly Calistogan. This page will be updated  as news comes in. Please bookmark this page to stay on top of local developments.

You can reach Howard Yune at 530-763-2266 or hyune@napanews.com

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Public Safety Reporter

Howard Yune covers public safety for the Napa Valley Register. He has been a reporter and photographer for the Register since 2011, and previously wrote for the Marysville Appeal-Democrat, Anaheim Bulletin and Coos Bay (Oregon) World.

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