LOS ANGELES (CN) — Foot traffic through the historic Olvera Street in downtown Los Angeles has nearly dried up.
The iconic district with its colorful curio stands or puestos, and brick pathways meant to invoke old Mexico is waning without tourists due to the novel coronavirus.
Gone are the merchants at the outdoor plaza and the mariachis serenading guests at the oldest Mexican restaurants in the city.
Mexican restaurant La Luz Del Dia has been operating with a skeleton crew since March 17, when the city’s health code went into effect to slow the spread of Covid-19.
Manager David Solorzano says sales are down 90% compared to last year.
The very idea of Olvera Street flies in the face of social distancing, as one of the oldest gathering places in LA when it was referred to as El Pueblo de Nuestra Señora la Reina de los Ángeles del Río de Porciúncula and has seen its landlords change numerous times, from the Spanish, to the Mexican and eventually the United States ownership that started in 1847.
Today, the landlords of all the businesses on Olvera Street is the city of LA and a proposal has been made to forgive one month of rent.
“It’s a good start,” Solorzano said. “But this is not all going to turn back to business as usual when the health order is lifted.”
Earlier this month, California Governor Gavin Newsom announced new guidelines to reopen dine-in restaurants with modified rules for customers and employees to wear masks and practice social distancing along with frequent temperature checks and disposable gloves.
Olvera Street sits at the intersection of hospitality and tourism. With nearly 90% of all the businesses now closed save for a few taquerias, there’s uncertainty on what a post-coronavirus Olvera Street could look like.
Greg Berber’s grandfather founded La Luz Del Dia in 1959 and with a cloth mask over his face he says without street gatherings for holidays and the bustle of people making impulse buys at the shops, the concept of Olvera Street goes away.
The restaurant used to host cultural workshops and other events for school field trips to Olvera Street, but all of that is gone as well.
“We don’t want Olvera Street to be forgotten,” Berber said.
The restaurant received a loan through the federal Paycheck Protection Program meant to assist small businesses with payroll costs and benefits. The restaurant used to employ 20 employees, but that’s been reduced to just 4, with the rest being furloughed. With the loan, he can bring back his employees if they feel comfortable working at the restaurant.
But once the federal loan runs out, Berber says he will have to make some difficult decisions about who to let go if the tourism industry does not bounce back.
The U.S. Travel Association and Oxford Economics project a $519 billion decline in travel spending and $1.2 trillion hit in lost economic output, a hit that would be nine times worse than the loss to travel from 9/11.
The nation’s labor force has been knocked down before, like during the Great Recession of more than a decade ago, but the data already shows the economic impact to the tourism and hospitality industry from the coronavirus is unparalleled.
LA reported an 11% decrease from taxes generated by hotel and motel stays for the month of March and a 77% decrease for April, according to a report from the city’s finance director.
Employment in the leisure and hospitality industry took a nosedive in April with 7.7 million jobs lost, nearly three-quarters of which were in food services and bars, according to the U.S. Bureau of Labor Statistics.
The very business model behind social gathering magnets, like restaurants, nightclubs, bars and hotels do not gel with California’s new health standards as they were before the novel coronavirus said Policy Research Specialist Sara Hinkley with the UC Berkeley Labor Center.
There is also the lingering question that if businesses scramble to get all the new infection control guidelines in place, will any customers show up?
“Paying rent when you don’t have any revenue coming in is a dire situation,” Hinkley said. “I think that’s what’s going to doom a lot of restaurants. They already have a very thin margin and they’re going to run out of money and forced to sell off their equipment and then close.”
Tourism destinations across the world could look vastly different after the era of Covid-19, but the same goes for small businesses in any setting. If bigger businesses can continue to weather losses, they could potentially outlast smaller businesses during this time, which would mean those tourist destinations with family owned businesses could simply evaporate.
On the grand scale, will the federal government sustain these businesses or subsidize U.S. citizens who are out of work?
“If you keep a business financially stable, but everyone is out of work then you don’t have any money moving through the economy,” Hinkley said.
Other countries, like Canada, Germany and the United Kingdom continue to pay their idle workforce during this era, while U.S. lawmakers debate whether to given Americans a second stimulus check.
The unemployment rate jumped to 14.7% in April and in California, the rate could reach 24.5% this calendar year.
LA Councilman Jose Huizar proposed the one month rental forgiveness and said in a statement, “El Pueblo de Los Angeles is the birthplace of the city of Los Angeles and an important historical monument for our city. Many of the merchants are legacy family-owned businesses with rental agreements with the city that go back decades.”
Solorzano, the manager at La Luz Del Dia, has worked on Olvera Street for over 40 years and started when he was 12. There’s never been a drought of people like there is now and he can’t foresee an easy solution for anyone.
“The business side of me wants to see everyone come back, but I know that it’s not the same anymore. You have to reopen, but you have to do it smartly,” Solorzano said. “It’s not a black or white thing.”