Romulus — More travelers are flying into Detroit Metro Airport, but they can’t get rental cars. Reservations are being booked at Mackinaw City hotels, but operators can’t order bed sheets. And restaurants lucky enough to find labor aren’t sure they’ll have alcohol for the Fourth of July holiday.
Welcome to summer travel in a reopening Michigan.
As more U.S. residents get vaccinated against COVID-19 and government restrictions recede, potential tourists have fewer qualms about traveling. But as more people come to Michigan to visit its cities and vacation spots, visitors are squeezing businesses both thankful for their return and stressing to satisfy increasing demand.
“We’re ready, willing and able to handle all of the tourists we can get,” said Joe Lieghio, whose family and investors own several restaurants and more than two dozen hotels in Mackinaw City. But “it’s like the whole supporting supply chain has to restart.”
That takes time, as businesses, customers and would-be travelers are discovering. Airfares are up 12% from 2020, fueled by vaccination-induced demand, as traffic increases and carriers like Delta Air Lines Inc. add flights to its schedule. Rental cars are scarce, with rates for those that are available running 95% higher than the start of the year. And employers are struggling to staff increasingly busy operations.
Businesses blame labor shortages on enhanced unemployment benefits offering an extra $300 per week. Their suppliers blame the COVID-19 pandemic, shutdowns and severe weather earlier this year in the South for delays in shipments and increasing prices.
Lieghio is thankful he had a stockpile of bromine, an alternative to chlorine, after many homeowners installed pools last year. His hotels are altering their chemical solution to get more washes out of linen sheets because he can’t find new ones. And the restaurants will continue to use paper menus because what’s available changes weekly. There’s no prime rib. It’s New York strips instead of ribeyes. And lobster is in short supply.
Equipment delivery delays are a challenge, too. A foam shortage has caused at least a four-month wait for coolers Lieghio needs to open newly constructed locations. He also hired two General Motors Co. retirees to repair motors on equipment after reopening from the winter — work that typically is not worth it.
He has about 70% of his staff, who are working overtime. Although the lodging accommodations are open, two restaurants, a brewery, a zipline and a trolley service remain closed without enough workers.
“It’s going to be difficult” making up for last year’s drop in activity, Lieghio said. “Our revenue is up, but expenses are up even more. It’s all part of the healing process. I didn’t even think we would be here at this point.”
More foot traffic at DTW
To gauge how busy Detroit Metropolitan Airport is, check how much coffee the terminal shops sell.
By that measure, the airport is inching closer to pre-pandemic levels with each passing month, said Steve Mangigian, managing partner of Zingerman’s Coffee Co. The Ann Arbor company supplies coffee to multiple stores inside the airport, and it’s selling at 70% of pre-pandemic levels, up around 10% over the last two months.
That translates to 1.7 million passengers in April, up from 1.5 million in March and 1.1 million in February, according to the Wayne County Aviation Authority. April’s results are a nearly nine-fold increase from the same period in 2020, when nonessential travel was discouraged early in the pandemic. The airport authority expects the airport to welcome 22 million travelers this year, a number that falls between 2019’s total of 37 million and 2020’s 14 million, spokeswoman Lisa Gass said.
The Transportation Security Administration has 235 airports understaffed as travel increases, according to a memo obtained by the Washington Post last week. But Detroit Metro appears largely sheltered from the shortage with an average wait of 12 minutes, according to the tracking website tsawaittimes.com.
Across Interstate 94, reservations are slowly increasing at the Delta Hotel by Marriott since reopening March 15 after finishing a remodeling that began in January when travel was “dead,” owner Jeff Katofsky said.
The hotel is at one-third of capacity. He expects reservation numbers to continue rising throughout the summer months but not to see a pre-pandemic recovery until next spring.
“We’re optimistic,” Katofsky said of the return to travel. “I just don’t think we’re running out tomorrow like, ‘Oh my god, the hotel will be full tomorrow night.’ That’s just not realistic.”
Delta is running 326 flights per day on average out of Detroit in June, up 14% from March. But even with the jump, flights are still below 75% of July 2019’s daily average. The airline is adding 300 Detroit-based employees to support summer operations, according to spokesman Drake Castaneda.
A forecast from the U.S. Travel Association released Tuesday shows that leisure travel spending is expected to nearly hit the 2019 pre-pandemic level by 2022, and exceed it by 2023. Business travel spending, on the other hand, is not expected to return to the 2019 level until 2024.
That’s key for Italian restaurant Andiamo’s return to pre-pandemic sales, owner Joe Vicari said. His restaurant at the airport is at 70% of pre-pandemic dining, but he thinks it will take business travel to get sales fully back.
“People are not traveling for business. They are still doing the Zoom thing,” Vicari said. “I don’t know if that’s ever going to get back to where it used to be, where we had a lot of businesspeople coming into our restaurant.”
Still, patrons may have a longer wait time. It’s already difficult to staff airport businesses given the requirements for going through security and parking off-site, he said, and the national worker shortage is exacerbating the issue.
Rental car woes
A national rental car shortage has changed how Jill Jones, vice president of Royal Oak’s Cadillac Travel Group, does her job. She typically thinks of a rental car as an afterthought in the trip planning process, but it’s now one of the first checks she makes when looking at a potential destination for a client.
“There very well may not be a car available, and if there is, it is considerably more expensive than what guests might have paid in the past or is expecting to spend,” Jones said. “My strategy is in the U.S., if their trip involves a car rental, I start there.”
Tom Saad did the same when traveling to New Hampshire earlier this month. After hearing about the rental car shortage, Saad looked into rental options at three airports near his destination before booking a flight. The closest in Portland, Maine, had no cars available. Boston and Manchester, New Hampshire, had daily rates double to what he was used to paying.
“I would certainly not try to rent a car right now,” Saad said.
Saad isn’t alone. Rental car prices are up 30% compared to May 2019, costing an average of $372 for a May week in Detroit, according to cheaprentalcar.net. Prices rose 95% from the start of the year to May alone, the travel site Hopper found. Hopper also reported that a roundtrip domestic airfare ticket costs 12% more on average than last year.
There’s an explanation for the rental-car woes: when travel came to a near halt amid lockdowns last year, rental car companies sold off many of their vehicles to protect their balance sheets. Avis Budget Group Inc. disposed of 250,000 vehicles globally last year. Enterprise Holdings Inc. still has not returned to pre-pandemic levels, spokeswoman Lisa Martini said.
Hertz Global Holdings Inc. had less than 300,000 vehicles at the end of 2020, down 42% from the year prior. The company, which had its reorganization plan approved earlier this month in bankruptcy court, said in November it had secured $4 billion to rebuild inventories.
But that’s easier said than done. Consumer demand for new cars, trucks and SUVs returned more quickly than expected because of increased stimulus dollars and fewer options for discretionary spending. Now, a global shortage of microchips used in vehicles’ infotainment and assisted driver functions has automakers idling plants and prioritizing production.
That means retail customers willing to pay higher prices for loaded vehicles are getting priority over rental-car companies, governments and other businesses that typically order less-outfitted vehicles for their fleets. The outlook is uncertain: The microchip shortage is expected to extend into 2022, and used vehicle prices have skyrocketed.
“Our relationships with our manufacturing partners remain strong and our Fleet Acquisition team is working hard to secure additional vehicles — both new and low-mileage used vehicles — through all channels to meet the ongoing increase in demand,” Enterprise’s Martini said in a statement. “Overall though, both new and used car inventory remain low.”
The companies recommend booking early and trying neighborhood locations farther from the airports. Some travelers have gotten creative: The Hawaiian government, for example, is requesting tourists leave the U-Haul trucks and vans for locals who need them instead of using them like a rental car.
Destinations meet growing interest
Tourists flooding Michigan’s beaches, hiking trails and cities are a welcome change for businesses in destinations that typically rely on the warmer months to buoy profit margins.
“Between May and October, that’s when we make or break our numbers,” said Sherri Campbell Fenton, managing owner of Black Star Farms, an event venue, winery and boutique hotel in Traverse City. Demand is sky-high this year, with 93% of rooms booked through August.
But pandemic-induced speed bumps are slowing the return to normal. Beef tenderloins that her team quoted a year ago for weddings are now double the cost. Furniture purchased for remodeling has not arrived because of shipping delays. And low interest from prospective employees prompted the business to keep its café closed for the time being, which will cause a noticeable hit to revenue.
Patti Ann Moskwa, owner of Horn’s Bar and Yankee Rebel Tavern on Mackinac Island, knows she’s fortunate to have most of her staff — both domestic and from abroad — this year. They’re nearly all vaccinated, too.
But chicken wings? Forget about it. And don’t try to order Heinz ketchup in a bottle, she says: Production lines shifted to focus on single-serve packets as the restaurant industry turned to takeout. A glass shortage also has made bottled beers and liquors difficult to order.
“I was talking to one of the beer distributors, and I said, ‘What do you mean you don’t sell bottles of Budweiser?'” Moskwa said. “He had a pallet coming in, but how about next week or July 4th? We’re trying to figure it out.”
Dennis Mackey is unsure if Northern Natural Cider House & Winery will ever recoup last year’s six-figure losses, but at least vaccines are helping this year. Open year-round, the Kaleva winery’s peak season is the summer and fall with their more agreeable weather and a concert series starting next week.
“The vaccinations,” said Mackey, the CEO and managing partner, “have basically saved the economy in this country, I believe, and certainly the economy of my business.”
Despite shortages and longer waits, travelers say they are excited to be in Michigan at a time when restrictions are rolled back and they feel some sense of normalcy.
At the airport last week, Josiah Shamsiddeen of Dallas waited in the McNamara Terminal arrivals area for his trip to begin. Visiting family in Michigan this week, he was excited to roller skate and try a new restaurant in Lansing — activities he could not do the last time he visited when pandemic restrictions were tighter.
“Texas was completely open, and I came here and everything was closed, so I was like, ‘Man, I can’t even do anything,'” Shamsiddeen said. “Now that things are opening up, we can do a lot more.”
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