Coronavirus-postponed Coachella is affecting Palm Springs businesses

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Everyone knew that the coronavirus outbreak would have an effect on Palm Springs and California’s Coachella Valley during its busiest tourism season: March and April. But when the famed Coachella music festival and its country music counterpart, Stagecoach, were postponed until October, and the Indian Wells tennis tournament was outright canceled, visits to the popular destination came to a halt. And local business owners watched their entire tourism high season—and significant revenue streams—disappear.

The area’s biggest employer is tourism, responsible for more than 50,000 jobs and $7 billion in sales, so the trickle-down effect is proving huge. Residents say it’s only gotten worse as the city government has tightened restrictions to protect the aging population that lives in the Coachella Valley; more than 31% are over the age of 65, according to the U.S. Census Bureau. Since the news of Coachella’s date change broke, the city council has banned all short-term rentals such as those via Airbnb, and hotels like Kimpton’s Rowan and the Ace Palm Springs have temporarily ceased operations. The convention center has furloughed employees. And while many residential properties in the area are second homes for wealthy weekenders, these homeowners are no longer coming or supporting the local economy by ordering takeout from the few restaurants that remain open. Uber and Lyft drivers are staying off the roads. Residents call it a ghost town.

“Many businesses rely heavily on the festival, and for most local vendors, Coachella is the biggest job of the year for them,” says Joey Gallagher, CEO of Gallagher Staging, which manufactures custom sets for musical acts and builds the main stage for Coachella. “The massive size of the festival requires companies to increase their staff and capacity to meet the high demand during the festival.”

A George Michael–inspired recycling bin at the Coachella Valley Music and Arts Festival, April 23, 2017, Indio, Calif.

The Coachella Valley Music and Arts Festival is one of the largest festivals of its kind worldwide. Last year, the festival hosted more than 99,000 attendees each day for its seven-day run. Its country music counterpart, Stagecoach, brings in another 70,000 per day, according to Goldenvoice, the entertainment company that promotes both festivals. Big names in music have performed at Coachella over the years, including Beyoncé, Radiohead, Calvin Harris, and Prince. The 2020 roster featured headliners Rage Against the Machine, Frank Ocean, and Travis Scott. It’s unknown if it will offer the same lineup in October.

That means basically every hospitality property in the area is typically bustling with festival-goers, performers, staff, and vendors—like Gallagher—responsible for putting on the show. But it also brings in major corporate sponsors, like American Express and Absolut, as well as brand activations by dozens more to capture the attention of festival-goers. That employs hundreds more small businesses, as event planners, caterers, entertainment companies, and their staff are commissioned to work on the projects. A 2017 report by the Greater Palm Springs Convention and Visitors Bureau estimated that the events bring in more than $403 million in net revenue. The bureau declined to comment on specific current estimates for this article.

One might think that corporate clients would just rebook in the fall when the festival commences, but that’s not the case. Tara Lazar, the founder and chef behind F10 Creative, a hospitality group with some of the area’s top restaurants, a catering company, and more than 200 employees, says that 90% of her corporate business for the year is tied to the festival. When the festival postponed, 75% of her booked corporate clients outright canceled, meaning they will not be a part of the festival at all. It’s lost revenue. “Not only do we suffer from the loss of 60-plus events being canceled on the catering side, but we also miss out on the busiest time of the year in restaurants and hotels,” Lazar says, noting that 25% of her budgeted revenue comes in March and April. “Those are high-profit-margin events, so it translates to roughly 40% of my profit for the year.”

Even small businesses not directly tied to the festival normally reap benefits from the influx of visitors to the community. Seth Pettit owns Mojave Guides, a tourism company focused on the nearby Joshua Tree National Park. He explains that any businesses related to the park spike in March and April too. As a result of the current situation, he’s anticipating a loss of up to 40% of his income; he’s had to temporarily cut hours for his office staff and guides. “We were on track for a record season, expecting about 100 days of work for our guides in March and maybe 100 more in April,” Pettit says. “We may end up with 10% or 20% of that now.”

What’s scaring small-business owners is that by the time they believe things will open back up—nonessential businesses have already been shut for three weeks now—it’s going to be too warm to enjoy Palm Springs, and the tourists won’t come. It is the desert after all. Temperatures hover in the 80°F to 85°F range in early spring. By May, though, it shoots to the high 90s and triple digits by midsummer. The chance of recouping lost costs doesn’t seem promising.

“Even if the virus fears recede, shops and restaurants open, and we are allowed to go back to work, by that time it will be 120 degrees,” says Laurie Whitaker, a Palm Springs resident and owner of an interior design company, Laurie Whitaker Design. Whitaker services many of the residents of the Coachella Valley, known for its second homes for the wealthy, golf courses, and hotel properties made for weekend getaways for Southern Californians. She’s seen her clients drop one after another, or at the least, put a project on hold. Many, she says, belong to the elderly, high-risk population. “First, it was from fear of spending money on a remodel with the stock market crashing,” she says. “Now it is fear of getting sick and dying.”

Some business owners are also frustrated by the lack of quick action by policymakers in the area. Since Gallagher has the tools to build stage structures, he’s converted the materials into temporary medical structures for health care professionals and government officials. He’s banded together with other entertainment companies to create the Entertainment Industry Response Resource (EIRR). “The entertainment industry can quickly turn a parking lot into a small city in a matter of days,” Gallagher says, noting the vast amounts of equipment that he’s teeing up to construct these temporary facilities anywhere in the country. “My concern is that the decision-makers aren’t moving fast enough to get our industry involved. They aren’t taking our calls or answering our emails.” Gallagher fears it’s only going to get worse in the area before it gets better as he has watched happen in other parts of the country.

If businesses can hold out, Gallagher says, he does see a light at the end of the tunnel in October, and that involves a lot of celebration. “I believe 100% that this next Coachella is going to be the best one yet,” Gallagher says. “Everyone involved is going to make sure that happens.”