The Dayton region’s restaurants, bars, music venues, gyms, hotels and other entertainment attractions suffered the worst job losses in April among urban areas in Ohio and the Midwest, according to a Dayton Daily News analysis.
Payrolls of leisure and hospitality businesses shrank 5.3 percent in this region between April 2012 and April 2013, marking the sixth consecutive month of year-over-year job losses, federal data show.
The job losses may be tied to the region’s weak labor market and the threat of furloughs at Wright-Patterson Air Force Base, some economists said. Consumers often cut back on discretionary spending when money gets tight, choosing to less frequently dine out, travel and pay for various forms of entertainment.
“When worker income is reduced, one of the first things they cut back on is dining out,” said William Even, Glos professor of economics with the Farmer School of Business at Miami University. “Furloughs could have a big effect on the restaurant industry.”
The leisure and hospitality industry encompasses a broad range of businesses, including restaurants, bars, performing arts groups, museums, hotels, concert venues, movie theaters, bowling alleys, gyms, gambling parlors, sports venues and amusement parks.
More than one in nine nonfarm workers in the state are employed in the industry.
In the Dayton metropolitan area, employment in the sector rose or remained flat year-over-year for 22 consecutive months that ended in October 2012, according to U.S. Bureau of Labor Statistics data that was not seasonally adjusted.
The Dayton metro area includes Greene, Miami, Montgomery and Preble counties.
But employment began falling in November, and the declines intensified this year.
In the region, about 33,700 people worked in leisure and hospitality in March, down 7.4 percent from the prior year.
In April, leisure and hospitality payrolls in the Dayton area decreased 5.3 percent from 2012, which was the largest percentage decrease among the 90 metro areas in the Midwest. Year-over-year comparisons are more accurate when using data that is not seasonally adjusted.
In April, the Cleveland-Elyria and Springfield metro areas also saw significant declines, with industry payrolls decreasing 4.1 percent year-over-year. Employment rose in Cincinnati-Middletown and Columbus.
George Zeller, an economic research analyst in Cleveland, said this industry has traditionally produced low-wages that have seen real wages decline in the last decade. Ohio workers on average earn $42,469 annually, while workers in arts, entertainment and recreation on average earn $24,905, and workers in accommodation and food services earn $13,977, Zeller said.
Within in the industry, accommodation and food services performed better during that time frame than arts, entertainment and recreation, Zeller said.
Tourism up in region
The job losses could be occurring in any one or combination of the many categories that make up the leisure and hospitality industry, because the data does not break out specific fields, said Adam Sacks, president of Tourism Economics, a research company in Philadelphia, Pa.
But other data sources suggest that the cuts are not related to tourism-related economy activity. Travelers purchased 4.4 percent more hotel rooms in the Dayton region in April than they did in April 2012, according to data from Smith Travel Research.
“There has been an increase in hotel occupancies and an increase in average rates, so that does not necessarily support what you are finding,” said Jacquelyn Powell, president and CEO of the Dayton/Montgomery County Convention & Visitors Bureau.
Several new hotels have recently opened in the region, including the Hilton Garden Inn Dayton South-Austin Landing along Interstate 75 and the Hampton Inn Middletown, said Matthew MacLaren, executive director of the Ohio Hotel & Lodging Association.
“New hotels mean new jobs,” MacLaren said.
Increased hotel demand suggests the employment declines are more likely tied to spending on leisure activities by residents, some economists said.
Some local restaurants and bars have recently closed and laid off their employees, citing tough financial conditions and weak sales. Some attractions have trimmed their payrolls to cope with weak consumer demand and revenue.
The Grub Steak closed its doors on Feb. 23 because of bad financial conditions and the rising cost of expenses, according to a letter posted by the owners on the restaurant’s Facebook page. The business employed 34 workers. J-Alans in downtown Dayton and the World Cafe in Vandalia were also among a string of local eateries and bars that closed earlier this year for economic reasons.
The Dayton region’s economy continues to struggle, and its nonfarm employment has declined for five straight months, compared to the same months the prior year.
The weak job market may be discouraging some residents from splurging on food or drinks out at bars and other types of entertainment, some economists said.
The looming threat of furloughs and cuts for employees and contractors at Wright-Patterson Air Force Base from the government sequester may also contribute to consumers watching their expenses more closely.
“I feel like everybody as a whole is of course struggling and have been for a while, even though there are pockets that are perking back up,” said Shanon Morgan, president of the Miami Valley Restaurant Association.
The owners of some restaurants, especially independently owned establishments, are nervous about how the new health care law may affect their businesses, she said. Under the law, employers must provide health care to employees who work at least 30 hours. Across the state, some restaurants said they plan to reduce their staffing levels or their workers’ hours to avoid paying for coverage or penalties for failing to comply with the law.
Of course, some new restaurants have opened in the region this year, including Lily’s Bistro and Salar Restaurant in Dayton’s Oregon District.
Ohio’s restaurant industry is expected to grow 3.8 percent in 2013, though different parts of the state face different economic conditions, said Jarrod Clabaugh, spokesman for the Ohio Restaurant Association.
“The ORA cannot say why the Dayton (region) is currently experiencing this period of retraction,” Clabaugh said. “But, the loss of jobs in any area typically leads to retraction in the hospitality industry.”
Local venues see mixed results
The poor local economy has also impacted some performing arts groups, which have seen a decline in donations. Other groups have struggled with weak season ticket sales and corporate sponsorships.
“Overall, I think that the arts community is struggling to retain funders and attract new ones,” said Martine Collier, president and CEO of Culture Works in Dayton. “The large companies that were the lifeblood of many organizations are no longer here.”
Most groups contacted for this article, however, said their payrolls have remained unchanged in the last year.
Staffing levels at the Dayton Convention Center and the Fraze Pavilion in Kettering have remained stable this year.
The National Museum of the U.S. Air Force usually hires student temp workers for the summer, and last year it hired 10 of these workers, said Rob Bardua, museum spokesman.
But one of the impacts of sequestration was that the museum was not able to make those hires this year, he said.
Despite the significant job losses, the leisure and hospitality sector could still bounce back with the arrival of summer and the tourism season.
Next year, the $125 million Hollywood Gaming at Dayton Raceway project will create about 1,000 direct and indirect jobs, including about 750 at the facility itself, said Bob Tenenbaum, spokesman for Penn National Gaming, Inc.
“We’re hopeful that it will also lead to development in that area, which clearly needs it,” he said. “Some of the things you find springing up around a facility like this are in the hospitality business, such as hotels and restaurants.”