image: Herb's Market
Christine and Harold 'Herb' Herbert of Herb's Montauk Market on Long Island, New York are bullish about summer sales.
By contributor
updated 10/28/2003 6:26:49 PM ET 2003-10-28T23:26:49

Entrepreneur Alan Rohde isn’t planning on a summer vacation any time soon. The owner of the Cornerstone Shoppe and the Broad Street Trading Co., two Lake Geneva, Wis. stores that specialize in home décor items, furniture and gifts is optimistic about sales during his small business’ peak time.

A weak economy, stock market sell-off and high gasoline prices could tighten the wallets of summer travelers and keep some of them from hitting the road, but Rohde says conditions would have to get a lot worse for him to drastically change his modus operandi.

“So far we do not see indications that there will be fewer people coming to Lake Geneva this summer,” says Rohde, who has been a shop owner for 20 years. “If we have to do anything different and market more aggressively we will, but right now it’s business as usual.”

Cautious optimism
While many mom & pop outfits across the U.S. are not planning to take drastic steps like shortening their hours or ordering less inventory, they are prepared to step up their marketing or offer more creative packaging of products if they see business slowing. In three popular summer destinations in the United States — Lake Geneva, Wis., Montauk, N.Y. and Newport, R.I. — small business owners say they are looking to the next few months with “cautious optimism.” They are anticipating sales to be basically flat compared to last summer, which will follow predicted travel patterns for the next few months.

According to the American Express Leisure Travel Index, 59 percent of leisure travelers said they plan to vacation about the same amount this year as last, while 23 percent said they would travel more and 18 percent said they would travel less.

“What you’ll see is that individuals will be much more likely to plan their vacations closer to the actual dates of travel. However, this does not mean that Americans will be traveling any less this summer over last,” says Bill Van De Laarschot, vice president of marketing for Minneapolis-based Carlson Wagonlit Travel.

In fact, the 16-room Cliffside Inn in historic, seaside Newport is anticipating so much business that it recently opened a second property, the 13-room Adele Turner Inn, says general manager Stephan Nicolas.

“If we need to do any [special rate] packaging we will, but our occupancies look strong for summer,” Nicolas says.

And, fellow Newport resident Chris Hayes, general manger of Michael Hayes, a men’s and women’s clothing store, is not planning any big summer sales. But, he would consider offering markdowns if business starts to slow.

“I am concerned about the effect of the economy on business and am keeping my eye on things,” Hayes says.

Indeed, a steady stream of travelers during the summer is particularly important to these popular warm weather spots and their local entrepreneurs. Lake Geneva sees half — $130 million — of its tourist expenditures made from June to August, says George Hennerley, executive vice president of the Lake Geneva Area Convention & Visitors Bureau.

Montauk, with its long stretch of white sand beaches, attracts about 90 percent of its tourists in summer, says Marilyn Behan, executive director of the Montauk Chamber of Commerce. And, 60-to-65 percent of Newport’s $750 million in annual tourism revenue come during the warmer months, says Robert Rosenberg, president of the Newport County Convention & Visitors Bureau.

However, additional factors could put a crimp on summer profits.

“High gas prices won’t hurt my business as much as lack of availability of gasoline,” says William Gage, owner of Geneva Lake Cruise Line, which operates dinner cruises on Lake Geneva. “If we start seeing lines at the gas pump, that would be a serious problem.”

And then of course, there is one factor that no one can control — the weather.

“If you have the sun, people will come,” says Christine Herbert, owner of Herb’s Market, a Montauk grocery market. “I’m still planning to stock up on all my inventory and would like to remain optimistic.”

Even if there is less overnight traffic due to tightening wallets, these travelers will likely be replaced by day-trippers who will still drive to Montauk for an afternoon at the beach, says John Drobecker, owner of John’s Pancake House.

“As long as the weather cooperates, we’ll be just fine,” says Drobecker, who gets about six times as many diners for breakfast and lunch during the summer as he does during the rest of the year.

Holding their own
The downturn in the economy and stock market and rising gasoline prices may actually help these destinations hold their own during the summer.

"Since we’re less than two hours away from major cities like Chicago, our close proximity may actually bring in more travelers who want to take a driving trip closer to home and save on gas,” says Steve Magnuson, vice president and managing director of the Grand Geneva Resort & Spa, who is anticipating either a slight downturn or flat occupancy compared to last summer.

Or, as Nicolas puts it: “Summertime honeymooners who are worried about spending too much money may substitute a $10,000 trip to Italy with a $3,000 jaunt to Newport.”

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