Wednesday, November 10, 2010

‘Frugal fatigue’ helping business?

Ketchum LOT receipts offer signs of hope

Express Staff Writer

Sierra Dickens tries on a vest at Silver Creek Outfitters in Ketchum while worker Susie Ring helps her. Customer Debby Boyd looks at boots in the background. Photo by Willy Cook

Ketchum businesses are on an upward streak not seen in five and a half years.

The city's sales-tax statistics for September have just been released, and the month marks the third in a row that Ketchum businesses made more money than during the same month of the previous year. The last time the city experienced such consecutive growth was December through February 2005.

Summer is the resort area's peak season, and Silver Creek Outfitters owner Terry Ring said it was a successful one at that, bringing in more business for him than the previous summer. He summed up his good fortune to what he calls people's "frugal fatigue."

"The anxiety felt by people who still have their jobs has lessened, and they're loosening up," said Ring, whose store on Main Street offers outdoor gear and fly-fishing guiding services. "They've kind of moved onto moving on with their lives."

Ring said demand for guided fly-fishing trips has especially experienced an increase.

"People are investing in memories," he said.

Ketchum businesses as a whole made 8.4 percent more money this September than in September 2009. August saw a 9.5 percent increase—a rate of growth untouched by any month dating all the way back to October 2006, which had 12 percent growth over the previous October. The month that started the winning streak was July, with 1.2 percent growth. That doesn't seem like much, but the average change during the past four years has been a 10 percent decrease in business compared to the same month of the previous year.

Any growth for even a single month, let alone consecutive months, has been a struggle. The 2009 calendar year didn't succeed in producing a single month of growth. In the end, Ketchum businesses made a quarter less in 2009 than 2008. And 2008 was a flat year, ending a little under its predecessor.

The city's economy is measured using its local-option taxes, collected monthly. LOT—commonly called the "tourist tax"—is a 2 percent sales tax on lodging and by-the-glass liquor sales, and a 1 percent tax on retail sales and building materials. Because LOT pertains to Ketchum's main industries, it's a simple gauge for reading the city's economy. LOT has been assessed for years and can therefore be used for establishing long-term trends after inflating past amounts to reflect the dollar's current value.

An average for each month was calculated using data back to 1998, and even though there was noteworthy growth from July through September of this year, the months were 22 percent off their averages.

But recovery has to start somewhere, said Jim Funk, owner of Mexican restaurant Despo's. He said Despo's has seen 2.5 to 3 percent growth this summer, not enough to be a "true indicator" of improvement.

"What has really been helping out is reducing labor and cost factors," he said, adding that his fellow Ketchum restaurateurs said they were having "great months" when he last met with a few of them in August. "Looking through LOT is sometimes a real good indicator."


But the fact that LOT is up doesn't tell the whole story.

What reversed the downward trend?

Rickshaw restaurant owner Nina Jonas said she hasn't seen more people at her tables this summer, despite continual increases in LOT collections.

"I picked up the LOT report today and went, 'Wow. Didn't predict that,'" she said. "That totally surprised me."

She suggested that the total amount of dollars being made in Ketchum might be up without businesses' making more money. That would be possible if enough new businesses have opened, thereby increasing the size of the pie but not individual slices.

Jonas has a point.

The city started keeping monthly track of businesses' either leaving or coming to town in October 2008, and the situation has drastically reversed as of late. Ketchum lost 87 businesses from October 2008 to the end of 2009 and gained only 50, meaning it ended with 37 fewer businesses than it started.

The situation reversed in 2010, when 52 businesses opened and only 14 closed so far, meaning that for every business that closed its doors, four others opened theirs.

Due to 2010's good fortunes, Ketchum actually came out ahead one business over the past two years, losing 101 businesses during that time and gaining 102.

Ketchum office assistant Kathleen Schwartzenberger compiles the monthly LOT reports and the list of new versus closing businesses. She said the town is "very fluid" in terms of the businesses that call it home.

However, Silver Creek Outfitters' roots can be traced back more than 40 years. The store began as a small fly shop and later evolved into a retailer, where it remains today under Ring's ownership.

However, Ring said, "I don't own Silver Creek. It owns me."

Trevon Milliard:

September LOT stats

All of Ketchum's industries saw growth in September compared to a year ago, even the building industry, bringing the month's total LOT to $139,000, nearly $11,000 more than September 2009. During the past couple of years, the largest percentage drop in LOT collections has occurred in the building industry, compared to retail, restaurants, bars and lodging. However, there was 22 percent growth in building-materials sales in September, unmatched by any business sector except hotel rooms, at 23 percent growth.

Ketchum separates LOT into five categories. Both restaurant and retail are lumped into one category, easily adding up to the largest business sector. They accounted for 63 percent of all LOT collections in September, slightly higher than the decade's average of 59 percent for the month. The building industry accounted for 15 percent of LOT collections in September, short of the usual 22 percent. Lodging, short-term condo rentals and liquor sales all sat in the single digits percentage wise, as is normal.

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