New Orleans 500: Almost 70% of Execs Expect Increased Revenue in 2022
The inaugural edition of the New Orleans 500 was published in November. It’s a collection of profiles of the city’s influential, involved and inspiring business leaders. Once a month, Biz New Orleans will send an email survey to all the leaders on the New Orleans 500 list to collect data and insights about topics important to the business community. This is the first report in that series.
NEW ORLEANS — Area business leaders are optimistic about their organization’s financial outlook in 2022 but clear-eyed about the dangers to the greater New Orleans economy posed by the uncertain trajectory of the pandemic and the prospect of more hurricanes next year.
These are some of the takeaways from a Biz New Orleans email survey of the “New Orleans 500,” a list of influential executives.
Nearly 70% of the leaders who responded to the questionnaire say they expect their organization’s total revenue to climb in 2022. About a quarter expect revenue to be flat and less than 10% are forecasting a drop in earnings.
According to the New Orleans 500, there are plenty of reasons to be optimistic about the city’s economy. For one, there are about to be hundreds of millions of dollars circulating through it thanks to federal pandemic relief, hurricane relief and the recently signed infrastructure bill. Dottie Belletto, owner of New Orleans Convention Company, said she’s very “optimistic about the infrastructure bill and our former mayor [Mitch Landrieu] as the lead.”
Several survey respondents emphasized how important it is to spend that money wisely, though.
“We cannot assume that the last year is a special case and we must plan accordingly,” said James Martin, an executive at LM Wind Power Tech Center Americas. “Now is the time for bold and entrepreneurial moves to attract new business, such as those emerging in offshore wind energy. Tax breaks, matched funding and technology centers are a proven method to stimulate growth so we must stand out from other states. [We must] shore up the current businesses that have the opportunity to grow exponentially and diversify our workforce across the full supply chain.”
Randy Waesche, president at Resource Management Partners Inc., agrees.
“New Orleans and the greater economic region will receive significant inflows of money from the recently passed infrastructure bill and will receive more in the proposed bill that will be voted upon soon,” he said. “This influx of money is not recurring revenue. Unless spent wisely, New Orleans and the region could find themselves in a 2025 recession with no government life raft for safety.”
But the bounty of federal funds isn’t the only reason to be optimistic about the regional economy, according to the survey.
Several execs said the success of the new levee systems during Hurricane Ida is a reason for hope. In addition, COVID cases are way down, restaurants and hotels are filling up, and the Convention Center is hosting big meetings again — although not at 2019 levels. Heck, Saints games are even full of fans even if the results on the field are nothing to cheer about.
Yes, there are worries about the pandemic’s effect on commercial real estate values, but the residential market is expected to continue its hot streak throughout 2022. Amazon and other companies, meanwhile, are building distribution centers in the region that will support more transportation activity while the Port of New Orleans continues to lay the groundwork for a new container terminal in St. Bernard Parish that would increase the amount of cargo moving through the greater New Orleans area. Also great news: the record setting “exits” of several New Orleans-based technology companies. In 2021, local tech startup Lucid sold for $1 billion, Levelset sold for $500 million and Turbosquid sold for $75 million. These acquisition help make the case that the city is a viable place to launch a startup — and they make it easier for local entrepreneurs to attract out-of-town investment.
In addition to all this, many survey respondents are optimistic that New Orleans will be a destination of choice for remote workers, who will be drawn by the city’s unique culture combined with a relatively low cost of living.
“[New Orleans] continues to be one of the most authentic and unique cities in the U.S. We can and should build on that distinction,” said Chris Bourg, executive vice president at Crescent Crown Distributing. “The expansion of our economy into technologies [is encouraging]. We should be a substantial player in the tech space. Our city is an ideal ‘virtual’ business environment because it has reasonable living expenses, the opportunity to give back in a challenged/diverse region, a world class airport, authentic cuisine, extreme diversity and acceptance of all people. … We should challenge Houston and Miami for shipment traffic in the South.”
Several respondents expressed hope that the city will use this historic moment to rebuild better.
“I worry about our continued over-reliance on tourism as an economic base, clearly an unsustainable foundation even in non-pandemic times,” said Jennifer Avegno, director of the New Orleans health department. “We have so many local resources — our higher education institutions, historically strong manufacturing and construction industries, medical research, a burgeoning tech and bio scene — that we can, and should, take advantage of these transition times and historic federal investments to right-size their impacts.”
Uncertainty: More Spikes and Storms?
Survey respondents also shared their biggest concerns about the region’s economy, and there were plenty.
Not surprisingly, the biggest worry among regional business leaders is the economic uncertainty created by the possibility of more COVID spikes and hurricanes. Most agree that it’s hard to run a business, pitch investors or recruit talent to an area while facing the threat of another round of COVID restrictions or a major weather event. Nowhere is this more evident than in the tourism sector.
“Any new variant would be a concern as to what it does to travel decisions,” said Mark Romig, an exec at New Orleans & Company and stadium announcer for the New Orleans Saints, in his response. “I am optimistic, however, about the number of New Orleanians who have decided to get vaccinated and protect themselves and each other.”
Roger Ogden, the real estate developer and philanthropist, worries that another wave could prove insurmountable for some. If that happens, he said, “I’m concerned that we will over-regulate the hospitality industry again and possibly deliver a final blow to many local businesses. [I want] city leadership to be more vocal in promoting business in New Orleans and selling the city as a great place to live and for businesses to prosper.”
Michael J. Sawaya, the president of the New Orleans Convention Center, said the susceptibility of the travel industry to natural disasters and pandemic surges make his industry’s forecast cloudy, although things are beginning to clear up.
“Optimistically, we have plans to recover our event load at 100 events versus a typical year of 125,” he said. “We are encouraged with the trajectory and the short-term demand we are seeing for corporate events beyond what we have experienced in the past 20 months.”
Overall, executives in many different industries expressed concern that more interruptions would be devastating to tourism and have a negative effect on the rest of the economy.
Infrastructure, Crime and Other Challenges
The combination of the pandemic and two busy storm seasons has brought renewed attention to the city’s infrastructure woes and other long-standing issues. Many respondents listed rising crime rates, crumbling streets, and vulnerable water and power systems as major threats. It’s as if when the festivals, parades, live music and inside dining went on hiatus, people saw the challenges facing the city more clearly.
Karen Saunders DeBlieux, head of U.S. corporate banking at Capital One, said she is concerned about the “lack of attention to basic needs and quality of life,” such as trash collection, streets repairs and water management. Gay Le Breton, managing director of Chaffe & Associates, also puts streets and drainage near the top of her priority list, along with efforts to combat the rising crime rates, increase government accountability and improving public schools. “This is not a cheap place to live if you have to pay for private education,” she said. “It makes it difficult to recruit new employers and employees to the area.”
Lowry Curley, CEO of biotech startup AxoSim, agrees that infrastructure improvements are of paramount importance.
“The loss of power for such a long amount of time necessitated closing down my operations, which was extremely disruptive and caused lost revenue,” he said. “This should not have to be a concern. A cause for optimism, however, would be that the levees held.”
Jim Cook, general manager of the Sheraton New Orleans Hotel, is primarily worried about the increase in crime — and he hopes the community can approach that problem with the same resolve used to overcome the challenges of the pandemic.
“We have shown the ability to host large gatherings safely with the guidance and collaboration of our department of health and private sector healthcare experts,” he said. “We now need a similar comprehensive approach to addressing violent crime on a short-term and long-term basis.”
Guy Williams, president of Gulf Coast Bank, puts it simply: “Crime and poor infrastructure are major dissatisfiers. Recruiting people to move to New Orleans is very difficult.”
Labor Shortages, Supply Chain Problems and More
Many New Orleans 500 survey respondents cited labor shortages as the biggest challenge to their own business or industry. As Chris Bourg, general manager of Crescent Crown Distributing, said: “It’s a hyper competitive and unrealistic environment to hire, train and retain employees.”
A scarcity of nurses and medical technicians is reducing the number of surgeries being performed by area doctors. The lack of available wait staff is limiting the amount of reservations at local restaurants. And an overworked labor force means homeowners are waiting longer than normal to complete post-Ida repairs. The list goes on.
“The labor market was challenging over the summer as the recovery from the pandemic was picking up steam, but it is even more challenging post Ida as large storms like that compel some people to move out of the city,” said Kyle Brechtel of Brechtel Hospitality.
Amid all this, there is one silver lining: wages have risen for many entry-level employees. And some are hoping the seismic and unforeseen changes that have taken place since March 2020 will help create a workforce that’s ready for the jobs of the future.
“My concerns center around educating and re-educating the working aged citizens in innovative areas where the opportunities have shifted in our economy,” said Kelisha Garrett, a vice president at the Louisiana Chamber of Commerce Foundation. “Specifically I want to ensure access to short-term certification programs that create a job force ready to serve the technology based and infrastructure needs to come. I am extremely optimistic about our growth in the technology, agriculture and entertainment industries.
“New Orleanians are resilient, but we are tired, too,” said Iam Christian Tucker, president of ILSI Engineering. “My worry for our local economy is our over-reliance on the gig economy and the hospitality industry. The pandemic and storms that seem to strengthen each year are proving over and over that this is not a sustainable model for many residents, and surely doesn’t create a path to wealth creation for our most vulnerable citizens. We need to find a way to invest in our citizens’ futures that helps to thrive, not just survive.”
Other challenges mentioned in the survey include inflation, the polarized political environment, the city’s worsening homelessness crisis, its over-reliance on tourism and rising insurance costs in the wake of Hurricane Ida
“I am very concerned about property and flood insurance as we move forward into 2022 and beyond,” said Robby Moss, president and CEO at Hartwig Moss Insurance Agency. “The new flood rating system (Risk Rating 2.0) is going to negatively impact homeowners and the real estate industry unless modifications occur. Also, Homeowners rates are going to be increasing as many insurers took on more claims than they could handle. Commercial rates are going to increase as well and we expect deductibles to have upward pressure.”
One final but important problem: the stress being placed on the city’s educators as a result of the pandemic and storms. Adrinda Kelly, of the education nonprofit BE NOLA, says that the mental health needs of educators have been neglected across the board.
“There has been a gap in assessing where adults are psychologically, physically, emotionally and not as much consistent grace extended to teachers,” she said. “We are seeing the fallout of this with schools across the country experiencing a high level of turnover. In New Orleans, this has been exacerbated by the impact of Hurricane Ida which has contributed to more exits as professionals across the city reconsider the viability of building a sustainable life in New Orleans given our infrastructure and climate challenges. But it is also important to learn from schools that are figuring out how to support their people. We are seeing that schools that offer wellness and mental health support for teachers and staff as well as more flexibility in their work schedule are doing a better job of retaining folks.”
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