Paying the Price

Increased energy costs challenge area businesses

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Thirty percent of the New Orleans executives who responded to this month’s New Orleans 500 email survey said increased energy costs are creating problems for their businesses.

“A lot of our business is in transportation. This includes VIP transfers using sedans and SUVs along with group shuttles using motor coaches and ‘mini coaches,’” said Jeff O’Hara, owner of PRA Business Events. “Anyone walking the streets of New Orleans will know how common a sight all of these vehicles are on our streets, shuttling visitors around town.”

O’Hara said that the recent jump in gas prices has had a significant impact on the cost to operate these vehicles and he’s had to pass that along to clients.

“This results in some difficult conversations at times, but I will say that in most cases people have been understanding,” he said. “However, coupled with rising costs on everything from airfare to food, there is concern that the increased cost will cause companies to scale back on their events. This trickles down to every level of the hospitality industry in New Orleans. You tend to think about hotels and big venues, but bus drivers, restaurant servers, hotel housekeepers and [others] all feel it when events are scaled back.”

O’Hara said business travel is especially important to the city because it’s responsible for the majority of weekday visitors.

“We need it to complement the tourism traffic and keep a steady flow of business across the industry,” he said.

On a bigger scale, international trade and transportation executives headquartered in New Orleans said they are also noticing negative effects of rising energy costs.

Both Jack Jensen of TCI Trucking and Ed Webb, CEO of the World Trade Center New Orleans, cited increased shipping costs as a problem.

“It impacts international business investors in particular,” said Webb. “We’re very concerned about our maritime industry.”

When it comes to real estate, few have as much to manage as much as the team leading the Ernest N. Morial Convention Center, which has more than a million-square-feet of exhibition space and claims the country’s “largest contiguous-space exhibit hall.” Michael Sawaya, the facility’s president and general manager, said utilities costs are an obvious problem, but recent investments in infrastructure are helping mitigate negative effects.

“Our 3-million-square-foot facility is the largest in Orleans Parish, and utility costs are our second highest expense after salaries and benefits,” he said. “In order to reduce usage and net costs, we have adopted progressive, leading-edge sustainability practices, and have made long-term capital investments aimed at reducing usage and costs.”

Some business owners are solving the extra cost of utilities by downsizing. Lana Joseph-Ford, CEO of High Level Speech & Hearing Center, is one example.
“We decided to consolidate locations and focus on our mobile community outreach program to mitigate operational costs,” she said. “Although it took some getting used to, it has proven to be a cost-efficient strategy for us … We decided not to renew our lease agreement and we’ve now adopted mobile, work-from-home and virtual appointment strategies to reduce costs and ensure that our company remains profitable.”

 

For more thoughts from local business leaders on this topic, visit BizNewOrleans.com/500 and scroll down to the latest New Orleans 500 Survey.

 

News from the top Each month, we ask the top business professionals featured in the New Orleans 500 to weigh in on issues impacting the New Orleans business community. Have an idea for a survey question for the New Orleans 500? Email rich@bizneworleans.com.