Small businesses facing ‘summer of uncertainty’

NEW YORK — Small businesses that depend on outdoor crowds and free-spending tourists aren’t sure what to expect this summer.

Consumers likely have a lot of pent-up demand after more than two years of the pandemic. But they’re also facing some significant financial headwinds because of the highest inflation in decades. And COVID-19 remains a looming presence.

The U.S. Travel Association, an industry trade group, expects money spent on travel — excluding business travel — in the U.S. to total $726 billion in 2022, up 3% from 2021 and slightly above pre-pandemic levels. Many Americans appear ready to spend what’s left of their pandemic savings.

But inflation might throw a wrench in their plans. Higher prices are making day-to-day living more expensive, which could leave less money for discretionary spending. Gas prices are up more than 60% from a year ago and hotel rooms and airfare are pricier as well, putting pressure on travel budgets.

Memorial Day weekend might offer a snapshot of how the summer will go. According to the Transportation Security Administration, an average of 2.23 million people per day passed through U.S. airport checkpoints during the five-day Thursday through Monday holiday period. That was 9% lower than the same five days in 2019, but up 24% from the same days last year.

Businesses are also struggling with inflation — raw materials and finished goods are more expensive and workers are demanding higher pay. Owners have been forced to raise prices or cut back on some services.

“It’s a summer of uncertainty,” said Ray Keating, chief economist with advocacy group the Small Business & Entrepreneurship Council. “Inflation is a major worry and tied to that is increases in costs small businesses are seeing from their own vendors and suppliers. There’s a tight labor market. It’s a tough mix.”

The higher cost for gas and other items means a growing divide between wealthy tourists and the middle or working class. At Mansion House Inn on Martha’s Vineyard, rooms are booking at pre-pandemic prices, with most of the summer sold out. Owner Susan Goldstein said her clientele likes the fact they can drive to the Vineyard instead of flying somewhere, despite higher gas prices.

But Goldstein said people aren’t booking as far ahead as they used to.

“There’s a lot of last-minute action,” she said. “People are waiting to see what the world is offering.”

AP David Rodriguez serves customers at Von Elrod’s Beer Hall And Kitchen, in Nashville, Tenn. For the restaurant, located across the street from a minor league baseball stadium that sees big crowds in the summer, both inflation and the worker shortage have sent costs skyrocketing.