July No Day At The Beach For Local Merchants; Sales Down Nearly 30 Percent

By Andrea Aurichio

Area boaters are less likely to wander from their slips as prohibitive diesel prices hinder travel plans. Photos by Christine Bellini

Southampton - The early returns are in as business owners across the South Fork close out their books for the month of July and head into August with high hopes for another "good, but not great" summer season, reporting a 20 to 30 percent drop in business compared to last July.

According to the Long Island Convention and Visitor's Bureau based in Hauppauge, tourism is officially the leading industry on Long Island, generating an estimated $4.3 billion annually. The South Fork region represents an important segment of the tourism income as it is a major tourist destination for travelers worldwide.

Vacant stores in villages and hamlets across the South Fork do not bode well as the
summer hits the halfway mark and anxiety about the health of the local economy
prevails as merchants report up to a 30 percent drop in revenue for July.

Business owners around the South Fork reported a sharp downturn in revenue this week as they evaluated the season to date while expressing a note of optimism that they were holding their own despite the high price of gas at the pump.

Combine this with a pervasive free floating anxiety about the nation's economy, reports of foreclosures and real estate grumblings across the country as fewer sales are being reported nationwide for the last quarter, and you've got the general outlook.

Even a day at the beach does not provide vacationers with a respite from the real and imagined economic woes that are casting a shadow on the sunniest summer day. Reports are the tourists are here, but they are not spending as much money as they did last year. The cutbacks are clear in many sectors of the local economy where the down turn appears to have hit the marinas, sport fishing businesses and restaurants hardest. Retailers are also racking up fewer sales as vacationers mind their wallets and curtail spending.

Attendance is high at free open-air concerts and beaches are crowded with families who bring a cooler filled with a picnic lunch to spend the day. For some, rainy days are spent watching movies at home or in a motel room rather than shopping idly to pass the time. Conversely, business appears to be booming at local delicatessens and fast food restaurants.

Out in Montauk, one of the South Fork's most colorful and carefree tourist communities, the mood was glum yet hopeful in a beach front enclave where surfboards and fishing poles set the tone and people tell time by the tide rather than by the clock to plan their daily activities.

Montauk Feeling The Pinch
"July was down 25 percent," Carl Darenberg, owner of the Montauk Marine Basin said as he looked forward to August. "We expect August to be better, that is our biggest month anyway and the fishing gets better then too."

Darenberg attributed the sharp decline in July revenue to the high price of diesel fuel and changes in fishing regulations. "When it comes to fluking, you are allowed four 20-and-a-half inch fish per person. You are allowed 10 porgies per person," Darenberg commented.

Pleasure rides and tourist attractions are feeling the pinch of the tightened economy.

While the fishing regulations are not expected to change anytime soon, the price of diesel fuel does fluctuate. "Fuel was $5.14 a gallon two weeks ago, now the price is down to $4.60 a gallon," Darenberg reported. "But people are not spending money. The dock area is down."

Darenberg was not alone in his predicament as private corporate yacht captains confirmed the effects of the high price of diesel fuel on the boating business.

"People are not using their boats," Gary Dow, a private yacht captain who takes the wheel for a host of high profile boat owners ranging from hip-hop moguls to titans of industry, explained. No stranger to the local waters, Dow also pilots a helicopter. According to Dow, the tide has turned and the boats are not sailing this summer.

"The average boater can barely afford their boat, so they are staying at the dock or close to it this summer," Dow said. "They will just sit on the boat and have a party at the dock because of the price of fuel."

According to Dow, owners of boats ranging in size from 25 feet to 65 feet appear to be most affected by the price of diesel fuel while smaller boats powered by outboard motors that run on regular fuel are still buzzing out on the water.

"When you start talking about boats in the 100 foot range and up, it's not an issue," Dow said, noting luxury yachts are often staffed by 12 member crews.

"Just to give you an idea," Dow volunteered," I took a 70 foot Ferretti from Pompano, Florida to the southern tip of North Carolina and the fuel bill was $10,500."

High End Remains Unfazed
Helicopter travel has not been affected according to Dow. "It's not an issue when it comes to the copters. People have the money and they want to get out here fast and beat the traffic. They aren't worried about the expense."

While the high-end seems to be thriving, Laraine Creegan, the executive director of the Montauk Chamber of Commerce, paints a different picture.

"The motels are doing well," Creegan said, "but it is not a banner year. People are taking vacations, but they are watching their money once they get here."

According to Creegan, business is off at many Montauk restaurants, while the garbage pick-up rate for hotels and motels is much higher this year. "I think that is a good indicator," Creegan said. "Garbage pick-up at hotels was usually once or twice a week. Now the pick-ups are daily because there is so much more garbage being generated by guests who are spending more time in their rooms."

The Montauk Chamber reports business is strong at the pizza parlors and the delis and it is off at the more expensive sit down restaurants where patrons no longer need reservations to get a table. "You can just walk in and sit down this year," Creegan said, "but you will have to wait for a table at a moderately priced restaurant with a reputation for good food."

The Budget Vacation
In Montauk this seems to be the year of the budget vacation, according to Creegan who noted retail business was sluggish as people eliminated shopping as a pastime, opting instead for free entertainment and ways to amuse themselves without spending money. There are also less sport fisherman out on the docks chartering boats or going out on party boats to fish for the day with a group of friends.

"The day trippers are not coming to Montauk this year," Creegan said citing the long drive, the killer traffic and the price of gas as the main reasons turning vacationers into stay-cationers, a new word that has crept into the lexicon this summer, meaning people who chose to say home and vacation in their backyard to save money while they try to have fun.

In East Hampton and Southampton both Chambers reported a strong summer season but noted it was not a banner year. In East Hampton, Marina Van, spokeswoman for the Chamber of Commerce, claimed business was booming, "We are doing very well in East Hampton," Van said. "We are not like Montauk. The jewelry stores are doing very well. The new Ralph Lauren stores are thriving and the restaurants are packed all the time," Van recounted. "There are Europeans everywhere. We are busier than ever this year and the weather has been great."

Van attributed the healthy business activity to a trend among vacationing Europeans who are spending the summer in The Hamptons thanks to favorable exchange rates. "They have discovered our little secret. They stay out here during the week, and go into the city on the weekends."

Sluggish retail activity posted for July has resulted in mid-summer sales as merchants try to boost sales in August while the tourist season remains in full swing.

Mid-Week Doldrums
Hotel rates are lower in the city on weekends when the city is less crowed, while rates rise in The Hamptons as weekenders flock to the area to escape the city. Van also reported an increase in calls from people who are not flying to vacation destinations this year opting instead to take a bus to The Hamptons and spend a few weeks closer to home. "We also have a night life here, and that attracts people too," Van said.

In downtown Southampton Village, the streets are bustling on weekends, parking spaces are at a premium during the week, although business seems to be simply good rather than especially great. Likewise, business owners in the Village of Sag Harbor noted strong weekend traffic, with a marked drop-off during the week. The downtown areas appear to be filled with seasonal regulars and long-time second homeowners rather than with hordes of day trippers.

Penelope Moore, a real estate broker with the Corcoran Group who writes a column for the Hamptons-North Fork Realtors Association (HANFRA), noted a definite increase in the number of rentals this summer. "People are out here, they are renting while they look to buy. They want to look at a lot of properties. They are not in a hurry." Moore cited strong rental activity early in year before experiencing a significant drop after April. "Now we are getting people who are looking for weekly and bi-weekly rentals," Moore said. In keeping with what seems to be a trend, high-end rentals went quickly in the fall of 2007. "That clientele wants a resort house with all the amenities," Moore said. There were a number of inland homes "left over" this season due to an abundance of inventory in that category.

"It's okay," Millie Fellingham said as she discussed business. Fellingham is the proprietor of a restaurant of the same name located in the heart of Southampton Village. She also serves as president of the Southampton Chamber of Commerce. "So far, I haven't heard any complaints. Everyone seems to be holding their own. No one is saying anything negative, so it's all good."

Nationally movie ticket sales are on the rise, a common indicator of slumped economic times as the harsh reality of a turn-down is buffered by an escape of the summer block-buster.

"I always hold my breath at this time of year,' DeDe Gotthelf, proprietor of the Southampton Inn, said as she reported a very strong season based on her July tabulations and looked forward to August.

Gotthelf noted an increase in business that she attributed to the rise in gas prices. "It's not keeping people away, it's actually bringing us business," Gotthelf figured. "We are getting a lot of corporate conferences. People are coming here by bus instead of flying to Aspen to hold meetings. They are coming here because it's low-key. It's a bus ride or tank of gas away. It's not as ostentatious as going to Aspen," Gotthelf explained, clearly seeing a direct benefit from corporate cutbacks inspired by the failing economy and the need to save money rather than spend lavishly.

Gas prices dropped sharply all over the East End this week going from record highs of $4.49 a gallon to a recent low of $3.97 breaking the $4 a gallon mark that sent motorists into a tailspin just before the Memorial Day Weekend when gas prices began to skyrocket.

"Its hot, it's August, and people go on vacation," Gotthelf said. "We hope they will come here. We always have room at the Inn."