Industry News | July 27, 2010

Leaders Take on the Hill, Demanding BP Pay for Damages to Business

“The rest of the world and the rest of America need to know that it’s safe to get back in the water,” said Rip Daniels, vice president of the Mississippi Gulf Coast Tourism Commission, before a Congressional committee this morning.

Alongside Daniels were several hospitality industry leaders and Kenneth Feinberg, who was recently appointed to administer claims to Gulf Coast citizens seeking compensation from BP after the explosion of its Deepwater Horizon oil rig on April 20.

“I answer to the people of the Gulf, not the administration or BP,” Finberg said as he explained the claims and payment process to the Committee on Energy and Commerce and Subcommittee on Commerce, Trade and Consumer Protection. As an independent party in the emotional and costly debate about who should receive compensation from the oil spill and to the tune of how much, Feinberg was appointed jointly by the administration and BP. Feinberg also oversaw the claims process following Sept. 11.

In this case, BP dedicated $20 billion to repay citizens affected by the oil spill, which brought tourism in the Gulf Coast region to a halt.

Ralph Brennan, president of Ralph Brennan Restaurant Group in New Orleans, said sales, counts, and margins were down at all of his restaurants, while costs were going up.

“Many ask if there’s oil on the doorsteps of New Orleans; and New Orleans is miles inland,” Brennan said, emphasizing the increased damage consumers’ misperceptions are causing the region.

Along with Brennan, Keith Overton, chairman of the Florida Restaurant and Lodging Association, explained that while Florida was not affected by the oil spill and subsequent tar balls, a recent survey of consumers showed it was perceived to be the No. 1 state suffering from the accident.

“The media must be held accountable for its actions,” Overton said, explaining that after the President’s visit to Pensacola, Florida, a television news organization superimposed dripping oil over the background of its coverage of the event. He went on to request that media coverage of the region be reviewed weekly to ensure that it is accurate.

With nearly one million Floridians employed by the travel and hospitality industries, the drop in vacationers means huge economic losses for the state. “And all of those losses have happened without a drop of oil on the beach,” Overton says.

Unfortunately, perception seems to be reality in the region that only recently rebuilt itself after the devastation of Hurricane Katrina wreaked similar havoc on the area’s tourism and hospitality industries. Hotels that are traditionally at 80 to 90 percent capacity in the summer are now at about 30 percent capacity because consumers are scared to visit.

As a result, the industry leaders asked for $500 million in marketing dollars from BP to restore consumer confidence in the region and encourage visitors back to the Gulf Coast.

“Visitor perception is key to decisions about where to vacation,” Brennan said. “Restaurants along the Gulf Coast—many of which are seasonal—face losing their entire year’s worth of sales and income even if there is no oil on their stretch of coastline.”

Feinberg, who faced demanding questions from politicians asking exactly how the claim money was going to be administered to victims, said BP will pay for both physical damages and lost profits caused by drops in tourism.

“The line is going to be hard to draw,” he said, explaining that a business’ proximity to the coast will come into play when deciding whether to award compensation for claims filed.

By Blair Chancey


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