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VIDEONew Orleans' New Business Landscape
Five years ago, Hurricane Katrina washed away jobs and businesses. But today the city is experiencing a renaissance of sorts that could leave it better than before.
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Relying largely on export industries like oil and gas, shipping, and leisure and hospitality, New Orleans’ economy, like its dixieland roots, has always marched to the beat of a different drummer. New Orleans "wasn't considered a great city for doing business before the storm,” Peter Ricchiuti, a professor of economics at Tulane University, told Time magazine in 2007. “People were always dribbling out.”
The energy-industry hemorrhage started with the oil bust of the 1980s as well as a confluence of other factors, including shipping deregulation and technological advances, that sent the shipping business down a steadily flagging course. However, the tourism industry -- despite its lower wages -- helped serve as an important tourniquet in the city’s economic wounds, with burgeoning growth between 1980 and 2004.
The city was untouched by the dot-com boom of the late ‘90s but also dodged the 2001 recession that crippled the rest of the country. When Hurricane Katrina blew through the Gulf coast in 2005, she took 21% of the region’s jobs with her. Tourism bottomed out at below 1980 levels.
That being said, New Orleans saw a spike in high-wage jobs in white-collar industries such as higher education, legal services, and insurance between 1980 and 2004 and went on to successfully ride out the storm. By 2009, the region’s shipping, oil and gas, and tourism industries were well into job recovery mode with employment at pre-Katrina levels.
The bread and butter of New Orleans’ economy is its $5 billion tourist industry. Tourism serves as the city’s largest employer and generates one-third of its operating budget. While tourism took a massive hit in the weeks and months following Katrina, a strategic unified master plan has helped give the industry a crucial shot in the arm. The plan aims to host nearly 14 million annual visitors by the city’s 300th anniversary in 2018, garnering $11 billion in direct spending, 33,000 new jobs, and $700 million in tax revenue.Despite fears that the BP (BP) Deepwater Horizon oil spill would take tourism two steps back, New Orleans remains on the road to recovery. “It’s been a strong summer,” Gil Zanchi, general manager of the New Orleans Marriott (MAR), told MSNBC. Zanchi, who overseas revenue management for the hotel chain’s greater New Orleans properties added, “We are close to what it was before Katrina in occupancy.” Within the first five months of the year, New Orleans ranked first in growth in hotel performance out of the top 25 US markets.
More than 50 franchise hotels dot the city’s commercial landscape, serving as proof positive that New Orleans is, once again, a strong destination contender. Intercontinental Hotels Group (IHG), Hilton (HLT), Wyndham (WYN), Choice Hotels International (CHH), Starwood Hotels (HOT), and Harrah's (HET) are among the city’s most successful chains. After suffering substantial hurricane damage, the Hyatt Regency (H) is undergoing renovation of all its 1,193 rooms and 53 suites and plans to reopen in the fall of 2011.
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