From the restaurants and salons on trendy Newbury Street to the circus at City Hall Plaza, businesses are being squeezed in the aftermath of the Boston Marathon terror attack.
Tourism may see a short-term falloff, and the costs of increased security may be felt throughout the city’s economy. The damage isn’t expected to be long-lasting.
“We went from robust ticket sales to trickling ticket sales,” said Lynn Stirrup, executive director of the Big Apple Circus Ltd., which is running March 26 to May 12 next to City Hall. “We are expecting a significant impact overall.”
Two explosions near the finish line of the April 15 race killed three spectators and left more than 170 injured in what officials said was an act of terror. A 12-block area sealed off by police encompassed 4,000 hotel rooms and about 50 restaurants, Patrick Moscaritolo, chief executive officer of the Greater Boston Convention and Visitors Bureau. The zone was narrowed to four blocks yesterday.
Boston may see a dip in tourist dollars over the next few months as prospective visitors shaken by the news delay trips to the city, Moscaritolo said.
“It’s so difficult to get good data at this point,” he said. “But you always worry after a major incident because we’re dealing with human emotions.”
“It’s been difficult for all the business owners down here,” said Nestor Real, owner of Diego’s hair salon on Newbury Street, which is now open. “I was talking to a priest around the corner, and he can’t even get into his church.”
Lost Productivity
For small businesses, especially for those in the service industry, when a day’s productivity is gone it can’t be replaced, Real said.
“It’s not like we sell widgets and can make it up tomorrow,” he said. “A hair salon can’t give three times as many haircuts tomorrow to make it up, and that’s true for doctors and dentists and restaurants.”
The immediate costs are just part of the equation, said David Turk, professor and chairman of the economics department at Suffolk University in Boston.
“I think there are two kinds of costs to consider -- one will be the immediate and obvious costs, mostly measurable by the devastation to people’s lives, damage to stores, lost trade,” he said. “But I think the bigger cost of this will be in terms of losses that follow the enhancements to security in order to have another Boston Marathon.”
Business Interruption
In addition to the expense of extra security, there are productivity costs associated with having to negotiate those measures, Turk said. He pointed to the time lost by business travelers as they stand in lines to pass through airport security.
Claims for business interruption will probably drive insurance costs tied to the bombings, according to catastrophe modeler Risk Management Solutions Inc.
Business-interruption payouts to companies shuttered by the blasts will probably exceed insured property damage costs, which may be less than $1 million, RMS said yesterday in a statement. RMS’s appraisal doesn’t include costs of treating the injured.
“There will be business interruption, due to the fact that several blocks were cordoned off,” Gordon Woo, a London-based catastrophe expert at RMS, said by phone. “There doesn’t appear to be much in the way of structural damage to buildings.”
Some businesses don’t buy coverage for terrorism, “so exactly how much would actually be at risk for this particular event, I’m not sure,” Woo said.
“This economy is driven by innovators and entrepreneurs, and they are not going to pick up and move because they are here, because other innovators and entrepreneurs are here,” said Rosabeth Moss Kanter, a professor of business administration at Harvard Business School in Boston.
