By Glenn Rolfe

Following a not-so-hot summer 2020, this season brought a noticeable business rebound in the hotel and restaurant sectors in Sussex County.

During the second beach season of the pandemic, lodging numbers were up dramatically from June through August, Southern Delaware Tourism Director Scott Thomas reported.

“If you look at the summertime months, one of the indicators, one of the barometers we look at is the public accommodations tax — the state of Delaware’s hotel tax,” said Mr. Thomas. “Respective to Sussex County in the summer months, 2021 really came back with a vengeance, as we expected it would, with a lot of pent-up travel demand and vaccinations having been out there. That propelled a lot of people our way.

“When you look at those tax figures, that increased by 36%, not to last year but to 2019, which was a pretty good year itself before COVID even hit. And that’s reflective of occupancy and rates.”

All industries affected

Scott Kammerer, president of SoDel Concepts, which operates 14 restaurants and 18 total venues along coastal Delaware, said this summer is one for the record books.

“I would say, for SoDel and for almost all of our restaurants here at the beach, we all had a record sales year, probably the best year ever in terms of sales, guest counts and amount of people that were here — by far,” he said.

On the flipside, the industry experienced some labor pains, with “Help Wanted” signs in abundance.

Greater Millsboro Chamber of Commerce President Kevin Turner said he thinks jobs are plentiful.

“You go down U.S. 113 past the fast-food restaurants, Lowe’s and BJ’s, there is a sign out in front of every place, (reading) ‘Hiring.’ They can’t keep up. Nobody wants to work.”

At Funland, the multigenerational family-owned amusement park and arcade on Rehoboth Beach’s boardwalk, the busy summer season has been a grind.

“It has been another year of pivoting and twisting and turning and trying to figure what is happening with what we have to do to satisfy not only government requirements, at least to start the summer, but also our own family comfort levels. Especially being in kind of a tourist town that we are and being at the location that we are, we get very busy,” said Ian Curry, a fourth-generation owner/operator.

“At the end of last year and even in the spring, we thought, ‘By August, we’ll be through all this, and it’s going to be a better year.’ Not to say that it hasn’t been a great summer, but it has probably been harder than 2020.”

He continued, “I think we’ve had more meetings as a family in the past two years than we’ve had in our entire 60 seasons. Every week, a few times a week, we would be meeting to discuss the logistics: how we were going to hire, how we were going to staff, what our hours would be, how we are going to keep not only ourselves safe but our customers and employees safe. We are tired … definitely tired.”

Mike Meoli, whose Meoli Companies has two dozen McDonald’s restaurants in Delaware and Maryland and a 25th in the making in Camden, said the summer season was a success, but there was some juggling.

“In terms (of) business and sales, things rebounded fairly well from 2020,” he said. “We certainly had our fair share of staffing challenges. We were able to maintain all our normal operating hours. Being a larger organization, we were in a position to move people around when certain stores were short-handed, whether it was with crew members or sometimes even management.”

Additionally, Mr. Meoli said there were incentive offers for new hires.

“We did have a hiring bonus in place in our restaurants that were the most challenged, and those stores were predominantly closer to the beach,” he said. “We did offer a premium pay for anyone who worked on Saturdays and Sundays, and we did that program all summer long. It was a $3-per-hour (bonus). I think it only helped a little.

“The biggest challenge was just a sheer lack of available employees in the market.”

Linda Price, president of the Greater Georgetown Chamber of Commerce, agreed.

“The employment shortage is the biggest thing on everybody’s mind right now,” she said. “Most of our businesses have struggled with finding staffing. Some closed on particular days, to give employees a rest.”

However, Ken Adams, president of the Joseph Family of Companies, said its ventures experienced success, along with hurdles.

“For Stockley Materials, it has been a good year. Landscaping and outdoor projects have been popular throughout the pandemic and particularly this summer,” Mr. Adams said. “For Melvin L. Joseph Construction and (for) Sand & Gravel, the continued housing boom is keeping us busy, while we suffer through the same labor issues as all businesses.”

Mr. Adams also is managing partner and majority owner of JD Shuckers Georgetown and the owner of Stockley Tavern, south of Georgetown. He said those establishments are getting by fine.

“(They) are doing OK after navigating the ever-changing rules and guidance during the state of emergency but are definitely feeling the pinch of the labor shortage,” he said.

Few international staffers

Mr. Curry and Mr. Meoli both noted that their businesses felt the workforce pinch due in large part to a lack of J-1 visa students.

“The J-1 visa program is kind of the No. 1 thing that we’re pointing to that is what really affected us,” Mr. Curry said. “The international students, they can typically stay longer into the summer, covering all of August. We start to lose our U.S. college kids at the start of August, if they are doing sports. (J-1 workers) start to fill that gap, and we didn’t have it this year. We usually have about 30 and 40 J-1 students. And this year, we had two. It was a huge gap to fill.”

Many Funland staffing gaps were filled by employees ages 14 and 15, who are limited in the amount of hours they can work and when, Mr. Curry said.

“We’re thankful for the staff that stuck with us,” he added. “Business level has been great. The crowds have been here.”

Mr. Meoli explained how his restaurants were affected by the J-1 shortage: “We had certainly a lot less J-1 students that we’ve had in the past. A lot of the businesses requested the opportunity to employ a lot more of the J-1 students than we were actually able to get. To some degree, I’m not sure money was the answer. There just weren’t enough available employees in the markets.”

Mr. Kammerer concurred.

“I think a lot of the labor issue was the J-1s. Usually, 10,000 J-1 students come to the area and work,” he said. “Even though (SoDel facilities) usually don’t have very many, it put a strain on the entire labor force. So (if) you’re short 10,000 people for the area, it trickles down.”

Severe workforce shortages led some businesses to cut hours and even close for a day or more.

“We had all those visitors coming here, and they are still looking very strong throughout the fall,” Mr. Thomas said. “Then, the Achilles’ heel is the workforce shortage. It has been hard to service and cater to all those guests coming in. Unfortunately, a lot of businesses could not optimize all that heavy visitation, and because of that, … they reduce their hours and even shut down a few days, just to weather the workforce shortage storm.

“That was a challenging part and remains a challenging part of the economy right now.”

He added that the resort area can feel major effects from that problem.

“If you look at a resort economy like the Delaware beaches, that makes it more acute because you have … more of a swell of guests coming in in an already growing population,” said Mr. Thomas. “That stresses out even more for a resort economy in leisure and hospitality.”

Another factor, Mr. Kammerer said, is that Sussex County is home to a growing retiree population.

“So many retirees and second homeowners are moving here. They are not working. They are not in the job market. So we have a lot of guests moving to the area but not a lot of workers,” he pointed out.

Extended unemployment benefits also impacted the job market, some employers report.

“That is something our businesses struggled with. As long as people were getting paid more on unemployment, they didn’t want to work,” said Ms. Price. “People were applying for jobs and then not showing up for interviews. Now, I think we’re starting to see more people looking for jobs because that extra unemployment is going to stop or stopped at the end of last month.”
Mr. Adams finds the worker shortage and unemployment picture puzzling.

“Labor market job openings in June were at record highs, around 10 million nationwide, while the unemployment rate floats near the 10-year average, at 5.9%,” he said. “Why are we paying folks enhanced unemployment benefits when there are plenty of jobs out there that need to be filled? Actually, job openings are almost double the average for the last 10 years!”

Rolling with the flow

“A lot of things with our restaurants was the cost of their goods, which has gone up, … but they don’t want to have to pass along the increase in pricing to their customers,” said Ms. Price. “Through this whole thing, every business has to think outside the box and (about) what they are going to do and how are they going to go about doing it?”

Mr. Kammerer said he was tested by an imbalance in supply and demand.

“The major challenge was handling that amount of volume. It was more of a flood of guests than a steady trickle. Any time you have that, you have a lot of operational things that you’ve got to work out,” he said. “We needed bigger storage areas.

We needed bigger orders coming in. We needed more merchandise and everything, really, and with the supply chain problems, it was definitely a challenge.”

He said the supply obstacles were far-reaching.

“It was essentially supply chain problems of nearly everything in the country, and restaurants were not immune to that. You heard a lot about … crab and chicken wings and other things. Anything that was labor-intensive that the restaurants bought there was a shortage of,” said Mr. Kammerer. “Some raised their prices. Some eliminated menu items. Really, restaurants are resilient, and they figure things out.”

Over the summer, SoDel maintained their offerings but adjusted prices.

“If you had the infrastructure and the company to rise to the challenges and to offset all the issues, then it was a really successful year. But if you didn’t. … So a lot of people chose to close a couple days a week just because they didn’t have people,” said Mr. Kammerer.

“We’re lucky. We can offer careers and benefits and long-term stuff. We really thrived during the pandemic. My theory is you have to grow out of crisis. You can’t cut salaries and labor and lay people off. It just doesn’t work. You have to grow through it.”

Creativity is key, he added.

“If you are short a couple people, you have to move some things around and make it work.”

Shoulder season outlook

“From my understanding, in talking to restaurants and businesses, there is still COVID in the back of their minds, but they are starting to see a trend moving forward,” said Ms. Price. “Everybody, I think, is feeling, ‘OK, September, we’re going into the fourth quarter. Things are starting to turn around.’ I think that people are going into the fourth quarter a little bit more hopeful, as long as we don’t get shut down again.”

Mr. Meoli is unsure how the autumn will play out.

“I have no crystal ball. It’s hard to say,” he said. “Many of us were able to kind of fill a lot of the staffing voids this summer with school kids. Now that they are back in school, September and October are definitely tight. So I don’t know really what to expect going into the fall in terms of an increased number of applications coming in.”

Ms. Price said the consensus she has received from the state is that Gov. John Carney “is not looking to go back to the way it was, not looking to shut down things. He’s keeping an eye every day on what is going on. And still, there is the big push … to get people vaccinated.”

Mr. Thomas said travel industry reports predict that 43 million Americans will be hitting the road in the coming months.

“That’s only a 10% decrease from 2019,” he said. “Looking ahead, 88% still have plans to travel over the next six months. That all kind of bodes well for us, as a big-time drive-to destination here in Sussex County. I think it will be a pretty busy fall.”

At SoDel, Mr. Kammerer sees things getting back to normal.

“It is definitely feeling more like what September typically feels like,” he said. “It’s very close to normal — as normal as it ever gets in the restaurant industry in Rehoboth, Lewes and Fenwick.”

The plan at Funland is to close for the season Sept. 12 and begin planning for 2022, which will be its 60th anniversary.

“Our family bought the business in 1962,” Mr. Curry said. “This is the end of our 60th season. In light of COVID, we decided that, rather than celebrate our 60th season (in 2021), we would celebrate our 60th year next year.”