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For Gulf Tourism, Perception Is the Problem

One man improvises and uses a shovel as an oar as residents of New Orleans' Mid-City district row their boats down a street in their flooded neighborhood. A week after Hurricane Katrina ravaged the city, many people say they have no desire to evacuate, despite dwindling supplies, no running water, stifling heat and filthy floodwaters.
Corey Sipkin | NY Daily News Archive | Getty Images
One man improvises and uses a shovel as an oar as residents of New Orleans' Mid-City district row their boats down a street in their flooded neighborhood. A week after Hurricane Katrina ravaged the city, many people say they have no desire to evacuate, despite dwindling supplies, no running water, stifling heat and filthy floodwaters.

On the great yawning porch that once belonged to Confederate president Jefferson Davis, two women sit in rockers listening to the cicadas and looking out over Mississippi Sound as they wait for their tour to begin.

Before Hurricane Katrina, some 200 people came each day to visit the house—the only structure on the oak-shaded Beauvoir estate not destroyed by the storm. And that's just what's needed to break even. Tourism has dropped off 20 percent here, with just a few visitors on some days since the BP well blew out in the Gulf of Mexico.

The story here is mirrored across the Gulf Coast. Beaches have been cleaned of crude, the leak has been plugged and some cities never had oil wash ashore at all. Still, tourists stay away from what they fear are oil-coated coastlines—a perception officials say could take years to overcome and cost the region billions of dollars.

"We had Katrina, then the recession and now we have the oil," said Rick Forte, executive director of the Beauvoir estate. "It's hard to overcome this when no one is coming."

With the summer tourist season coming to a close after Labor Day weekend, destinations are scrambling to keep businesses afloat and hang on to the region's 400,000 travel industry jobs. Some are trying discounts, special concerts and celebrity-endorsed commercials inviting residents to visit attractions once seen as havens for out-of-towners in their hometowns.

BP gave millions to the region for tourism promotion—$25 million to Florida and $15 million each to Louisiana, Mississippi and Alabama—though most of that money already has been spent with little effect.

"Once perceptions are formed, they take quite some time to change," said Geoff Freeman, executive vice president of the U.S. Travel Association, a national nonprofit trade association. "One of the best examples was after Katrina — here we were in 2010 and we were only now ready to get to 2005 levels."

Hurricane Katrina: 5 years Later | A CNBC Special Report
Hurricane Katrina: 5 years Later | A CNBC Special Report

The association commissioned a study by the Oxford Economics forecasting group that projected the disaster could cost the region $22.7 billion by 2013. With a $500 million infusion from BP to promote tourism, they estimated that figure could drop to $15.2 billion. The group also said travel to the Gulf Coast wouldn't rebound until at least 2013.

Communities known for their beaches or charter fishing appear to have suffered most, while a few others managed unexpected increases after an anemic recession year.

Tracy Louthain, spokeswoman for the Beaches of South Walton on Florida's Gulf Coast, said summer occupancy was down 30 percent from last year. The agency is offering a bonus for travelers who book three-night stays in the area from now to the end of September: $250 gift cards to the Silver Sands Factory Stores or for future travel on Southwest Airlines .

In Alabama's Dauphin Island, known for its sugar sand beaches and bird sanctuaries, 90 percent fewer people booked summer rentals compared to last summer, said Mayor Jeff Collier.

"We were hoping it was going to be our year to come back after the hurricane (Katrina)," he said.

Luring Tourists Back for Vacations and Conventions

Source: mvn.usace.army.mil

Other cities with more attractions showed increases over last year. New Orleans began 2010 as the country's top tourist destination, said Kelly Schultz, vice president of the city's Convention and Visitors Bureau.

But after a flurry of news reports on the oil spill from New Orleans, officials spent much of the $5 million from BP assuring people oil wasn't in their city, Schultz said.

One print ad featuring a couple strolling with cocktails in hand read: "In New Orleans, Things are Normal. Well, Our Normal." Another with a photo of a large fried shrimp sandwich teased: "There is no Moratorium on Shrimp Po-Boys," referring to the ban on deepwater drilling after the rig leased by BP exploded and spilled millions of gallons of oil into the Gulf.

"It's our most important industry, and it's an image-driven business," Schultz said of the $5 billion a year tourism industry.

Miami spent the bulk of its $1.25 million from BP reminding overseas visitors that its beaches were clean. The first six months of hotel occupancy increased 8.1 percent over last year, and the South Florida city's typically busy winter season also is expected to be strong.

"Could this year have been better had the oil spill not happened? Anecdotally the answer is yes," said Rolando Aedo, senior vice president for marketing for the Greater Miami Convention and Visitors Bureau. Other communities had deceptively high occupancy rates because BP and federal officials were stationed nearby.

"I think we're one of the overlooked victims," said Leon Maisel with the Convention and Visitors Bureau in Mobile, Ala. "We have an elevated false economy because we were the staging area for the response team."

Spill response workers may have filled the hotels, but that left tourists with nowhere to stay. And that meant no one was spending money on attractions such as the USS Alabama Battleship and the Mobile Carnival Museum.

The state has launched a series of commercials featuring celebrities from Alabama, including actress Courteney Cox and singer Taylor Hicks, reminding families to return to beaches they've known for generations.

The plan after Labor Day, Maisel said, is to go after convention business, continue advertising attractions and set up new draws, such as a series of arts weekends.

"Right now our brand is 'go coastal' and that's almost like saying 'go toxic,'" he said. "Our brand has been damaged, we're going to have to rebuild and re-inform."

Look for CNBC's special coverage of the fifth anniversary of Hurricane Katrina on-air and online this week. Senior Correspondent Scott Cohn reports from New Orleans Thursday and Friday, August 26 and 27.