Kit Cramer talks tourism and economy

October 10, 2019

Recently, Asheville Chamber president Kit Cramer received an email from a UNC Asheville student journalist.  We thought our members might be interested in her responses to the student’s questions.

The student said, “I’m writing a piece about Asheville’s local economy and how tourism and high rent prices/ home values potentially affect it. Given the importance of what you do and how it relates to Asheville’s economy, I was hoping you could answer a few questions for me.”

Is tourism positive or negative for Asheville’s economy?

Tourism is a positive. It’s a piece of the economy and supports other segments, like professional and business services.  There is a belief that tourism dominates our economy, and while it’s an important sector, Health Services and Private Education actually account for 21% of employment, versus Leisure and Hospitality at 15%.  We also have a strong Manufacturing segment at 12%. (Check out more data in our Research & Reports)

I think the tendency to demonize any one sector of the economy is a mistake.  An economy is an interdependent system. If you removed a piece of it, the rest would suffer.  And that would mean fewer jobs, fewer purchases of goods and services, less investment, less support for the local businesses that make Asheville special and a lower quality of life for everyone.

I’ve heard from older lifelong locals that Asheville used to be what they called a “factory town” AKA a manufacturing city. Do you think that the tourism jobs that some feel replaced the old manufacturing jobs are more sustainable or less sustainable?

I’m not sure I’d categorize tourism jobs as having replaced manufacturing jobs.  The whole country’s manufacturing sector changed when the North American Free Trade Agreement (NAFTA) was established, and more companies found it was much cheaper to produce goods in other countries like Mexico or China.  That forced workers into other sectors. Data available since 1990 shows Education and Health Services growth outpacing Leisure & Hospitality Services. The types of manufacturing performed here changed to become advanced manufacturing, a cleaner and higher tech version of manufacturing.  The loss of jobs scared off a generation of workers from pursuing manufacturing, and yet, great paying jobs still exist in that sector.

At the same time, the business community began to invest more in marketing of Asheville.  It took years of work and investment for Asheville to become recognizable and an “overnight” sensation.

As the economic development entity for the county, the Economic Development Coalition (a department of the Asheville Chamber) pursues companies from a variety of sectors in an effort to maintain balance in the economy.  We don’t recruit hotels here.  Hotel owners—many of which are local, by the way–have seen the opportunity and responded.  We are working on helping existing industries remain and expand (GE Aviation or Borg Warner, for example). We are attracting and retaining workers to supply existing businesses. We help entrepreneurs grow and scale their businesses to create the next set of headquarter companies for the area. And we attract new businesses (think New Belgium or Fox Factory, for example) to help offset the ones that merge or go out of business or relocate.

Explore Asheville and the Tourism Development Authority market the community. The TDA is currently conducting a Tourism Management and Investment Plan process to talk about how to spend occupancy tax in a way that the community wants.

Do you find that Asheville’s middle class is vanishing?

Changes in the status of the middle class are not only occurring here, but across the country. Finding ways to get young people interested in the jobs that are readily available here helps with economic mobility.  We’re working with businesses to provide mentors and apprenticeships to help students from challenged backgrounds to move up on the economic ladder.  It’s an important issue for us to address.

– If so, do you think wealthy people moving to Asheville contribute to said issue?

I think of wealthy people moving to Asheville as potential customers for all the local businesses we all love.  I’d rather deal with the challenges of a growing Asheville than a declining one.  Other communities are facing great challenges with declining populations.

– If not, do you find that wealthy people moving here has any negative contributions to Asheville’s economy (i.e. rising rent prices)?

Rising rents are due to not having enough housing stock. While everyone can agree that we need more affordable housing in this community, almost every day you can find examples of neighbors protesting a new development.  The Not In My Back Yard (NIMBY) movement is hurting our ability to respond to the pent up demand created during the Great Recession.

We need to understand that in a community surrounded by mountains that there always have been and will be competing interests for the use of land, while also maintaining the natural beauty most of us came here to enjoy.  The City of Asheville has proposed increasing density in order to provide the housing needed on transit corridors which is a sound approach. We have to find a way to urge our citizens to be more thoughtful before opposing development that would provide more housing. We also need to start thinking about how to move people to and from work from outside the City. Fully 40% of workers in Buncombe County come from outside the county, from an area that encompasses 10 counties.  We’re having growth pains. Not exponential growth either, but steady increases. We simply have to work together to rise to the challenge of meeting those needs.  It’s not easy, but it’s what we need to do.

Just today I looked at data that says that the percentage of people who live in poverty (2017 data, latest available) for Buncombe County is 11.5%.  That’s less than the state and national averages. That means a lot of people are doing okay.  At the same time, we need to continue to work to help everyone access the economic ladder and improve their situation.

What do you think the main causes are of Asheville’s increasing rent prices?

I’ve addressed a lot of this question above.  The cost of housing is higher because there is not enough of it.  We have limitations on the land that can be used for housing. Frequently, when a developer proposes new housing the number of units will get scaled down because of the protests of neighbors.  When you lower the number of units, you raise the cost per unit.  It’s a math problem.

Strong demand from people moving into Asheville because of a lower cost of living than places they’ve come from (i.e. California, New York) certainly contributes.  But given that a lot are coming from other areas of the Carolinas and Florida, you can’t put housing costs totally on their shoulders.  Not only is land more expensive because it’s limited, it’s more expensive to develop land with topographical challenges than it is flat land.

We have to find a way to work on getting more housing built at the same time as we try to improve infrastructure (roads, transit, bike paths, greenways, broadband, etc.) to support that growth and the movement of people. We’re a regional economy.