In the aftermath of the April 20, 2010, explosion of the Deepwater Horizon drilling platform in the Gulf of Mexico near Louisiana, many coastal merchants in the region are facing economic uncertainty as would-be tourists turn away from beaches that are typically crowded at this time of year. And this is affecting the ISOs and merchant level salespeople (MLSs) who serve them.
According to Dun and Bradstreet's 2010 Deepwater Horizon Oil Spill, Preliminary Business Impact Analysis for Coastal Areas in the Gulf States prepared in June, the BP PLC oil flow has the potential to impact 7.3 million active businesses throughout the gulf states, affecting 34.4 million employees and $5.2 trillion in sales volume. And at least 1,034 fishing industry businesses could lose as much as $177.2 million in sales due to fishery closures.
As of mid July, nearly 90 percent of Florida's more than 1,260 miles of coastline were not affected, according to Visit Florida.com.
Christian Murray, National Director of Business Development for Global eTelecom Inc. (GETI) in Fort Walton Beach, Fla., said, "We have yet to experience the full force of the oil spill as it sits in the gulf about seven miles out. Currently the Gulf Coast is seeing some regular tar balls and discernible material hitting the beaches. More of this will hit the coast in the coming weeks.
"Our ISOs and merchants near the Gulf Coast are holding firm and doing what they can to keep business going. Unfortunately, the hospitality and fishing industries are getting hit hardest along with any tourist type business.
"The merchants are seeing a 50 to 70 percent drop in sales based on what we have been told. BP is cutting checks to many of these merchants as we speak, and this is helping to keep many afloat for an unknown period of time."
So far, GETI has helped several ISOs with gulf merchants who've lost their businesses close accounts without penalty and, in some cases, temporarily lowered fees to help struggling gulf merchants continue their processing.
"We are doing what we can to assist our resellers and their merchants," Murray said. "We look at it on an individual, case-by-case basis to determine if, in some small way, we can assist in keeping a merchant's doors open."
In addition, GETI employees have volunteered in beach cleanup efforts and provided donations of cash, towels, blankets, wading pools and other supplies for the Emerald Coast Wildlife Refuge to assist with animal rescue efforts. "The oil spill affects us all, on a personal and professional level," Murray said.
Sheri Andrews, owner of Bank Card Services and SEA Chaser Watersports in Destin, Fla., started her business back in 1995. "I usually take off in the summers when my credit card business quadruples," she said.
"This year I opened a water sports company, renting pontoon boats and wake runners; however, tourism is down 50 percent. The media has portrayed this area as being covered with oil, which isn't the case. We've had tar balls, but beaches remain open," she added.
Andrews indicated that tourism in Destin, which consistently ranks as one of America's top family beach destinations, has been sporadic at best.
Visitors from neighboring states who normally book weeklong vacations are now averaging just two to three days in the area, as they continue to monitor weather reports and shifting oil penetration throughout the region.
"I haven't had any merchants go under yet that I know of," she said. "I do a lot of the charter fishing business, and they're still limping along. It's the whole claims process. BP wants a lot of paperwork and documentation.
"I've witnessed some business closures, but I think it will be this fall when we see the big fallout. All the condos right now are offering steep discounts and oil refunds, which allow tourists to cancel without penalty should the oil spill impact our area."
According to Andrews, BP has contracted with a majority of Destin's charter fishing boats to perform oil-skimming duties in the gulf. Vessels contracted with BP are not permitted to fish.
Local fisheries are closed, but certain types of fishing are permitted within a nine-mile radius of the coast. The National Oceanic Atmospheric Administration has established a fishery closure area of nearly 78,264 square miles, viewable at www.noaa.gov.
Andrews has also contracted with BP as a member of the wildlife observation crew. She patrols local waters in one of her pontoon boats searching for oil-damaged wildlife. Once an animal is spotted, she contacts trained wildlife personnel and offers water transport for pickup and treatment of the injured animal.
Andrews feels fortunate, however, because as an MLS, she has tremendous flexibility. "I have a nice residual income coming in every month. ... I can meet with someone and have the merchant signed up the very same day. Other types of businesses in our area don't have that kind of opportunity. As an MLS, you can go right into business anywhere," she said.
Vicki Daughdrill, owner of Small Business Resources LLC in Hattiesburg, Miss., said that, until very recently, Mississippi had been less impacted than Louisiana. "Even with CNN coverage, I think the general public still doesn't grasp the catastrophic nature of what is happening," she said. "We are 60 miles from the Gulf of Mexico, which is far enough inland so that my business and my clients have been spared for the time being.
"MLS residual income will definitely be impacted as certain types of merchants are doing less credit card processing. There will be fewer startups to approach as well. MLSs with solid businesses that generate sufficient income and cash reserves will survive.
"One thing they'll have to do for existing merchants not involved in seafood or tourism is to find ways to cross-sell additional products and services to drive new revenue streams."
As the hurricane season approaches, many people are concerned about the potential for even more widespread negative repercussions. "What we are worried about is the high probability of a hurricane picking up the oil and sending it miles inland and covering our communities in toxic oil," Murray said. "It was estimated that if this happened, the oil could be spread up to 20 to 30 miles inland and devastate vegetation, causing another major catastrophe."
Several organizations are offering assistance to the Gulf Coast. For example, a CNN and Larry King Telethon Disaster in the Gulf: How You Can Help helped raise funds for the United Way, National Wildlife Federation and the Nature Conservancy.
The Gulf Coast Fund, www.gulfcoastfund.org, is providing grants and accepting donations. And for details on the $20 billion BP set aside to cover claims for bodily injury or illness, property damage and/or loss of income caused by this event, visit www.restorethegulf.gov.
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