Two years later, do Coachella, Stagecoach still pack the same economic punch? – Desert Sun

For years, the Coachella and Stagecoach music festivals dominated America’s — and the world’s — public perception of the Coachella Valley. The events and related tourist dollars were make-or-break moments for many local businesses before the onset of the slow, scorching summer months.

Now, after two years of festival cancellations amid the COVID-19 pandemic, some local business owners and workers say the events may be returning to a different valley. While the festivals will likely remain a helpful boost to business for many, a rise in year-round tourism and an uptick in full-time residents over the past two years mean Coachella and Stagecoach may now be less crucial to the desert’s bottom line.

And although the events are still critical moments for some, others question how much of the money generated ends up in the pockets of locals to begin with. 

No longer the golden child?

Some local businesses have long been dependent on Coachella and Stagecoach to bring in a critical influx of cash near the end of tourist season in the Coachella Valley. For these businesses — the ones that survived the years of pandemic cancellations — the return of the music festivals this year marks a return to normal after two difficult years.

“I would say our business in 2020 was half of what it was in 2019,” said Jay Mainthia, owner of the Super 8 hotel in Indio. “To put it another way, when we don’t have Coachella (or other events) in the month of April, we do only about $40,000 to $50,000 (in revenue), versus $550,000 or $600,000. So that’s a drastic difference.”

Mainthia said many hotels — especially budget hotels in the eastern Coachella Valley — depend on events like Coachella to draw in guests. While the festivals are a significant business booster for hotels across the valley, Mainthia said high-end hotels in cities such as Palm Springs and Rancho Mirage can fall back on non-event vacation traffic in a way that budget hotels cannot.

“The regular public do not come to Super 8 to vacation,” he said, “they come to Super 8 on their way to the vacation.”

Heirloom Craft Kitchen in Indio, one of the only restaurants within walking distance of the Empire Polo fields where the festivals are held, for years counted on the events for an infusion of cash before the slow summer months. The restaurant’s owner, Andie Hubka, said this business boost stretched into the months leading up to the festivals as staff from Goldenvoice — the Los Angeles-based promoter that organizes the festivals — visited her business in search of vegan food. 

Hubka said she is glad to see this business returning in recent months and that she expects a boost to the restaurant’s catering business for various Coachella-related artists and parties in the coming weeks. She added, however, that this business is less critical to her restaurant’s ability to survive through the summer than it was in the past.

The COVID-19 pandemic delivered an unexpected boost to year-round residents and off-season tourists in the Coachella Valley as Californians and others fled densely packed cities. The phenomenon resulted in some of the busiest summer seasons in the Coachella Valley on record, reflected both in numerous anecdotal accounts from businesses and passenger data from the Palm Springs International Airport. 

Hubka said she observed this boost at Heirloom over the last two years with more local residents eating and ordering out at her restaurant for the last two summers than at any time in the past.

“I think we had our best year ever in 2020, all things being considered,” Hubka said. “It says a lot about how many people are sticking around in the summertime here now.”

Liz Ostoich, owner of Palm Springs restaurants Tac/Quila and FARM, said her businesses have long benefited from upticks in breakfast and lunch crowds around the music festivals. She said losing large events, including Coachella and Stagecoach, over the past two years was difficult for many local restaurants like hers.

She said, however, that the rise in non-event tourism has significantly helped to offset those losses.

“What we’re seeing is that the greater Palm Springs area has become a destination spot,” Ostoich said. “We’ve had an uptick in people coming all year long from Los Angeles, Orange (County) and San Diego that didn’t used to come during the summer. So I think we’re really seeing a shift in season and it’s really expanding all year rather than just October to May.”

The restaurant owner said this rise in year-round business has made Coachella and Stagecoach — while still positives for local businesses — relatively less important than they once were. 

“I don’t think the festivals will, in the future, stand out as the one thing we’re all hanging our hat on,” she said.

Other business owners are more ambivalent about the return of the Coachella and Stagecoach festivals. Jacquee Renna-Downing, owner of the La Quinta Cliffhouse and Pacifica Seafood Restaurant in Palm Desert, said that despite their popular image as business-boosters, the festivals were an annual drag on her restaurants.

“They definitely impacted our business, but in a negative way,” Renna-Downing said. “We had a lot less business during Coachella.” 

The business owner said many of her restaurant’s typical local clientele tend to stay away during the festivals, especially at the Cliffhouse.

“Even a lot of the people who would come rent and come dine out, well they’re renting and they’re going to Coachella all day long and all night long,” she said. “So we see a very big dip in business from Coachella here at the Cliffhouse, and we see less of a dip but we do see a dip at Pacifica.”

Renna-Downing said she noticed an uptick in business last year amid the rise in off-season visitation and an influx in new residents. She said he is hopeful some of these new locals will lead to a rise in business during the festivals and into the summer, although she said has no idea how things will end up playing out.

“It’s up in the air,” she said. “April is going to be such a moving target.”

What is the benefit to workers?

A huge amount of money changes hands before and during the Coachella Valley Music and Arts Festival and its little sister, the Stagecoach country music festival. Exactly how much money, and how much of it stays and goes into the pockets of locals, is less clear.

Various figures citing amounts northward of $1 billion dollars in revenue or economic impact from the festivals have appeared in outlets from NBC to Rolling Stone and even this newspaper. While these figures are attributed to a variety of sources, upon closer inspection, nearly all appear to trace their ultimate origin to the findings of a 2016 study by Palm Desert-based consulting firm Development Management Group. 

That study, commissioned by Goldenvoice, estimated that the 2016 festivals would generate $704 million in total spending. Of that, the study estimated that $403 million would directly benefit Coachella Valley businesses and about $106 million would directly benefit businesses in Indio specifically.

The firm’s head, Managing Partner and Chief Economist Michael Bracken, shared some high-level points on his methodology with The Desert Sun at the time, but was light on the details for how he had arrived at those figures.

Bracken declined to comment on the report or provide any further details when contacted by The Desert Sun for this story, citing client confidentiality.

Indio Director of Communications and Marketing Brooke Beare said the actual economic impact from the festivals was “nearly impossible to quantify.” She noted, however, that the city had estimated roughly $3 million in lost direct revenue per year due to the cancellation of the festivals in 2020 and 2021. She said that number was inclusive of ticket sharing revenue and transient occupancy tax on festival camping, but not sales tax and citywide transient occupancy tax. She said the city typically sees increases in those latter figures in April, but the way those taxes are calculated makes it impossible to separate festival-related increases from non-festival activity.

Joe Wallace, CEO of the Coachella Valley Economic Partnership, said arriving at a rough figure for overall money generated by the festivals was not difficult, but noted that such a number was not necessarily a good indication of local economic impact.

“If you wanted to go way outside and try to get close you could say 125,000 people show up for two days and between food, drink, buying gas to get out of town and (a place to) sleep, at $1,000 a piece, boom, that’s $125 million,” Wallace said. “And you’re probably not that far off for the amount of cash that changes hands.

“How much of it actually gets into the pockets of working people or locally owned businesses, I have not seen a study targeting that,” Wallace said. “I could see that being a very small fraction of what the overall changing hands of cash would be at one of these things.”

Two groups of local workers often cited as directly pocketing festival money are local rideshare drivers and staff hired for the events.

Rideshare drivers say their reality is more complicated, as changes in the way Uber and Lyft pay drivers, logistic changes at the festivals and a flood of temporary non-local drivers have driven diminishing returns for working the events in recent years.

Joseph Ortega, a Bermuda Dunes resident who has worked as a rideshare driver full or part time for more than six years, said he earned roughly $5,000 in a weekend when he first began driving for the music festivals. By 2019, the last time the festivals were held, he said he earned about $1,000 per weekend.

“(That) is a huge cut compared to what it used to be,” Ortega said.

Ortega, who worked for Lyft for several years as the company’s Palm Springs “community associate,” said changes to the main rideshare companies’ algorithms made it less lucrative for drivers to work during very busy times for the last several festival seasons. He said changes to the rideshare pickup requirements around the festivals and increasingly clogged traffic added to the time required for each festival trip, depleting the relative benefits of working the events.

“The luckiest I got was an hour and 20 minutes in and out,” Ortega said. “I could be almost to L.A. in that time.”

Ortega said a majority of the rideshare drivers who choose to work the festivals are not from the Coachella Valley, but rather are drawn from other areas in Southern California by promotions offered by Uber and Lyft designed to boost driver numbers and meet the temporary surge in demand from the festivals. He said this amounts to a raw deal for local drivers, who are paid less than people from out of the area to do the same work.

An Uber spokesperson told The Desert Sun that the company planned to increase fares across the Coachella Valley during the festivals this year to help both local and out-of-area drivers and that there would be a “series of special promotions” to incentivize pickups from the events.

The spokesperson also said passengers would be required to pay drivers a $20 surcharge for pickups from the festival grounds. They didn’t respond specifically to a question on the disparity between local and out-of-area driver pay for festival work in past years.

Lyft did not respond to a request for comment.

John Fitzgerald, a Palm Springs-based IT worker who has driven for Uber and Lyft part-time for the last six years, echoed Ortega’s sentiments about the declining profitability of working the events and the prevalence of out-of-area drivers.

He said new incentives designed to get drivers back onto the road amid the pandemic led him to make more money with Uber in 2021 — a year without the music festivals — than in the three years leading up to the pandemic combined.

“I think the festivals are going to have less of an impact than they used to because of the incentives Uber has for just regular driving,” Fitzgerald said.

Fitzgerald said he doesn’t need the income from rideshare driving to pay his bills, but he primarily does it because he enjoys meeting and interacting with new people in the desert. He said he plans to drive during the festivals this year, but only ferrying people around the greater Palm Springs area. He said past experiences with traffic jams, less favorable rates for drivers and high gas prices currently have left him set against taking trips directly to or from the events in Indio.

Ortega, who uses the money from rideshare driving to pay for vacations with his five children, said he also plans to drive during the festivals, but is uncertain whether or not he will take rides directly to or from the events.

The rideshare drivers’ observations about the prevalence of non-local workers also appears to apply to a large share of festival staff.

Many security-related positions at the festivals, such as security guards and screening agents, are filled by events staffing company Allied Universal. Although Allied’s Palm Desert office hires locals to staff gated communities and events throughout the Coachella Valley year round, a company representative said most of the staff it supplies to Coachella are from Los Angeles or elsewhere in the Inland Empire.

Allied spokesperson Sherita Coffelt said the company is currently looking to fill “hundreds” of openings for events in the region, including the festivals, and welcomes Coachella Valley locals to apply.

Goldenvoice did not respond to a similar inquiry on how many of the festival events staff directly hired by their company were Coachella Valley locals.

James B. Cutchin covers business in the Coachella Valley. Reach him at james.cutchin@desertsun.com.