Nightlife industry facing '$225 billion loss' amid COVID-19: Expert

American Nightlife Association President Juan Carlos Diaz joins Yahoo Finance’s Zack Guzman to discuss how the coronavirus pandemic is disrupting the nightlife industry.

Video Transcript

ZACK GUZMAN: More and more businesses moving full steam ahead with reopening plans, at least those that can afford to do so. We've talked a lot about restaurants having some issues with that when you think about occupancy requirements not necessarily make it profitable for them to reopen. But what about clubs? Yes, clubs-- maybe it's been awhile since you've been in one, but you might not have forgotten that people are often packed in there, and not necessarily one of those spacess easy to reopen, especially we think about occupancy requirements.

For more on that, we're joined by the president of the American Nightlife Association, it's a trade body advocating for nightclubs and bars and their staff and guests as well, representing about 30,000 clubs across the country-- joining us is Juan Carlos Diaz. I appreciate you taking the time, sir. I guess the first question to you would just be, how have you been managing helping out these clubs and restaurants that have been hit hard by all this? What's the actual, I guess, loss that you amounted at this point over the last couple of months that we've been on lockdown?

JUAN CARLOS DIAZ: I mean, we've been doing a lot of different things. To begin with, to talk about the loss-- in the past three months, we have lost about $225 billion. You know, we're a pretty big industry. We represent almost $1 trillion in economic impact-- about 5% of the GDP. And of the 15 million employees that are employed by this industry, 8 million of them are currently unemployed.

ZACK GUZMAN: I mean, that's a staggering number when you think about it. But you talk about all the cities across the country that have their own nightlife scenes, and you add all those up-- not surprising to see how big the number grows. But when we talk about plans to reopen now, how does that affect clubs? Because it doesn't seem that it would be easy to open when we're already talking about restaurants. They have certain occupancy that they have to hit to even hit profitability.

I imagine it'd be even harder for clubs when people are coming in and buying one or two drinks. So how do you look at it in terms of actually getting the green light? What's the timeline for you and clubs that you're representing across the country to actually reopen the doors?

JUAN CARLOS DIAZ: I mean, we want to open up as soon as possible, but also we have to look at the economic safety of it and guest safety as well. And so when we look at what's happening now and how restaurants are able to generate revenue from doing pick up and delivery, some bars-- you know, prior to COVID-19, only about 12 states allowed for alcohol delivery. Thanks to some state governors, they allowed for a variance to allow certain bars to actually serve food and also through alcohol delivery-- 33 states are now on board with that.

So that allows them to generate some revenue right now while everybody else is closed. As far as clubs goes, anything where you have a large group of people gathering together-- whether it be music festivals, live concert venues-- it's a lot much harder to do. And so obviously, we've been implementing mitigation measures to limit the liability or the exposure to this disease. And obviously, we're doing anything from temperature checks at the door, distancing from table service. And so there's a lot of different strategies that we're trying to apply not only at the local club level, but at the mega clubs that you'll see somewhere like in Las Vegas.

ZACK GUZMAN: Because I imagine the risks there would be a little bit higher. I mean, we saw the same story play out in South Korea-- right when they were pretty much about to lift a lot of their restrictions, you had one guy-- just one guy going to the nightlife scene in Seoul responsible for about 50 cases that then came from that, because he visited five clubs that night. So I mean, you think about how easy it would be to transmit in that scene in a packed club, is that going far enough to just have temperature checks? Or do you see that you need to get to a point where you need to test anybody who's coming into a club?

JUAN CARLOS DIAZ: We're not going to begin testing people at the door, right? So what we're trying to do is, obviously, more an educational standpoint. I think the states are jumping on board with something like this, by having more testing available at different areas across the city. I think here in LA, they're doing it at Dodger Stadium, you know, the nation's largest testing facility. And so for us, it's trying to make sure that we educate our patrons and our staff that if they feel sick, stay at home.

I understand people want to go out, they want to have fun, they want to party. And I want them to come out and help us at least generate some branding for these venues, because this is probably the last time we'll see them if we don't get them up and running. But we have to make sure that we're conscious of these people that are around us-- our families, our colleagues, and any other guests or even staff.

You know, this is just something we don't have a cure for. This is something that transmits very easily. It can take up to 14 days before you find out you have symptoms. So for us, it's all about mitigation. Yes, temperature is only one thing-- a mask and gloves, sanitizing stations, closing off bar tops to make sure that people are not congregating in one general area, having restroom cues, if people can reserve before they go to different venues, possibly preordering so we can turn tables a lot faster, because, you know, a lot of people do want to go out. But most importantly is safety first.

ZACK GUZMAN: Yeah, I guess that would be one of the points that I was thinking of here, because we've heard so many polls that people don't want to go out to crowded venues until there's a vaccine in place. But then you see a long weekend-- this past weekend, you have people going out-- the Lake of the Ozarks video was widely spread. I mean, when you look at that, what do you see on the demand front from people saying, look, I know the risks, but I want to get back out there to the club, because that's my outlet. So what have you seen on the demand side in terms of talking to customers that normally would be occupying these clubs right now?

JUAN CARLOS DIAZ: People have been couped up for the past couple of months. I understand-- psychologically, they need to socialize, right? That's just the type of society we are. People want to go out and hang out with their friends, they want to see their families. Being locked up and, you know, having Zoom meetings like we are right now, right, it's a little bit hard for people. And so they definitely want to go out, be out in some fresh air, have a drink, have some food, you know, and spend-- and hopefully spend some money.

I mean, for every dollar that gets spent for, you know, admission, about $12 gets spent locally to other small business enterprises. So it's an economic boost. Drinking establishments are essentially the heart of arts and culture. This is the reason why people go out. This is the foot traffic that is derived from that-- for people to go out to art galleries and any other ancillary venues that are within their vicinity.

ZACK GUZMAN: Well, I know you're out in LA. I know that it's a market that's been hard hit here when you look at club closures. Just limiting it to your timeline there, when you look at LA, the mayor has been pretty-- he's back his timeline up when he thinks about reopening there. So at least in LA, what are you seeing in terms of the timeline for clubs to get back to actually inviting people in?

JUAN CARLOS DIAZ: I think the governor and mayor are playing it safe here. Obviously, LA county is one of the biggest counties. We have Ventura, Riverside, San Bernardino, and Orange County want to open up, right? So they've already opened up. LA County is a lot bigger county with a lot more people. The infection rate is pretty prevalent. So I think they're doing a pretty good job in regards to try to mitigate that risk and mitigate the exposure.

Everybody has been submitting their plans in regards to opening up, following the same guidelines that other states are following and other cities and other counties are following. And I think hopefully soon, we'll be able to open up, I guess, at the beginning of the third or middle of the third quarter.

ZACK GUZMAN: All right. We'll see what happens on the club front. For now, American Nightlife Association president Juan Carlos Diaz, appreciate you taking the time, sir.

JUAN CARLOS DIAZ: Thank you for having me.