# The impact of Zika on local businesses

Timothy F. Page (Health Policy and Management, Florida International University, Miami, Florida, USA)
Mark L. Williams (Health Policy and Management, Florida International University, Miami, Florida, USA)
Graziana Cassella (Health Policy and Management, Florida International University, Miami, Florida, USA)
Jessica L. Adler (Health Policy and Management, Florida International University, Miami, Florida, USA)
Benjamin C. Amick, III (Health Policy and Management, Florida International University, Miami, Florida, USA)

ISSN: 0965-3562

Publication date: 7 August 2017

## Abstract

### Purpose

In June 2016, the first cases of Zika were reported in the USA in the Wynwood neighborhood of Miami, Florida. The purpose of this paper is to present the results of a survey of Wynwood businesses about their perceptions of their financial well-being and the government and media’s responses to the Zika outbreak.

### Design/methodology/approach

A survey instrument was developed, and 44 owners/managers of Wynwood businesses were interviewed by telephone or in-person during the period when the outbreak was being managed.

### Findings

Businesses reported downturns in revenues, profits, and customer traffic following the Zika outbreak. Believing that the downturn would be temporary, few businesses laid off workers or reduced prices. All businesses reported dissatisfaction with the government’s response to the outbreak.

### Originality/value

This is the first study to document the impact of Zika on businesses located in outbreak areas. The findings highlight the business impact of Zika outbreaks and suggest a need for improved communication and response from state and local governments to business concerns when future outbreaks occur.

## Keywords

#### Citation

Page, T.F., Williams, M.L., Cassella, G., Adler, J.L. and Amick, III, B.C. (2017), "The impact of Zika on local businesses", Disaster Prevention and Management, Vol. 26 No. 4, pp. 452-457. https://doi.org/10.1108/DPM-04-2017-0090

### Publisher

:

Emerald Publishing Limited

## Introduction

The medical costs associated with a Zika outbreak include diagnosing cases and treating the sick. The public health costs are much broader and include those associated with public education, developing and taking preventative measures, and case ascertainment (Staples et al., 2014). Because of widespread media attention (Ungar, 1998; Dalrymple et al., 2016; Sell et al., 2016), costs may also be associated with negative impact on economic activity (Sands et al., 2016) in high-risk areas (The World Bank, 2016). A variety of studies of economic impact of disease note that outbreaks can have a psychological impact on people far greater than the actual probability of being impacted by a disease outbreak (Smith, 2006). In studies on SARS in Beijing, China, and foot and mouth disease in the countryside of England, researchers concluded that businesses in outbreak areas were deeply impacted by a drop in demand, even if nationwide, long-term economic impacts were relatively minor (Thompson et al., 2002; Hai et al., 2004; Siu and Wong, 2004; Koegh-Brown and Smith, 2008). Furthermore, a study of outbreaks of influenza found that places with greater ties to the global economy, such as Miami, would be impacted greatly (Verikios et al., 2015). Transmission rates are predicted to be the highest in the Southeastern USA (Shacham et al., 2017). Limited data exist regarding the economic impact of Zika in particular, given the fact that it has only become highly prevalent in some localities relatively recently. One recent study (Macciocchi et al., 2016) reported that companies sponsoring the 2016 Olympic Games experienced negative stock returns following early announcements from international organizations about Zika, but these negative shocks did not persist following subsequent advisories.

In June 2016, the first cases of Zika were reported in the continental USA in the Wynwood neighborhood of Miami, Florida (Fauci and Morens, 2016; Owens, 2016). Soon afterward, the CDC issued an advisory for pregnant women and couples wanting to become pregnant to avoid traveling to the affected neighborhood. The purpose of this report is to present the results of a survey of Wynwood businesses about their perceptions of their financial well-being and the government and media’s responses to the Zika outbreak. It was hypothesized that the CDC advisory impacted local business, and that the impact on local businesses may have been out of proportion to the likelihood of infection or the virulence of the disease.

## Methods

### Participants

In total, 44 businesses agreed to be interviewed. The businesses consisted of 14 restaurants, four bars, 12 retail stores, nine art galleries, and five “others.” Table I compares the representation of business types in the study to the overall distribution of businesses in Wynwood. While all business types were represented, the percentage of galleries that participated (20.4 percent) was less than the gallery representation among Wynwood businesses (28.3 percent). The other large difference occurred with retail stores, where the percentage that participated (27.2 percent) was greater than the 22.0 percent restaurant representation among Wynwood businesses. For all other business types, differences were within 2 percentage points. Of the 44 interviews, ten were conducted in Spanish and 34 in English.

### Measures

One item asked about media coverage of the Zika outbreak. The question posed was “Do you think the media’s coverage of the Zika virus has been […]?” and possible responses were “Too sensational,” “Somewhat sensational,” “About right,” “Somewhat understated,” or “Very understated.”

### Analyses

Descriptive analyses of each item were conducted. For each item, the number of businesses responding in a certain way and the proportion of businesses responding in a certain way were reported.

## Results

### Impact on revenues and profits

Results of the survey are presented in Table II. The majority of businesses surveyed (91 percent) reported decreased revenues in the period following the Zika outbreak compared to the same time the prior year. Of these, three businesses (8 percent) reported revenue declines of 1-10 percent, 11 businesses (28 percent) reported revenue declines of 11-20 percent, while the majority (53 percent) reported revenue declines of 21-30 percent, and the remaining five (13 percent) reported revenue declines of 31-40 percent. The responses for profit declines during the same period compared to the prior year followed a similar pattern. In total, 37 businesses (84 percent) reported a decline in the number of customers compared to the same time period the prior year.

### Impact on inventories and staffing levels

Despite these declines, few businesses changed their prices, inventories, or staff levels. Only 16 of the businesses (36 percent) reported decreasing the prices of their products following the Zika outbreak. Two business (5 percent) reported laying off employees as a result, and 12 (27 percent) reduced their inventories.

This lack of response to the business declines is likely due to the positive outlook that most businesses had about the future. In total, 37 businesses (84 percent) expected their revenues to increase in the next three months, and the remaining seven businesses (16 percent) expected revenues to stay at the same levels. In total, 43 of the 44 businesses (98 percent) expected customer volume to increase in the next three months.

### Perceptions of government and media response

Businesses expressed concern about the government’s response. All businesses reported that the state/local government provided little information to businesses about what to expect or do in response to the outbreak. All businesses reported that the local/state government was unresponsive to the concerns of local businesses, with 40 (91 percent) indicating “very unresponsive” and four (9 percent) indicating “somewhat unresponsive.” Almost all businesses (98 percent) reported that media’s coverage of the Zika outbreak was too sensational.

## Discussion

Our study revealed some important findings. First, the majority of businesses reported declines in revenues and profits, suggesting that hysteria caused by a small number of confirmed Zika cases significantly impacted businesses. Despite the business downturn, very few laid off workers or reduced their prices. This was consistent with the business owners/managers belief that the downturn would be temporary and business would return once the outbreak was over. Laying off workers would have resulted in additional costs of hiring and training once business returned to normal, and changing prices would have required changing signage, print advertising, and website content. In addition, the Miami Bayside Foundation launched a microloan program, targeted at Wynwood businesses, to provide $2,500-$20,000 to cover payroll expenses. This program may also have mitigated the impact of Zika on employment. The most consistent finding across businesses was frustration with the government; all reported dissatisfaction with the communication and responsiveness of state and local governments.

Our study supports findings regarding the economic impact of disease outbreaks, and highlights the need for public health and medical authorities to be strategic and forward-thinking in responding to emerging disease outbreaks. Miami business owners’ Summer 2016 profit and revenue losses, their frustrations with local and state governments, and their optimism about the future signify a business community willing to engage with public health authorities. While long term, widespread economic impacts of disease outbreaks are contingent on a variety of factors, including the nature of the disease and the economic measures examined, localized, short-term impacts – those most relevant for small businesses like the ones surveyed in Miami – can be severe. It is important to better understand whether these short-term shocks to economic activity have longer-term consequences and how best to mitigate loss. A larger, more detailed survey of businesses should be conducted in future outbreak areas to support more robust statistical analyses.

The study had limitations. The response rate of businesses in the Wynwood area was 35 percent. Businesses that did not participate cited lack of time or availability of the owner or manager as the main reason. However, a variety of business types were included in the study; therefore, there is no reason to believe that the participating businesses were not an accurate representation of businesses in the one square-mile area of Wynwood. All business types were represented, but it did appear that galleries were underrepresented and retail stores were overrepresented. Responses were based on owner or manager self-report and were not verified using actual business records. There is a chance of measurement error from self-report data. However, the likelihood of error was mitigated or reduced because the timing of the interviews was close to the actual event. Despite these limitations, common themes emerged across the businesses, including declining revenues and profits, minimal changes to staffing levels or prices, and overwhelming dissatisfaction with the government’s communication and response to concerns.

In the absence of an imminent solution to the spread of Zika, it is worth engaging local business associations and business owners to develop policies and programs that help alleviate the economic impact of an outbreak in a particular area (Gubler, 2002). While government health authorities committed resources to increase mosquito control efforts, as per the recommendation of the World Health Organization, (2016), such activity should be part of a wider plan to engage in pre-crisis planning. This planning should include resource allocation projections and program evaluation, wherein the government prepares for disease outbreaks before they occur by building an evidence base to support planning and decision making (Kuo et al., 2008). Meanwhile, business owners could recognize that consumers’ fears of contracting a disease may lead them to shift their discretionary spending from traditional shopping channels to online shopping or delivery services. Thus, business owners should explore alternatives to in-person shopping, if possible, where foot traffic is not a necessity for generating sales (Jung et al., 2016).

## Table I

Restaurants 29.9 31.8
Galleries 28.3 20.4
Retail stores 22.0 27.2
Bars 10.2 9.1
Other 9.4 11.3

Notes: There were a total of 127 businesses in Wynwood, consisting of 38 restaurants, 36 galleries, 28 retail stores, 13 bars, and 12 other

## Table II

Study results

Key findings n
Restaurant 14 (32%)
Alcohol or wine bar 4 (9%)
Retail store 12 (27%)
Art gallery 9 (20%)
Other 5 (11%)
Revenue
Experienced revenue decline following Zika outbreak 40 (91%)
Revenue declined 1-10% 3 (8%)
Revenue declined 11-20% 11 (28%)
Revenue declined 21-30% 21 (53)
Revenue declined 31-40% 5 (13%)
Profits
Experienced profit decline following Zika outbreak 40 (91%)
Profit declined 1-10% 3 (8%)
Profit declined 11-20% 11 (28%)
Profit declined 21-30% 21 (53)
Profit declined 31-40% 5 (13%)
Experienced decline in the number of customers 37 (84%)
Reduced prices 16 (36%)
Laid off employees 2 (5%)
Decreased inventory 12 (27%)
Revenues will increase in the next three months 37 (84%)
Customer volume will increase in the next three months 43 (98%)
Local/state government has provided little information to local businesses about what to expect or do 44 (100%)
Local/state government has been unresponsive to concerns of local businesses 44 (100%)
Very unresponsive 40 (91%)
Somewhat unresponsive 4 (9%)
The media’s coverage of the Zika outbreak has been too sensational 43 (98%)

Notes: The table contains the number of businesses responding a certain way. Proportions are in parentheses

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## Corresponding author

Timothy F. Page can be contacted at: tpage@fiu.edu