A trend towards local communities supporting their home town restaurants drove positive economic impact in places you might not expect.
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There’s no denying that the impact felt by local hospitality businesses in the immediate vicinity of the Washington Bridge was profound and immediate following the emergency closure of the crucial span in December of 2023.
And although a recently released study has confirmed that negative impact occurred even beyond the initial fears of industry leaders, it also showed that not all parts of the state felt that impact equally — even within some communities at the epicenter of the transit-oriented chaos.
Specifically, some communities (like East Providence), are shown to actually come out in the green by 2029, reflecting an actual overall tax revenue boost resulting from the bridge closure.
But how?
About the study
The “Washington Bridge Closure Economic Impact Report” — conducted by students within the “Econometrics” class at Salve Regina University at the behest of the Rhode Island Hospitality Association (RIHA) — sought to determine the short-term and long-term impact of the bridge closure on local hospitality businesses.
To do so, they used an economic multiplier model called the Regional Input-Output Modeling System (RIMS II), which looks at the immediate and long-term impact of money spent within a select geographic region and assumes that money spent in the region stays in the region and benefits other areas of the economy as a result; creating a cascading economic impact from one dollar on the whole of the local economy.
The study was accomplished by reviewing meals and beverage tax data supplied by the state covering two periods — a 12-month span from before the bridge closed, and the 12 months following the bridge’s closure. Making certain necessary assumptions, the Salve team could then extrapolate that delta forward to 2029; the earliest time in which they estimate a new bridge to be fully built, and assess the total economic impact of the bridge closure and the accompanying disruption from its ongoing reconstruction.
It should be noted that the study only covered businesses that generate meals and beverage tax revenue, meaning businesses that prepare and sell food and drinks. As a result, other small businesses such as boutiques, convenience stores, pharmacies, and gas stations were not included within the scope.
Asked about the study, RIHA President Farouk Rajab said this was the third study they had requested from Salve Regina in the past five years. He said his initial request for the study was much more expansive, covering all revenue-generating businesses, but that turned out to be too large to accomplish.
“It would be a huge undertaking that I don’t think my students and I could legitimately do,” said Sam Sacco, senior lecturer for the Business and Economics Department at Salve Regina, who oversaw the study. “And the other challenge would be where do we get the basic data? Meals and beverage tax is easy. It’s there, it’s collected, and it’s posted every month, so we had something we could hang our hats on.”
The bad news
Overall, the result of the study was not good news for the hospitality industry.
The data showed that, in total, the state suffered a $114 million hit to hospitality businesses overall between December 2023 and November of 2024. Projected outwards to 2029, using the aforementioned RIMS multiplier made available by the Bureau of Economic Analysis, the numbers revealed the long-term statewide economic loss resulting from the bridge closure would be $748 million (adjusted for inflation).
Every county (except for Bristol County; more on that later) experienced an overall economic loss in the hospitality industry following the bridge closure.
“Honestly, it’s worse than I thought,” said Rajab. “My finger is on the pulse. I’m always visiting these restaurants and retailers and each person looks at the economy and impact with their own lens. My conversations, previously, with government agencies are saying, ‘It’s not bad. It’s not bad.’ So you think maybe it’s not bad. But I talk to restauranteurs and they say it’s horrible. And you look at the tax generated by food and beverage sales and lodging, it’s not horrible. But when you add the total economic impact it is bad — it’s worse. Because you’re adding other venues that live in the ecosystem that we call hospitality. And…it’s really bad. And to look at a five-year projection, it’s scary.”
Kent County experienced the largest decrease per capita, with a $29.8 million decrease in revenue within the 12-month span following the closure (a 2.45% decrease over the year prior to the closure), which balloons to a projected $195.5 million loss over the next five years.
Washington, Providence, and Newport Counties lost $17.6 million (a 1.5% decrease), $56.7 million (a 1.47% decrease), and $16.5 million (a 1.45% decrease), respectively, in the year following the closure.
The bridge’s impact also caused a significant loss of employment for hospitality businesses. A projected 1,343 jobs were lost among Kent, Washington, Providence, and Newport Counties in the year following the bridge closure.
The good news
When Sacco and his students started the study, he said the assumption was that the negative hit to businesses would likely be seen consistently throughout the state.
“We weren’t sure what we were going to find,” he said. “When we began we thought there would be a drop everywhere.”
Instead, the data revealed a curious trend in some communities indicating that the bridge closure actually caused the opposite — driving a significant revenue increase in the East Bay, in particular.
Bristol County, according to the data, experienced a $6.6 million increase (2.34%) in meals and beverage tax revenue in the year following the bridge closure. Extrapolated out to 2029, that amounts to a $43.5 million increase in revenue for the communities that had its main corridor to the rest of the state cut off from regular access. They also saw a growth of 78 hospitality jobs in the year following the closure; the only county to not experience an overall loss in jobs.
Most interestingly to this paper, East Providence was one of the communities where the data showed a positive economic outcome resulting from the closure, with a projected $1,952,982 revenue increase in meals and beverage taxes being estimated by 2029.
Sacco reasoned that such data points provided evidence of a trend that many had hoped might be the case — that the bridge closure caused people to stay closer to home and avoid the anticipated headache.
“There are certainly East Providence businesses that suffered,” Sacco said. “But there was also some offsetting positive impact where people said ‘Let’s not go over the bridge.’ Let’s stay local and go down the street and check out this place that we’ve driven by 100 times…it seemed that because of the original bridge closure and its restrictions and the continuing concern from Rhode Islanders about those restrictions, that they adjusted their social habits to be more local. So instead of going into Providence for a meal or a drink, maybe they stay in Bristol or Barrington or Warren and stay local.”
It’s a theory that East Providence Mayor Bob DaSilva said he has seen play out in real time as well.
“When you think about East Providence, we’re right at the Washington Bridge, and we have the opportunity here to capture everybody from southeastern Mass and from the East Bay if they don’t want to travel over the bridge or if they have this perception that they can’t get over the bridge,” he said. “Which, by the way, is not true. You can get over the bridge. It’s not going to prevent you from driving into Providence or driving into Cranston. But if people want to choose to stay on this side of the bridge and support our local restaurants, we appreciate that.”
One other nugget of good news from the data collected as part of the study showed that traffic on the I-95 corridor has recovered back to about 90% capacity from its pre-closure numbers.
“So they’re still down 10%, which is significant, but we had thought they were still very, very low and I think many people might think that to be true as well,” Sacco said. “But, in fact, they’ve come back pretty close to what they were before.”
What does it mean?
Rajab said that the study confirmed something that was long suspected of Rhode Islanders: that they would change their behavior and travel habits when faced with the consequences of a travel inconvenience like was caused by the bridge.
“I always say, we’re Rhode Islanders. We believe a 20, 30 minute traffic jam is the end of the world,” he said. “That’s the norm in the New York or Boston Metro, but not in the Providence Metro. People change their habits and behaviors because of that 15, 20 minutes in Rhode Island a lot more significantly than they do in other places.”
In places like East Providence, where lots of local restaurants can enjoy the benefits of more people staying on the east side of the bridge, that can result in a good thing, like the data showed. But for places like Providence, which has many more businesses in the hospitality industry that rely on interstate travel, it has resulted in a perfect storm of bad news.
“The zoo, the museums, the other venues that rely on people traveling, they might go and find that somewhere else,” Rajab said. “[People] are changing their habits because they’re worried about the bridge.”
Rajab said that the bridge closure was a significant stressor on top of a business environment in the state that is already often incredibly hard to navigate and find success in. He mentioned restaurant and hotels needing to adhere to some 60 different regulations in order to open.
“It’s insanity what we need to go through as restauranteurs and hoteliers to open a business and to comply with all the regulations,” he said.
He said he was hopeful the study puts things into perspective for those who want to see a thriving hospitality industry in the state.
“I’m very hopeful that the general assembly and the legislators put their eyes on this study and recognize that our industry is struggling, and it’s not thriving like it should be. What scares me is that we have a budget shortfall. What scares me is more taxation and more regulation,” he said. “It’s really, really difficult to open a restaurant and stay open a year from today. It’s not easy. And anybody who has never done it has no idea how hard it is. It’s a lot of sweat and tears and blood poured into it, and it’s your life savings that just disappears if you’re one millimeter off on your plan or budget. We need support and help in our industry, we don’t need more taxation or regulation.”
Sacco said that he would be interested in conducting follow-up studies as time went on to see if the predictive trends shown in the data stand true.
“Salve prides itself on its partnerships throughout Rhode Island, and they stress experiential learning having students deal with real-life experiences. This was certainly one,” he said. “The students got to participate in a real study with real consequences, deal with professionals both at the state level and within the hospitality industry. So they got that out of it. And yes, we would be open to doing another study with RIHA to follow up on this and see what’s happened.”