Actual occupancy at mountain resorts rose 6.9 percent for May to October period compared to the summer of 2011, while the Average Daily Rate (ADR) increased 3.9 percent during that time, according to the most recent briefing released by the Denver-based Mountain Travel Research Program (MTRiP).* The month of October capped off the solid six-month run for mountain destinations with an 8.8 percent increase in occupancy and ADR posting a 5.7 percent increase over the previous October.
However, the data coming in for the upcoming winter season is less robust. As of Oct. 31, on-the-books occupancy is down 3.9 percent for the upcoming ski and snowboard season (November through April) compared to last winter. The aggregated ADR for the six-month period is currently up 2.3 percent.
“Resorts have been waiting expectantly for a more favorable environment, but apparently neither economic nor weather influences have shifted positively in the minds of reluctant consumers,” says Ralf Garrison, director of MTRiP. “The economic story has been wrapped around the presidential election, and consumers apparently feel that no real change has ensued, so the economic story has shifted to partisan positioning about the forthcoming ‘fiscal cliff,’ instead of a post election bump that might also have bumped bookings.
Weather patterns and snowfall are also crucial, particularly in the early season.
“On the weather front, while resorts are opening on schedule, no major winter weather event has yet sent a compelling message, leaving consumers not yet convinced that this year is destined to be better than last year, tipping the booking pace positive in the process,” added Garrison.
In the short term, data for November is showing a strong upward swing with on-the-books occupancy up 10.3 percent but the critical month of December is down sharply from the same time last year, declining by 12.4 percent compared to 2011. Mid season looks positive with February looking stronger.
The monthly briefing also provides a summary and analysis of major economic indicators and their potential for impact on lodging in mountain destinations. On the positive side of the economic news equation last month, the Consumer Confidence Index (CCI) was up 5.6 percent to reach its highest level since February 2008 and making it dramatically higher (76 percent) than one year ago. An increase in unemployment, ticking up very slightly from September, was overshadowed by the 171,000 jobs employers added during the month. Those new jobs helped to keep the rate below eight percent for only the second time since January 2008. And although crude oil prices remain higher than they were a year ago, the decline in price to below $90 per barrel has the potential to bring price relief at both the pump and in many consumer goods.
“There is a shift in the economic environment starting in November, as financial markets look to Washington for indications of how the ‘fiscal cliff’ will be addressed while consumers concentrate on the holiday shopping season and employers, recently finding momentum, monitor both closely during this important hiring season,” explains Tom Foley, operations director for MTRiP. “The moving pieces are many and the consequences are another part of the tipping point discussion,” he added.
On the negative side, the Dow Jones Industrial Average (DJIA) declined for the first time since last May and for only the second time in the past 14 months. Despite the 2.5 percent drop, the briefing points out that the index still remains 9.5 percent higher than one year ago.
“This is the time of year when we keep our eyes on the clouds and our hands on the tiller as we brace to steer the best possible course through whatever this winter brings,” concludes Garrison.
