DestiMetrics, the tracker of advance reservation occupancy and revenue and part of the Business Intelligence division of Inntopia, noted that summer occupancy is likely to be down compared to summer 2021, pre-pandemic 2020 and the benchmark-setting summer 2019. However, the Average Daily Rate (ADR) continues to increase, allowing lodging properties to offset lower occupancy and assure an increase in aggregated revenues compared to both summer seasons.

The recently released monthly briefing from DestiMetrics showed the booking pace for September, with arrivals in September through March, was down 5.7 percent in a year-over-year comparison and marked a return to the consistently declining booking pace over the previous eight months, except for August. Although the booking pace slowed, DestiMetrics data also concluded that while guests make fewer reservations, they stay longer, and with sustained high rates, providing a solid foundation for the winter season. 

DestiMetrics compiled data gathered through September 30 from 17 Western mountain destinations in seven states.

September 2022 Occupancy Increased
Compared to last year, actual occupancy for September was up 4.9 percent and, when coupled with a 5.3 percent increase in ADR, delivered a 10.4 percent increase in aggregated revenue. In contrast to the prior two years during COVID, occupancy is up 22.7 percent, rates are up 25.7 percent and revenues are up 54.2 percent. Compared to pre-pandemic September 2019, occupancy finished up 1.4 percent, and daily rates were up 44 percent to provide Western lodging properties with a 46 percent revenue increase.

Summer Season Wraps
Looking at the summer season, May through October, as of September 30, with five months completed and one month remaining, occupancy is down five percent compared to last summer, with declines posted every month except September, and with August posting the steepest drop, down 11.4 percent. 

ADR is up 4.6 percent with increases in all six months, but with lower occupancy, aggregated summer revenues are down 0.6 percent compared to last year. 

Compared to the previous two summers, the pattern imitates September 2022 results, with occupancy up 43.3 percent, rates up 27.4 percent, and revenues showing an 82.6 percent increase. However, compared to 2019, occupancy is down 5.6 percent, while ADR is up 38.8 percent. The strong rates offset occupancy declines with a 31.1 percent gain in revenue compared to three years ago.

“Performance for the summer season was only lightly impacted by September’s relatively small share of the season’s booking activity, with summer occupancy levels compared to both 2021 and 2019 barely changing from one month ago,” said Tom Foley, senior vice president, Business Intelligence, Inntopia. “The same is true for daily rates, which held, while the booking pace, which had enjoyed an uptick last month after seven months of slowing, once again slipped below year-over-year comparisons.”

Winter Coming Into Focus
As of September 30, on-the-books occupancy for the winter season (November 2022 through March 2023) is down 2.4 percent compared to last year’s same period, with decreases in two of the five months—November is down 9.6 percent, and December is down 20.1 percent—however, the ADR for those months is up 14.1 percent compared to last year with increases in all five months. That rate strength offsets the loss in occupancy to deliver an 11.8 increase in aggregated revenues over one year ago.

In contrast to two years ago, when resorts struggled to formulate and announce changes in daily operations, occupancy is up 70.3 percent, and ADR is up 43.7 percent for a 144.8 percent increase in revenues compared to the uncertain start of the 2020/21 season. 

A truer “apples-to-apples” comparison can be made to the pre-pandemic booking period three years ago for the 2019/20 winter season, with occupancy as of September 30 up 8.1 percent, ADR up 38.8 percent and revenues up 49.5 percent.

Economic Indicators
Investors experienced their most challenging month since October 2020 as the Dow Jones Industrial Average dropped 9.6 percent or more than 3,053 points during September to finish the month below 30,000 points for the first time since November 2020. The drop can be attributed to high inflation, growing worries about a possible recession and forecasts for a decline in the GDP. The sell-off during the month left the Dow Jones Industrial Average 15.1 percent lower than September 2021.

“It’s been a Catch-22 situation as the concerns about inflation that drove markets down earlier this year have now been replaced by the efforts of the Federal Reserve to curb inflation by steadily raising interest rates,” said Foley. “Both scenarios have rattled financial markets since decreases in various indexes can slow employment growth, weaken consumer confidence, and even push more affluent consumers to the sidelines.”

In contrast to market declines, the Consumer Confidence Index rose in September for the second consecutive month by adding 4.2 percent and reaching its highest level since last April. Although up slightly due to easing gas prices, strong job numbers and higher wages, it is down 1.6 percent compared to last year.

The national unemployment rate decreased from 3.7 to 3.5 percent during September while jobs growth slowed as employers added 263,000 new positions and wages remained unchanged from last month. 

The Leisure and Hospitality industries led job creation with 83,000 new positions, primarily in food services; however, the sector was down 1.1 million jobs from before the pandemic.

The National Inflation Rate at 8.3 percent in September remains high, but as cooler weather comes in, declines in natural gas and other fuel prices are important to consumers; however, with the Federal Reserve Bank raising interest rates by 0.75 points on September 21 to combat inflation, there has been a cooling of economic activity, including home purchases and credit related purchases.

Focus On The Following:

  • Length of stay: The average stay for bookings made in 2022 is down moderately following the booking surge in 2021 but remains up compared to the pre-pandemic 2019 winter, with the average stay up 0.39 nights compared to that season.
  • Arrival day of the week: The day of the week for arrivals shifted at the beginning of the pandemic, with bookings for Saturday arrivals dropping from 19 percent of all bookings to 13.2 percent in 2020. At the same time, bookings for mid-week arrivals ticked up, led by Thursday arrivals which jumped from 13.4 percent to 17.1 percent in 2020 driven by visitors trying to avoid crowds and the flexibility of work-from-home schedules for some workers. Those trends have started to shift back to a typical pattern, with Friday the busiest day of the week for arrivals but a more even distribution of arrival dates than before the pandemic.
  • Booking lead times: The time between when a booking is made and a guest’s arrival extended by about ten days compared to pre-pandemic patterns. Lead times are expected to remain extended for now.

“Summer will likely finish with a modest decline in occupancy, but with such consistently strong daily rates, most lodging properties will still be enjoying higher revenues than last summer,” said Foley. “Of course, with the leaves starting to turn and the first dusting of mountaintop snow in many locations, the focus is turning to winter. At this point, as bookings begin to really ramp up, we are seeing some softening in November and December, primarily due to a shift in holiday school breaks,” he explained. “But what will really impact the coming season as the pandemic fades away is the all-important amount of snowfall and the direction of economic indicators—driven by inflation, interest rates, and financial markets,” he concluded.

Photo courtesy Four Seasons Jackson Hole, WY