The six-month summer season that tracks from May through October for mountain destinations, finished with lackluster results and the softest aggregated summer occupancy figures in a decade. Modest gains in the Average Daily Rate (ADR) did boost overall summer revenues though, according to the DestiMetrics’ Market Briefing released by Inntopia.
All results are based on data collected through Oct. 31 from 18 western mountain destinations across six western states. Actual occupancy was down 1.2 percent compared to last summer while a 2.8 percent increase in ADR delivered a small 1.4 percent increase in revenue for the combined summer season.
The month of October eked out a one percent gain in occupancy along with a 0.4 percent increase in ADR to deliver a 1.2 percent gain in revenues.
“The aggregated results for the summer weren’t stellar, and were particularly notable since this is the first summer season since 2009 that we’ve reported a year-over-year decline in occupancy from the previous season,” reported Tom Foley, senior vice president of Business Operations and Analytics for Inntopia. “We specifically looked at changes in available inventory as an explanation for this decrease but that wasn’t a significant variable.”
Foley went on to clarify that “the overall decrease in occupancy was due to a decline in bookings that the data indicates has been triggered, at least in part, by economic volatility over the past 12 months. That unpredictability has caused consumers to push back on ever-rising rates in many discretionary spending categories, not just travel,” he continued.
The Briefing also noted that increased competition from other destination markets and a maturing summer season in mountain resort communities are also having an impact on the downward shift in occupancy.
The Briefing then shifted focus to the first full view of the upcoming winter season that extends from November through April. Most notable in the winter data is a soft start in seasonal winter occupancy that is similar to the past summer with rates and revenue up while occupancy declines. Occupancy on-the-books for November, January, February and March are all down as of Oct. 31 while room rates are up in all six winter months.
At the same time, the booking pace during October which measures reservations taken in October for all months in the winter season, was down 2.5 percent compared to reservations taken in October 2018 for last winter season. Bookings for arrivals in October, December, and February all moved up slightly to moderately while bookings for arrivals in November, January, and March were all down in a year-over-year comparison.
“While the tepid booking pace for October contributed to the under-performance of on-the-books occupancy for the upcoming winter, this ongoing softening in occupancy being offset by higher rates is a continuation of the pattern we saw throughout the summer and indicates this is a trend and not an anomaly,” observed Foley. “On the bright side, widespread snowfall in October delivered some significant amounts of snow in many western regions and the urban markets that feed those resorts, triggering early openings and a likely notable bump in bookings that should show up in our November data.”
Economic indicators continue to shape consumer expectations and behavior after months of rapidly changing news that sent markets on rapid climbs and descents. October brought some stability to markets and primary economic indicators. The Dow Jones Industrial Average (DJIA) moved up a modest 1.25 percent and closed the month just slightly below the monthly record-setting close last July. The DJIA is now 8.7 percent higher than the same time last year. On the stability front, this is the second consecutive month that the month-over-month variance was less than 1.5 percent.
“It may be too early to tell if this is a stabilizing trend or if Wall Street is holding its breath heading into a contentious political process in Washington, but after many months of wild swings in the Dow ranging anywhere from 2.5 to 8.5 percent in month-to-month comparisons, this is at least a respite,” continued Foley. “And economic stability fosters consumer confidence and spending,” he added.
However, the Consumer Confidence Index (CCI) slipped 0.3 percent during October and marks the eighth decline in confidence during the past 12 months. It is now 8.7 percent lower than October 2018. The national Unemployment Rate remained increased slightly from 3.5 to 3.6 percent for the month. Not only did October job creation easily exceed the 75,000 expected new jobs, figures for both August and September were adjusted up significantly. Wages also rose 0.1 percent during the month for an annual gain of three percent–helping workers earn more money for discretionary purchases, including destination travel.
“In wrapping up summer, we are calling it a modest success, but recognize there are some different travel trends that have stalled 10 years of steady year-over-year summer growth,” cautioned Foley. “Looking forward to winter, we are optimistic that a great snow year last season along with some strong early season snowfall this year will help boost winter bookings in the weeks and months ahead. That said, as with any winter season at this point, the weather and economy are great unknowns and have the potential to drive either a positive or negative outcome, so lodging properties will have to closely monitor the changing dynamics to keep pace with the occupancy and rates seen in the past few winters.”