In the most recent data compiled by the Mountain Travel Research Program (MTRiP),* analysts found that despite current economic uncertainties, lodging occupancy in western mountain destinations continues in an upward arc toward pre-recession levels, while nightly room and lodging rates remain essentially flat. Actual occupancy in June 2011 was up 10.5 percent compared to June 2010 while the Average Daily Rate (ADR) was up only 1.6 percent. The report also tracks lodging activity for the previous six months (January-June) and during those months, actual occupancy was up 4.7 percent while ADR was up 1.4 percent.
As we predicted last month, despite ongoing turmoil in the broader market and more negative than positive economic news, were still seeing that mountain vacations this summer are a good match for consumers, said Ralf Garrison, director of MTRiP.
The remainder of the summer also shows occupancy growth outpacing last year, with on the books occupancy for the month of July as of June 30 up a strong 9.5 percent compared to the same period in 2010 although ADR is up a scant 0.4 percent.
The relatively steady lodging rates from last summer to this summer seem to be attracting financially sensitive travelers, claimed Garrison. Even though we are seeing minimal increases in the average nightly rate, the strong gains we are seeing in occupancy are giving a healthy boost to the bottom line.
The monthly report also gathers and reports on reservations for the upcoming six months. Currently, on-the-books occupancy for the next six months (July-December) is up 7.2 percent from the same period in 2010 while ADR mirrors the trend of the past six months by posting only a 1.3 percent increase.
The report emphasized the importance of the current political debate over raising the debt ceiling calling it a pivotal moment in the history of the economy, according to MTRiP analyst Tom Foley. Foley pointed out that dealing with the debt ceiling crisis as well as implementing sustainable deficit reduction measures to avoid a second, and harder economic blow, is vital for the overall economic recovery-including tourism.
Economic factors that mountain destinations were wrestling with in the past month include unemployment increasing in June to 9.2 percent; the Dow Jones Industrial Average down 1.2 percent, its second consecutive monthly decline; and the Consumer Confidence Index down 5.2 percent for the second consecutive month. And for the 11th consecutive month there was an increase in the Consumer Price Index that drove the inflation rate to 3.6 percent and far above increases in consumer wages, according to Foley.
The most notable bright spot was that crude oil prices declined slightly-0.6 percent in June to ease pricing pressure on everything from fuel prices at the pump to the cost of food and consumer goods.
In short, what were seeing is a balancing act between short- and long-term confidence-an issue that determines whether consumers feel comfortable spending, particularly in discretionary categories like vacations, summarized Foley.
Garrison cites good marketing tactics, a wide range of mountain-specific special events, and great value among the explanations for increases in mountain lodging in the midst of a still struggling economy.
Occupancy continues to increase over last year, in some cases now reaching or exceeding pre-recession levels as marketers successfully attract travelers with discounted rates and value-add propositions, Garrison claimed. On average, were seeing double-digit increases in occupancies without further discounting in many destinations, but results do vary. On the whole, we anticipate the remainder of the summer to deliver more of the same, led by the established mountain destinations that are within a ‘one tank trip from urban locations, he concluded.
*Data is derived from a sample of 265 property management companies in 15 mountain destination communities, representing 24,000 rooms across Colorado, Utah, California, and Oregon and may not reflect the entire mountain destination travel industry. Results may vary significantly among/between resorts and participating properties.