Generous snowfall and good slope conditions throughout much of the U.S. western resorts along with less than ideal conditions in other regions of the country are helping to buoy lodging rates even as occupancy figures continue to slip, according to DestiMetrics’ monthly Market Briefing from Inntopia.
DestiMetrics said the trend for rising rates is continuing despite some consumer push-back and dipping occupancy. Despite the occupancy slip, bottom-line revenues remain positive. Aggregated results are based on data from nearly 300 lodging properties and track results through December 31.
Actual occupancy for the month of December was down a fractional 0.1 percent compared to last year while the average daily rate (ADR) was up 5.3 percent compared to last year. That boost in rates delivered 5.2 percent in aggregated revenues compared to December 2018.
The full winter season shows similar results. Occupancy for the six months from November through April is down only a slight 0.8 percent although there are modest declines for the remaining four months of the winter with the exception of April, which is up 19.8 percent compared to last April. Once again, ADR continues to rise, up 4.3 percent for the entire winter season and offset the declines in occupancy when calculating revenue, so despite soft occupancy, aggregated revenues show a 3.5 percent increase in a year-over-year comparison to the same time last year.
“There is no question that western mountain destinations are having a good winter season again this year despite soft occupancy,” reported Tom Foley, senior vice president of business operations and Analytics for Inntopia. “Snow conditions are as good, if not better, than last year at this time in most western resort destinations while several other ski regions around the country are struggling with uneven snowfall and temperatures. Those excellent slope conditions combined with the geographic flexibility provided by the increasingly popular, multi-resort season passes such as the Ikon and Epic passes are a big part of why both the Rocky Mountain and Far West ski resorts are having another strong revenue season.”
The booking pace during December for arrivals in the months of December through May is up 2.3 percent compared to bookings made for the same period last December. Despite January facing a slight downturn, April bookings surged 38 percent, bolstered primarily by an earlier Easter than 2019 with the April 12 holiday in 2020 occurring while many, if not most of the western mountain resorts are still open for the season. Last year, the April 21 Easter holiday landed when many resorts had already closed or were scheduled to close for the season, inhibiting December bookings for April.
The Briefing suggests that some of this booking volatility can be explained by economic indicators and their impact on consumer travel decisions. The Consumer Confidence Index (CCI) experienced a slight dip of 0.2 percent in December and marks the fourth decline in the past five months.
Meanwhile, the national unemployment rate remained unchanged in December at 3.5 percent. Employers added 145,000 new jobs, but that was below the forecast of 160,000. Earnings rose 2.9 percent during the month but it is the softest earnings growth since the middle of 2018 and maybe influencing the slip in confidence.
In contrast, the Dow Jones Industrial Average (DJIA) added 1.4 percent during December to close the month with its highest closing ever. Compared to last December, the DJIA is 21.8 percent higher than it was last year, although part of that significant difference is because in December 2018 there was a sharp selloff.
“Interestingly, despite strong conditions in the West and the competitive advantages of weaker snow so far in the Northeast, occupancy continues to struggle at many western resorts,” acknowledged Foley. “This sluggish occupancy has been the new norm for most of 2019 and is continuing into 2020. While rising rates have continued to drive revenues up for lodging properties, the potential for lower visitation, as a result, could eventually have a negative impact on the broader destination—including retail businesses, restaurants, non-ski activities, and town tax collections,” he concluded.