Summer is in full swing in mountain communities focused on hiking, biking, paddling and outdoor concerts, with a handful of resorts still offering limited skiing and riding. Positive economic news in June spurred an uptick in summer bookings, according to DestiMetric’s most recent monthly Market Briefing.

DestiMetrics, a division of Inntopia’s Business Intelligence department,

aggregated data compiled through June 30 that includes approximately 28,000 units in seven states and showed that the pace of bookings was up while daily rates improved slightly after five months of softening compared to summer 2022. However, occupancy and revenue continued to lag behind last summer’s record-breaking level.

Along with a year-over-year comparison, DestiMetrics Market Briefing compared the summer of 2019, the last pre-pandemic summer before the data became skewed by widespread closures in the Summer of 2020, followed by dramatic rebounds in the Summers of 2021 and 2022.

Booking Pace Showed Some Spark
Bookings made in June for arrivals in June through November were up 6.9 percent for the six months compared to last year at the same time. Increased bookings were up in three of those six months, with the biggest gains in the short-lead time frame, with June recording a 16.5 percent increase in bookings and July recording a 26.9 percent increase in booking pace. The accelerated pace lifted July occupancy from down 8.6 percent at the end of May to down 3.9 percent as of June 30; however, August through October was down.

June Improved
Boosted by the increased booking pace, occupancy during June was down 0.7 percent compared to last June, marking an improvement from where it was at the end of May 2022. The Average Daily Rate (ADR) recaptured some strength during the month with a 6.9 percent increase over last June, but in a seemingly contrary twist, that 6.9 percent gain was slightly below what it was a month ago, helping to drive the boost in bookings. The higher rates offset lower occupancy and delivered a 6.2 percent revenue increase compared to June 2022. In contrast to 2019, June occupancy was down 6.7 percent, ADR was up 42.5 percent, resulting in a 33 percent increase in revenue compared to June 2019—the last pre-pandemic summer.

Overall, Summer Improved With August and September Struggling
Occupancy for the summer (May through October), both actual and on-the-books, is down 3.6 percent as of June 30 compared to the same period last summer, with declines in all six months; this is an improvement from last month when it was down five percent. Summer ADR is up 1.3 percent, with small gains in four months except July and August. Those fractional gains cannot offset the lower occupancy and are resulting in a 2.6 decline in aggregated summer revenues compared to one year ago.

Once again, there are differences compared to the Summer of 2019. 

Summer season occupancy is down 7.8 percent, with declines every month except October; however, daily rates were up 41.2 percent to deliver a 30.7 percent increase in revenues, despite the markedly lower occupancy.

“Daily rates are very much the story again this month as year-over-year rates have actually ticked up very slightly since May 31—despite all the inflationary pressure,” emphasized Tom Foley, senior vice president of Business Intelligence for Inntopia. “But those minor increases to historically high rates were not equally distributed across all summer months or all participating regions and properties,” he clarified.

Foley pointed out that the two summer months, June and July, that recorded increases in occupancy were also the two months that saw a softening in daily rates. By contrast, the months/properties experiencing a slower pace also offered higher year-over-year rates. “Correlation doesn’t necessarily mean causation, and there could be other variables in play, especially since the rate increases are fairly modest. However, it is a pattern we have been following for several months and suggests a return to more typical ‘supply and demand’ economics,” said Foley.

Economic Indicators
The Dow Jones Industrial Average (DJIA) reversed direction from the previous month and rose sharply during June, up 1,214 points or 3.7 percent compared to June 2022. The rebound was a resolution of the debt ceiling issue and the better-than-expected reduction in inflation. It also marked the fourth increase in the DJIA during the past six months and placed the Index 10.9 percent higher than in June 2022.

Further evidence of consumer optimism came in the Consumer Confidence Index (CCI) and the Consumer Sentiment Index (CSI), both gained sharply in June, as consumers appeared to overcome their cautious concern about the economy. 

The CCI rose 7.2 points or seven percent to reach its highest point since January 2022 and before the onset of sustained inflation and the war in Ukraine. The CCI is 11.5 percent higher than a year ago. 

The Consumer Sentiment Index (CSI) was equally upbeat, which increased 8.8 percent to reach its highest level since January of this year. Unlike the CCI, which saw most of its gains in consumers under age 35, the CSI improved across all demographic groups, with consumers citing a positive resolution to the debt ceiling negotiations and easing inflation. Their view of personal finances was unchanged from May, suggesting that persistent inflation impacts purchasing decisions and priorities.

The national unemployment rate dipped slightly in June from 3.7 to 3.6 percent as job creation declined in June, with employers adding only 209,000 new jobs, the smallest amount in the past 30 months and may partially be in response to actions taken by the Federal Reserve Bank to cool down inflation and the economy. 

Wages were up 0.4 percent compared to June 2022 and edged slightly ahead of the national inflation rate. The Leisure & Hospitality sector had another tepid showing for the third consecutive month, with only 21,000 new jobs added to payrolls, while Retail and Trade dropped 11,000 positions.

The National Inflation Rate exceeded expectations and declined sharply from four percent in May to three percent in June and marked the 12th consecutive decline in inflation to reach its lowest level since March 2021. However, prices did increase during the month, with the Consumer Price Index up 0.2 percent. 

Some travel inflation was down during the month, including airfares down 8.1 percent from May 2023 and gas prices down 26 percent from one year ago. “Although this is generally good news, additional interest rate hikes are expected this year which will make spending on credit more expensive,” noted Foley. “Although things are moving in the right direction, inflation has been at 12.3 percent for the past two years and 18.4 percent over three years.”

Watching Closely

  • Daily rates: year-over-year ADR among participating properties reversed a three-month trend of softening rates and increased 0.4 percent during June for the full summer; however, despite the slight uptick, summer ADR declined in the past four months in response to increasingly price-sensitive consumers.
  • Length of Stay: arrivals in June improved slightly from one month ago, from down 0.1 nights per booking to down .07 nights; however, the stay on-the-books shortened for the remainder of the summer season, with October showing the largest decrease in length of stay.
  • Price sensitivity: although price sensitivity appears to have eased in the past month, it remains a consideration for overnight visitors and it is unknown if the June uptick is an outlier after five consecutive months of softening rates or if its indicates wider acceptance of current rates.

“While price sensitivity is the single most important data point for the fifth consecutive month, we have seen a small uptick in consumers’ tolerance for the ongoing record-high room rates,” observed Foley. “But, when we dive into the details, our analysis showed that higher rates in some months are leading to softer demand and vice-versa—lower rates are driving higher demand. But results for one month are not considered a trend or pattern and another month or two of data will give us a much better perspective about which way rates are headed,” he concluded.

Photo courtesy Crested Butte Mountain Bike Park