Denver, Colorado, April 17, 2009
—Citing the most recent lodging reservation data released by the Mountain Travel Research Program (MTRiP)* through March 31, occupancy for March 2009 was down 21.3 percent and average daily rate was down 16.6 percent compared to March 2008. Season-to-date results show occupancy down 16 percent and average daily lodging rates down nine percent for the overall season. Figures have remained consistent for the past three months and are thought to closely reflect anticipated end-of-season totals due at the end of April.
The MTRiP Monitor reports on a variety of economic indicators that influence mountain travelers and skiers. Unemployment rose dramatically for the fourth consecutive month in March, with the loss of more than 663,000 jobs--bringing the rate to 8.5 percent, the highest level since 1983. The Consumer Confidence Index (CCI) increased modestly from a record low of 25 last month to 26 and was the first increase since November 2008. The Consumer Price Index (CPI) increased 0.5 percent, resulting in an inflation rate of 0.24 percent while the Travel Price Index (TPI) had its first increase, one percent, since July.
“Unfortunately, economic conditions had a significant impact on the long-distance, multi-day visitor but on the positive side, regional and close-in skiers and riders filled in some of the gaps with last minute bookings for shorter stays as skiers traveled closer to home this season,” said Ralf Garrison, author of the report.
Snow had a positive effect, particularly for regional visitors but did not offset the negative effects the economy had on destination visitors.
Many last minute bookings were the result of discounts that eroded the average room rate. The combination of lower occupancy and reduced rate combined to decrease total revenue. The report indicates that municipal entities in resort communities that receive funding derived from these revenues are expected to experience budget shortfalls for the coming season.
“Consumers have made a distinct move toward frugality and I’ve heard it said that ‘frugal is the new black,’” claims Garrison. “Luxury retail shops and upscale lodging were hit particularly hard by the reduced spending patterns of visitors at resorts,” he added.
Reservations taken in March for the next six months fell -13.3 percent from last year’s pace, showing continued weakness well into the summer months. Both occupancy and rate are well below previous summer levels.
Preliminary projections indicate that April business looks good, primarily due to the busy Easter holiday that landed in March last year and fell in April this year. While the volume is not large, occupancy is flat and room rates are up five percent. “As the consumer spending button gets reset in the months ahead, many people consider flat as the new up,” observed Garrison.
“When you compare either skier visits or overall lodging to the stock and housing markets or the banking, auto, and many other industries, only Wal-Mart, McDonalds, NetFlix and a handful of other companies have out-performed the mountain resort industry,” claims Garrison. “Once again it looks like skiers and the ski industry are showing their resilience.”
According to Garrison, resorts and mountain communities will have to change their marketing plans and strategies for the new realities delivered by the changing economy. “Darwin’s Theory of Evolution described “survival of the fittest,” but in today’s economy, “survival of the fleetest” might be more appropriate.