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Economic Fallout Continues to Impact Mountain Resorts

Economic Fallout Continues to Impact Mountain Resorts

Advanced reservations continue to lag
posted: 04/15/2009

Denver, Colorado, --The current financial crisis is having an increasing impact on the ski and mountain resort industry. The latest data released in February by the Mountain Travel Research Program (MTRiP)* reveals that declines in consumer confidence, retail spending, and leisure travel is becoming increasingly apparent at ski resorts. Historically thought to be a recession-proof industry, recent data indicates that the old adage isn’t holding true this year.



The primary economic indicators that are bedeviling the economy are also the likely culprits for the decline in destination mountain travel. The unemployment rate which rose dramatically in January with the loss of nearly 600,000 jobs brought the national unemployment rate to 7.6 percent—the highest rate since 1983. The Consumer Confidence Index dropped again to a new record low of 37.7 points and is down an average of 54 percent over the past four months compared to the same period a year ago.



However, falling prices for crude oil has led to lower consumer prices so that the Consumer Price Index is at 210.2 and is up only 0.1 percent from last month. The Travel Price Index is down 5.5 percent from December 2007.



“Many businesses, including those in the mountain travel industry, are reacting to consumers aversion to discretionary spending by rolling back prices on a variety of products and services to either move inventory or continue delivering services,” said Ralf Garrison, author of the monthly report. “Lower prices are contributing to increased short term bookings which have provided some last minute relief to low occupancies, but is apparent only in high demand periods like the recent Christmas holidays,” he noted.



The current ski season at the halfway point as of Jan. 31 was tracking significantly behind last year’s pace. In January, occupancy at MTRiP destinations ended at 50 percent overall compared to 60 percent in January 2008 while the Average Daily Rate (ADR) was down 7.9 percent. Reservations taken in January 2009 for all future dates were down -18.9 percent from last year’s pace and were considerably lower than the December 2007 pace which finished at -7.1 percent. However, the short lead booking pattern that saved December’s performance was far less evidence. Last minute reservations taken in January for arrival in January (same month, short-lead) were up incrementally over the previous January but still didn’t have the strength of December 2008 when last minute bookings (in December for December arrival) resulted in a significant increase in the number of destination visitors for the holidays.



“While the wild card of economic relief is showing little signs of benefit, snow may indeed prove to be a trump card for many western destinations,” according to Garrison. “However, good snowfall may be having a greater impact on local season pass holders and nearby regional guests--which may boost lift ticket sales more than destination lodging,” he added.



Overall, advanced reservations as of Jan. 31 continued to trail last season with occupancy down -18 percent and lodging rates down – 8 percent.



“We report what is on the books, then offer guidance to those who need to forecast the likely outcome. The tumultuous market conditions and impacts of weather/snow are two wild card already identified and now volatility in short-lead bookings is another. There there isn’t an evidence base for these market conditions,” Garrison noted.



While December showed strong last minute bookings, January’s bookings failed to rebound similarly, leaving the eventual outcome of February and March business as uncertain but not optimistic. Lodging occupancy for February is currently down -20 percent and March is down -29 percent.



“These tough conditions for mountain resorts and communities translates into good news for skiers and riders; some of the best ski vacation bargains in nearly a decade,” concluded Garrison.

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