Mountain West: Moderate Rate Growth and Flat Occupancy Through Early Summer

While some participating mountain destinations are still offering limited snowsport activities, many are hustling to get their resorts and communities ready for summer activities and events following an extended winter season. In the most recent DestiMetrics* monthly Market Briefing released by Inntopia, the short-term outlook for lodging properties is showing continued healthy gains in daily rate despite nearly flat year-over-year occupancy.

Kicking off the summer with the first actual figures for the season, occupancy slipped down 4.2 percent in a year-over-year comparison to May 2018 while the Average Daily Rate (ADR) was up 5.1 percent for the month. Despite the lower occupancy, May eked out an 0.6 percent increase in aggregated revenues.

As of May 31, occupancy for the full summer of May through October, is down a slight 0.5 percent compared to the summer of 2018, with gains being reported in two of the six months—July and September. Aggregated ADR for the full season was up four percent as of May 31 which is offsetting the dip in occupancy to post a 3.1 percent gain in revenues. Rate gains are being reported in all six summer months led by June with an 8.3 percent increase over June 2018.

The booking pace for the summer was mixed. Bookings made during the month of May for arrivals in May and August were both down substantially compared to last year at this time while May bookings for arrivals in June, July, September, and October were all up—most notably in October with a 17.6 jump in bookings.

“Momentum from the strong winter season seems to be carrying into the summer season as far as rate is concerned,” observed Tom Foley, senior vice president of Business Operations and Analytics for Inntopia. “However, the start of this summer season feels a little bit different. This is the first time in the past nine summer seasons that on-the-books occupancy for the six summer months has been down as of May 31—albeit only slightly.”

The economy also delivered mixed results in May. The Dow Jones Industrial Average (DJIA) dropped sharply in May and lost 5.8 percent of its value. This was the second monthly decline in the past three months. However, it remains 1.7 percent higher than last year at this time. Despite the drop in the DJIA, the Consumer Confidence Index (CCI) gained 4.9 points that nearly matched the April increase. At 134.1 points, the CCI is at its highest level since November 2018 and very close to record highs posted in the winter of 1999-2000. The Unemployment Rate remained at 3.6 percent during May but employers only added an anemic 75,000 new jobs which was well below expectations. Also new job growth figures for both March and April were adjusted down from initial reports.

“Although the adjusted job creation figures for the past four months are at a respectable average of 151,000 per month, it does represent a significant decline from the previous four-month average of 247,000,” cautioned Foley.

The Briefing also noted that in the past 18 months, daily rates start out the season with strong number but then have the tendency to drop considerably as the season progresses.

“The reality is that many lodging properties reach peak capacity more often during the summer months than they do in the winter months, with the average daily rates about 40 percent lower than winter rates,” Foley continued. “Though summer rate is currently up comfortably from this time last year, summer guests are accustomed to lower rates compared to winter. As rates have been climbing steadily for the past decade, we’re starting to see more resistance to rate increases, even though the economy remains strong. We’ll be monitoring that situation closely in the coming months as properties manage rate to capitalize on major holidays like the 4th of July while providing attractive pricing and incentives to encourage more mid-week overnight visits,” concluded Foley.

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*DestiMetrics, part of the Business Intelligence platform for Stowe-based Inntopia, tracks lodging performance in resort destinations. They compile forward-looking reservation data each month and provide individualized and aggregated results to subscribers at participating resorts. Data for western resorts is derived from a sample of approximately 290 property management companies in 18 mountain destination communities, representing approximately 30,000 rooms across Colorado, Utah, California, Nevada, Wyoming, and Idaho and may not reflect the entire mountain destination travel industry. Results may vary significantly among/between resorts and participating properties.