Trends
With two months yet to go in the summer of 2021, western mountain destinations are assured of an all-time record for occupancy, daily rates, and revenue, but some gentle headwinds have started blowing that are cooling down the hot summer activity. Destructive wildfires accompanied by gusting winds throughout the West created smoky conditions in many destinations. And an alarming spike in new cases and hospitalizations for the Delta variant of COVID-19 contributed to a decline in consumer confidence. Along with some economic concerns, this combination of challenges was reflected in the most recent data released by DestiMetrics,* the Business Intelligence division of Inntopia in their monthly Market Briefing. The results include data from nearly 300 participating properties across eight western states through Aug. 31. To better understand the trends emerging this year, the report provides comparisons to both last year and two years ago at this time.
When this August is compared to one year ago at this time, actual aggregated occupancy was up 21.4 percent while the Average Daily Rate (ADR) for the month was up 24.8 percent to deliver an impressive 51.5 percent increase in revenues for the month compared to August 2020. Comparison to the pre-pandemic summer of 2019 reveal a different picture. While actual occupancy was down 2.4 percent compared to August 2019, ADR was up a dramatic 30.8 percent and clearly illustrates that significantly higher rates in the wake of the pandemic are sustainable. Despite that slight dip in occupancy, the higher rates easily offset the loss in visitors and revenues were up an aggregated 30.8 percent compared to August 2019.
As of Aug. 31, occupancy for the full summer season is up 65.4 percent compared to last summer and includes the four months from May through August that are already in-the-bank along with the two remaining months of September and October that are on-the- books. ADR for the full summer is up 21.7 percent and the robust growth in both occupancy and rates is delivering to properties a very welcome 101.3 percent increase in aggregated revenues compared to last summer at this time.
While comparisons to Summer 2020 offer vital information about lodging’s recovery from the depths of the pandemic, a more meaningful perspective about long-term performance can be found by reviewing comparisons to the data from two years ago. When drawing comparisons to two summers ago before anyone had heard of COVID-19, as of Aug. 31, occupancy for the full summer is up only a slight 1.8 percent with declines being reported in May, June, and August. But when the data is normalized to account for declines in available rental inventory this year, that occupancy level is down 3.3 percent for the summer season. Meanwhile, soaring rates continued to prevail with a healthy 32.6 percent increase in nightly rates to deliver a 35.2 percent increase in aggregated revenues compared to two summers ago at this time.
The cooling trend is most notable in the booking pace. Comparing August 2021 to the same month in 2019 offers a more reliable seasonal comparison and some downturns are emerging. The booking pace, which is the difference between incremental fill (reservations made in August for all arrival dates) this year and last year is down dramatically for both August and September arrivals. August arrivals suffered a 61.5 percent decline while September was down 46.6 percent. While bookings for arrivals for October through January were up when compared to the same period two years ago, those declines for August and September pulled down the overall booking pace for August transactions by 16 percent. And although less meaningful when compared to bookings last August at this same time, they are also down 27.8 percent—also driven by a sharp decline in the booking pace for August and September. These are the first declines recorded since early 2021.
“Although destinations are still capitalizing on gains made during the past five months, in the past month we have seen some shifts in both booking patterns and lodging performance, particularly when we compare it to two years ago at this time when we had a fairly typical season underway,” observed Tom Foley, senior vice president for Business Process and Analytics for Inntopia. “Those downward shifts indicate that the COVID-19 Delta variant is again having an impact on destination mountain travel. We’re also watching the decline in adjusted occupancy very closely; when we normalize the data and factor in the decline in available inventory this year, summer occupancy is down more than three percent compared to 2019. Again, this is the first time for such declines since early 2021,” he clarified.
Compared to last year at this time, as of Aug. 31, on-the-books occupancy for the upcoming winter is up 86.3 percent with gains currently being reported in all six months. Rates are up a healthy 24.4 percent to provide an exceptional 131.7 percent increase in revenues for the winter season. Looking back two years ago at this time, occupancy for the full winter is up 7.8 percent with gains in November and December but currently showing declines in both January and February. Rate growth and strength is notable compared to the pre-pandemic season with ADR up a healthy 19.3 percent which is currently slated to deliver an impressive 28.7 percent gain in revenue compared to two years ago at this time.
The Dow Jones Industrial Average (DJIA) continued its relatively stable performance during August to rise 1.22 percent and set its sixth all-time record end-of-month closing in the past eight months and includes the all-time single day record closing on Aug. 16 of 35,625.4 points. It is now 24.4 percent higher than it was a year ago on Aug. 31, 2020. In stark contrast, the Consumer Confidence Index (CCI) dropped a sharp nine percent and marks the second consecutive monthly decline in confidence following five consecutive monthly gains. This is its lowest level since March 2021. The decline was primarily attributed to consumer concern about the rapid spread of the Delta variant although inflation played a smaller role. And despite weaker than expected job creation during August—an anemic 235,000 new jobs—the national Unemployment Rate declined from 5.4 to 5.2 percent, due in part to job seekers abandoning their job search and being removed from unemployment benefit lists.
“Although financial markets have remained strong and fairly stable in recent months which helps support strong room rates, the slide in consumer confidence, discouraging employment news, and strong emergence of the Delta variant could all conspire to push rates down,” Foley cautioned.
-Occupancy gains softening. Although occupancy is gaining in all six summer months and remains strong, those gains are softer than they were just one month ago when year-over-year occupancy for the summer went from being up 97.7 percent last month to 65.4 percent this month.
-Room Nights Available (RNA) continue to decline. Changes in how owners are utilizing their units is impacting the number available for both short and long-term rentals. There was a 5.04 percent decline in available units this summer and the units available in August declined a sharp 6.3 percent compared to August 2019.
-Booking pace and Incremental Fill – The decline in booking pace during August reflects a shift in consumer confidence mostly attributed to the surging Delta variant. However, Foley reports there has been an atypical, non-seasonal slip in booking volume during August.
“In the past month, mountain destinations have been buffeted by wildfires, widespread smoke, a dramatic spike in COVID-19 cases, emerging economic uncertainty, and rising inflation,” Foley noted. “Despite those concerns, pent-up demand and strong consumer savings have delivered an exceptional summer of recovery for mountain destinations. But there are indications that the convergence of challenges this past month are taking a toll on traveler’s intentions and pent-up demand won’t last indefinitely–and is likely already starting to wane,” he continued. “Mountain destinations should be ready to react when that momentum starts to fade in earnest–particularly if the current headwinds pick up as we move towards the all-important winter season,” he concluded.
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*DestiMetrics, part of the Business Intelligence platform for 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, Montana, and Idaho and may not reflect the entire mountain destination travel industry. Results may vary significantly among/between resorts and participating properties.
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