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News Summer Occupancy At Western Mountain Destinations Edging Up Slightly

Summer Mountain Hiking

photo of the author Katie Barnes

 Jun 16, 2020

As stay-at-home restrictions ease, lodging properties throughout the western mountain region are gradually opening up more capacity as allowed by their local jurisdictions and as demand for a mountain getaway ticks up slightly. According to DestiMetrics* in their monthly Market Briefing from Inntopia released last week, aggregated summer occupancy is still limping along among the 290 participating property management companies, and remains significantly down as cautious consumers and businesses balance concerns about the ongoing pandemic and a confusing set of economic indicators. The Briefing suggested that most resorts are focusing on “getting it right” during the summer months to help secure the success of the more crucial upcoming winter season.

As of May 31, occupancy for the month of May was down a crushing, but not unexpected 85.4 percent compared to May 2019. The Average Daily Rate (ADR) for the month was down 28 percent leading to distressing 89.7 percent decrease in revenue.

The Briefing noted that recovery during May was hampered by the availability of inventory. As late as May 20, 69 percent of participating properties were completely closed to guests while 19 percent were operating with occupancy restrictions.  Only 13 percent of all properties were fully open for visitors.

Data for the full summer isn’t appreciably more encouraging. As of May 31, occupancy for the six months from May through October is down a staggering 61.9 percent, posting decreases in all six months with May and June being the hardest hit.  Interestingly, ADR for the summer is up an encouraging 5.2 percent with modest gains in all summer months except for May when lower rates were employed to entice cautious, but lockdown-weary consumers to visit the mountains. Currently, revenue for the summer is down 60.4 percent.

“Overall, aggregated occupancy on-the-books for the summer continues to decrease with five of the six months showing lower occupancy figures than as of April 30,” acknowledged Tom Foley, senior vice president for Business Operations and Analytics for Inntopia.  “May was the only exception and eked out a small increase when aggregated occupancy went from a miniscule 1.5 percent occupancy to 4.1 percent occupancy of all rooms participating in the data set.”

In addition to inventory restrictions, pandemic concerns and economic volatility continued to negatively impact the booking pace during May for arrivals in May through October which were down 130.5 percent compared to last May for the same six-month period. The remaining five months of summer are all showing triple-digit declines in monthly bookings—most dramatically in August, down 173.7 percent compared bookings made in May of 2019 for arrival that August.

Economic measures

As restrictions eased and businesses began re-opening, economic indicators during May improved. The Dow Jones Industrial Average (DJIA) recovered strongly in May and gained three percent (7479.2 points) from the end of April, driven by optimism about the Covid-19 curve flattening and the return of economic activity in many regions of the country. As of May 31, the Dow was 2.3 percent higher than May 2019.

“As a caveat, the first two weeks of June have brought official reports of a rising number of Covid-19 cases, more than 1.5 million new jobless claims, and a somber outlook for the remainder of 2020 from the Federal Reserve,” cautioned Foley. “Meanwhile, stock markets have been increasingly disconnected from the economy in recent months and may have been providing a false sense of financial security to consumers,” he added.

The Consumer Confidence Index (CCI) clawed up 1.1 percent during May from the historically steep plunge in April. It remains at its lowest level since June 2014 with the exception of last month. The national Unemployment Rate unexpectedly declined in May to 13.3 percent from the 14.7 percent it recorded April. Employers added a record 2.5 million jobs to payrolls during the month to support the resumption of economic activity. However, new unemployment claims remained high with 1.9 million new claims filed in the last week of May—down 2.1 million from the previous week.

“In most cases, the anemic occupancy for May and into the summer is due primarily to the pandemic related shutdown and restrictions of lodging and resort operations,” clarified Foley. “We now have re-openings picking up but consumers remain tentative and we are seeing most summer bookings for either very short-lead arrivals of less than 30 days in advance, or very long-lead dates for more than 140 days in advance.  Close-in and further off dates seem to be the more comfortable choice for consumers at this stage,” Foley concluded.

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