Summer Off to a Good Start; Winter Finishes Slightly Ahead of Last Year

BRADENTON, Fla., March. 12, 2020—It was a battle to the finish line, but aggregated data for lodging properties in three southeastern states wrapped up the winter season essentially flat but with a slight uptick in revenues despite a fairly rugged start to the winter season and the challenges of the final week of February. The season-long summary was released yesterday by DestiMetrics,* in their monthly Market Briefing from Inntopia. Results are aggregated from participating properties and include data collected through Feb. 29.

Positive momentum that started picking up in December and continued through January and February, helped lift the overall winter season to a solid finish, despite a 5.9 percent decline in bookings during February for arrivals during that month compared to bookings made last year. February’s actual occupancy was up 2.6 percent compared to February 2019 and the Average Daily Rate (ADR) was up 2.2 percent. The combination delivered a 4.8 percent increase in aggregated revenues for February.

A final assessment of the full winter season revealed that for the six months from September through February, actual occupancy was down 1.6 percent in a year-over-year comparison to last winter. Although appreciable rebounds in occupancy were experienced from December through January, the decline in bookings in February meant season-long figures couldn’t fully recover from a very sluggish September and fairly anemic October. On the brighter side, the ADR finished the winter up 1.8 percent compared to last winter and that slight boost in rates helped to offset the lower occupancy to deliver a scant 0.2 increase in revenues.

“We are definitely calling this a ‘win’ for the Southeast when you consider the tepid start to the winter season back in September,” said Tom Foley, senior vice president for Business Operations and Analytics for Inntopia.  “Our full focus now turns to the summer season that stretches from March through August. Early indicators are very good but the rapid global spread of the Covid-19 virus and the dramatic effect it has had on financial markets around the world in the past two weeks are likely to have some impact on destination travel,” he continued. “At this point, it is too early to determine how significant and long-lasting that impact will be, but there are early indications in the data that bookings in the last week of February for May, June, and July arrivals have fallen off somewhat—likely related to market conditions starting Feb. 24 and fears around the spread of Covid-19.”

Looking to the upcoming summer, the widely-recognized high-season for participating properties in the Southeast, bookings made during February for arrivals in February through July were down a scant 0.6 percent compared to the same time last year. A notably sunny spot was that bookings made during February for April arrivals were up a robust 14.4 percent compared to last year.  However, bookings made during the month of February for arrivals in the peak months of June and July were down 11 percent and 4.3 percent respectively.

Overall for the summer months, as of Feb. 29, occupancy for the summer season is up 3.3 percent compared to the same time last year and is up in four of the six summer months. ADR is up 2.8 percent with increases in five of the six months and the result, as of Feb. 29, is a 6.2 percent increase in revenue for the summer season.

“The Southeast currently has a very solid foundation for the upcoming summer with increases in occupancy, rate, and revenue in four the next six months with April, May, and August looking particularly strong,” explained Foley, senior vice president for Business Operations and Analytics for Inntopia. “However, we are reminding our participating lodging properties they should be prepared to manage the impact of cancellations, reduced bookings, and decreases in rate if the economic impacts from the current financial volatility persists longer than the immediate impacts of the Covid-19 spread.”

A robust and relatively stable economy persisted through most of the month of February until the final days of the month when the Dow Jones Industrial Average (DJIA) plunged 11.9 percent and finished the month two percent below where it was in February 2019. In the last few days of the month, investors reacted strongly to the impact of the corona virus/Covid-19 virus that has disrupted the supply chain from China for the past eight weeks and counting. There has also been a reduction in the demand for crude oil that is leading to a downward spiral on fuel prices around the world.  As a result, corporations are revising their first quarter expectations based on their inability to get vital materials for producing and distributing consumer goods to their national and international markets.

Escalating the woes of Wall Street is the cancellation of flights to and from Asia and the widely-reported difficulties to the recreational cruising industry. The spread of Covid-19 beyond Asia has put additional pressure on global travel and trade.

“Dramatic decreases in financial markets can have the effect of shocking consumers into a temporary spending freeze, but sustained striking declines have the potential to foster significant consumer withdrawal from the entire marketplace, including travel,” cautioned Tom Foley.

In reviewing other indicators through Feb. 29, the Briefing emphasized that the positive direction of the Consumer Confidence Index (CCI) and unemployment figures during February were all collected prior to the end of the month.

The CCI during February edged up 0.2 percent and marked the fourth consecutive monthly increase in confidence. The national Unemployment Rate dropped from 3.6 to 3.5 percent in February as employers dramatically increased expectations by adding 273,000 new jobs to the payroll—well ahead of the 175,000 expected. Additionally, job creation figures in December and January were adjusted upward to create a three-month average of 243,00 new jobs per month for the three months. However, year-over-year wage earnings slipped down driven by a shorter than expected work week.

“As we wrap up the winter season and look to the upcoming summer, we recognize that we are operating in a dramatically different environment than we were just two weeks ago,” added Foley. “We are moving into a challenging phase for the travel and tourism industry, so we are encouraging properties to be proactive in their rate management and messaging. We are also recommending that they be responsive and reactive to their guests through empathetic application of cancellation policies and considering value-added offers as an alternative to just cutting rates,” Foley concluded.

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*DestiMetrics, part of the Business Intelligence platform for Stowe-based Inntopia, tracks resort performance in selected mountain and southeast U.S. destinations. They compile forward-looking reservation data each month and provide individualized and aggregated results to subscribers at participating resorts. Data from the Southeast is derived from five resort destinations in three states including South Carolina, Georgia, and Florida.