Summit County Colorado Economics - Rocky Mountain Resort Management™

Summit County Colorado Economics

Posted in: Uncategorized- Aug 18, 2009 No Comments

GETTING UP TO “FLAT”

Denver, Colorado, Aug.17, 2009—Although the latest release from the Federal Reserve reported that the “economy is leveling off,” data gathered and analyzed by the Mountain Travel Research Program (MTRiP), revealed a slightly different picture. “Neither the national economic indicators or the mountain travel indicators support the Feds claim,” said Ralf Garrison, author of the monthly report. “At best, national signals are mixed.”

As evidence of Garrison’s assessment, the report pointed out that the Dow Jones Index rose 7.8 percent in July while the Consumer Confidence Index experienced a second consecutive monthly decrease in July, down 5.5 percent. Another significant travel industry indicator is the Travel Price Index, which tracks costs associated with consumer and business travel and includes fuel prices, room rates, insurance costs, ticket purchases, and the Consumer Price Index. It rose two percent in June for the fifth consecutive monthly increase and resulted in an 0.7 percent decline in consumer spending in July.

“Although travel prices are 9.5 percent below 2008 levels, according to MTRiP comparisons for the past several years, consumers have historically shown little regard for year to year variance in price even though there have been consistent increases in both occupancy and the Travel Price Index for the past several years,” observed Garrison. “Consumer behavior is tied closely to the Consumer Confidence Index so we predict that sustained positive news in the job sector of the economy is needed to get people traveling more.”

July’s lodging business followed the winter pattern with low volume and occupancy down 13.3 percent compared to July 08 but was slightly better than June—down 14 percent. Room rates in July were down 11.3 percent compared to last July. Reservations taken in July for arrivals in July-December were flat compared to reservations on the books last year for the same time period. Short lead bookings in July were very strong with bookings in July/for July up 30 percent compared to July 2008.

However, a downward trend was being experienced for long-lead advance bookings in November and December—those declines were offset by the last minute reservations in July/for July. “Overall, summer business (May–October) continues to show significant declines from last summer with no indication yet of an improving market or more optimistic consumers,” reported.Garrison. “To combat the decline in visitors and to provide incentives to prospective guests, destinations continue to decrease rates from last year– up to 21 percent for next December,” he added.

However, Garrison is quick to point out that this MTRiP data is an aggregation of a variety of western mountain destinations and does not include the significant differences in reservations among and between mountain resort communities. “The variances are considerable and noteworthy,” he emphasizes. The report further notes that special events and occasions such as reunions and weddings are the most consistent travel segments, while business group and conference business is down the most.

Bargain lodging, campgrounds, and roadside motels were relatively busy while destination condos, especially luxury units, were weakest. “The leveling off suggested by the Federal Reserve would be welcome news but all travel and market indicators show a continuation of the same negative trends and the outlook has yet to show tangible signs of improvement,” concluded Garrison. “From this point, getting reservations up to a flat comparison with last year is an admirable objective and an important first step to recovery–preferably in time for the all important winter booking season.”

*Data is derived from a sample of 216 property management companies in 15 mountain destination communities across Colorado, Utah, California, and British Columbia. Data is representative of a comprehensive cross-section of the community and may not reflect the entire mountain destination travel industry. © 2009, MTRiP LLC.

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