Consumer conﬁdence is up and down in U.S.
Vail, CO Colorado
VAIL – Uncertainties in the United States economy such as the job and housing markets, as well as instability in oil-rich countries, are all things consumers talk about when asked about their confidence in the U.S. market.
It’s the perception of what’s going on that influences our confidence levels, and lately, the perception has turned more negative. The Conference Board Consumer Confidence Index, which tracks consumer confidence nationwide, had increased in February but declined in March.
The index, now at 63.4, is down nearly nine points from February. The number combines two ratings from consumers – one rating measures their feelings about the present, and the other rating measures their feelings about the future.
Ralf Garrison, co-owner of the Mountain Travel Research Program, which studies travel-industry data for mountain resorts, watches consumer confidence closely. He said the recent decline in ratings needs to be viewed in its greater context.
“Seventy-two is the highest it has been for more than two years,” Garrison said. “We were eking up in the right direction and have now fallen back, at least for a month’s time.”
The rating was on the rise for five months until last month. The drop is likely tied to a variety of factors, including volatile housing and job markets and unrest in oil-rich countries, which creates a perception that there’s an oil shortage, Garrison said.
Garrison thinks new-age communication technology helps drive that perception more so than ever.
“It’s the anticipation of events, more than real events, that’s driving the market right now,” Garrison said. “Generally, we feel like the overall economy is continuing to slowly get better, but housing and jobs will continue to be the drag.”
The town of Vail has seen big increases in sales tax revenues this winter season, but the merchants in town aren’t necessarily seeing major increases at their businesses. The sales tax revenues contributing to the town’s economic growth this season are mostly attributed to the new businesses in town, such as the Four Seasons and the shops at Solaris, for example.
Luca Bruno, owner of designer clothing stores Luca Bruno and Due Luca Bruno, has seen consumers who have remained cautious about their spending ever since the economy collapsed.
But at Vail Mountain, the sense is that consumer confidence is strengthening significantly, said Vail Mountain Marketing Director Adam Sutner.
Consumer confidence affects the tone of the resort’s marketing message, as well as whether messaging is deal-oriented or brand-oriented, he said.
About 21⁄2 years ago, Vail Mountain was trying to “recalibrate” its brand to a more luxurious position, Sutner said. Consumer confidence shifted dramatically right around that time, and the resort realized that the campaign was out of touch with how consumers were feeling, he said.
“We did an aggressive and quick recalibration,” Sutner said.
During times of crisis, it’s important for marketers to look introspectively and return the messaging to reflect the core beliefs, Sutner said.
“We turned back (from luxury) toward the goodness of Vail Mountain,” he said.
The explosion of social media has allowed Vail Mountain and Vail Resorts to understand how people are feeling in real time, rather than waiting weeks or months for survey data to come back. The real-time feeling right now is that consumer confidence is coming back, Sutner said.
“There’s a robust audience out there giving us good feedback,” Sutner said. “At the conclusion of the season, we’ll revisit our brand position and take stock and understand if we’re in the right place with the right message.”
Garrison said that as of the end of February, early bookings for the summer months across all Mountain Travel Research Program destinations are up 12 percent through August over last year. Consumers are still booking their trips closer to their travel dates but not as much as they did when the recession first hit, he said.
Short-term successes include last-minute deals, typically spread to consumers through social-media sites, but Garrison isn’t sure the deals are giving resorts much, if any, long-term benefits.
He said the deals run the risk of turning long-term guests who book in advance into bargain-basement shoppers.
“We’re risking changing our guests to some behavior that’s not in our long-term interests,” Garrison said.
And until political unrest in the Middle East stabilizes, there will be a perception out there that there’s a shortage of oil, and that affects confidence levels.
“People might stay closer to home. This may be another year of Colorado being fed by its local and regional market,” Garrison said. “We’ll wait 30 days (until the next consumer confidence index report) and see where we’re at.”