Economy brutal to business in Aspen
ASPEN, Colorado ” It’s tough out there for Aspen, Colorado businesses and most of them are bracing for further financial hard times.
Based on a sampling of businesses in a variety of sectors, the predictions made by City Manager Steve Barwick last week that sales tax revenue will be down 11 percent for the year are holding true.
Those projections are based primarily on occupancy rates, which are becoming difficult to forecast because would-be travelers are waiting until the last minute to book rooms in the hopes of scoring a deal.
Bill Tomcich, president and CEO of Stay Aspen Snowmass, a central bookings agency for the resort, said his early predictions that sales activity would be down 19 percent in December was consistent with the city’s report, which was released last Friday.
“It shows that occupancy forecasting is dead on,” he said, adding the average room rate also has declined, another contributing factor to low sales tax revenue.
But it’s not just occupancy rates that signal Aspen is hurting ” businesses are reporting sales being significantly down ” like jewelry stores, which posted a 40 percent drop in sales tax revenue for December over the same month in 2007.
“May and June rent will be hard to pay,” said one Aspen jeweler who asked not be identified.
December accounts for 15 percent of the city’s annual sales tax revenue and March is just as big of a contributor to the local economy.
Barwick said Friday that he expects sales tax revenue to be down 15 percent in January and February, with March being far worse.
Based on advanced bookings at Stay Aspen Snowmass and the Limelight Lodge, which opened the week before Thanksgiving, Barwick’s projection is painfully correct.
“As far as advanced bookings go, we’re probably going to have half of the bookings that we would want to have,” said Brad Wyatt, general manager of the Limelight.
He said he expects January and February to be down between 15 and 20 percent. During the first week of February, the Limelight was 50 percent full. Now, the bookings hover around 65 percent. Wyatt said he budgeted for 80 percent occupancy this month, which he thought was conservative last year.
“March is going to be as bad as February,” he said, adding 30 to 40 percent of the hotel’s business right now is being booked within days of guests’ arrival.
The most inexpensive price for a room at the Limelight is currently listed at $370 a night, which is a rate lower than what Wyatt had budgeted for. And with the hotel’s travel partners, even better deals can be had.
“If you don’t have a deal, you might as well hang it up,” he said. “We’re giving deals that weren’t budgeted for.”
As a new hotel recently developed, the Limelight doesn’t have a lot of cash reserves to weather the storm.
“We are all in survival mode,” Wyatt said, adding there have been no layoffs at the Limelight, which employs about 35 people.
“We’re weathering it pretty well,” he said. “We are hoping summer is better.”
So is Pat Newkam, owner of Attic Fantasies, a T-shirt and gift shop in the North of Nell building.
While T-shirt stores posted a 17 percent decline in sales tax revenue for December over the same period in 2007, and 16 percent down for the entire year, Newkam said he’s only down about 12.5 percent.
“You have to remember, we are down from three very good years,” he said of the business his family has owned for 39 years.
The only year he can remember being hit harder was the 1999-2000 ski season when fears of Y2K affected business and travelers.
While Newkam has seen Aspen weather tough economic times in the past, this recession seems different.
“We are in new territory, a new level of greed,” he said. “This is the worst I’ve seen our nation get into a tizzy.”
Newkam said he hopes summer will be better, but recognizes that those tourists are not inclined to spend as much winter guests.
As a longtime resident and business owner, Newkam said Aspen is one of the last to feel the effects of a recession and the first to rebound. And people will still come despite financial worries, he added.
“The last thing people give up is their vacations,” Newkam said.
The sports equipment and clothing sector also was a big loser in the sales tax revenue arena, posting a 30 percent decline for December.
That figure is indicative of Ajax Bike and Sport’s business, according to owner Craig Peterson.
“We’re looking at a reduction in sales by 30 percent,” he said, adding he expects business to pick up this spring but he might be selling more inexpensive equipment, including commuter bicycles.
Normally, Peterson said he would have seven or eight people employed for both of his shops, but currently has five salaried employees working.
Tomcich echoed Newkam’s observation that comparing sales and bookings to last year is difficult because last ski season was stellar in terms of snow, the economy and frequent air service in and out of Aspen.
“We have experienced year after year of growth and we have to look at the long-term trend,” he said, adding Aspen and Snowmass are faring better than other ski resorts in the region in terms of bookings.
That’s not to say there isn’t plenty of room for improvement ” not one hotel in Aspen is sold out for the upcoming President’s Day weekend, and advanced bookings are dwindling.
“I’m worried about March,” Tomcich said. “Right now, there has been a focus on filling in February because there is a lot to fill in.”