Regional bookings wane in the wake of rising rates
As 18 western mountain destinations spread over six states assess the status of the 2019-20 winter season, a decline in occupancy and softening of daily rates are continuing a gradual trend that has been emerging for more than a year.
In the most recent analysis released by DestiMetrics in its monthly Market Briefing from Inntopia, consumer rate resistance is pushing back against more than a decade of consistent growth in occupancy, rates and revenue. The aggregated results in this month’s report are based on data from nearly 300 lodging properties through Nov. 30.
Despite widespread and significant early season snowfall, actual occupancy for the month of November was down 5.3% compared to November 2018 while the Average Daily Rate eked out a .7% aggregated increase. The result of lower occupancy and nearly flat rates led to a 4.7% decline in revenue for the month compared to last November.
“Widespread early season snow was expected to boost strong last-minute bookings during November as well as generate enthusiasm for the rest of the season,” said Tom Foley, senior vice president of Business Operations and Analytics for Inntopia. “However, although we did see a slight uptick in bookings at some destinations, the consumer response was not as optimistic as expected and that is evident in the lethargic November booking pace.”
A continuing trend
A look at the full winter season sheds additional light on the continuing trend of lower winter occupancy. As of Nov. 30, the upcoming season from November through April is down 1.5% compared to the same time last year. More notably, year-over-year occupancy is declining in five of the six winter months with the exception of April, which is up 14.4%.
The average daily rate for the winter is up a moderate 4% led by the months of December (up 6.2%), February (up 6.1%), and April (up 14.1%). Although the sharp April increase looks good, it can be attributed to Easter Sunday one week earlier this season and relatively low volume at this point in the booking season. Winter revenues for the entire six-month season are up 2.4% and are being bolstered by the higher rates, not increased occupancy.
The booking pace during November for the remainder of the winter was also revealing. Bookings made during the month for arrivals in November through April are down an aggregated 5.7% compared to the same time last season. January and April were the only two months that posted increases.
One of the most striking findings in the November report was how occupancy during the month of December dropped dramatically in just 30 days. One month ago, December occupancy was up 6.3% compared to December 2018. One month later, as of Nov. 30, occupancy for the month was down .7%.
“The decline in November bookings was a bit surprising because the above-average early snowfall across much of the West was expected to boost both last-minute bookings by powder chasers as well as longer-term bookings by skiers and riders having confidence in another good snow year,” Foley said. “This tepid response to very good early slope conditions may be further evidence of continued resistance to rising rates by some mountain travelers — a trend that has been gradually building for more than a year.”
Economic indicators’ impact
The monthly briefing also tracks economic indicators and analyzes their impact on consumer travel decisions. In November, the Dow Jones Industrial Average rose a sharp 3.15% to post the highest monthly close on record — just short of the single highest daily close, set on Nov. 26. As of Nov. 30, the Dow is 10.8% higher than one year ago at the same time, but the dramatic increase reflects the November 2019 gains in contrast to the sharp declines in the index in November 2018.
Despite the record-setting stock market highs, the Consumer Confidence Index declined for the fourth consecutive month in November to finish at 125.5 points. Although the dip was a scant .5% from October, it is now 10.3 points below its most recent high of 135.8 points in July 2019.
Another positive economic indicator was the national unemployment rate dropping from 3.6% to 3.5% in November. Employers exceeded analysts’ expectations with the addition of 266,000 new jobs (which includes the 41,000 General Motors workers returning to their positions following an extended strike) and well ahead of the 187,000 expected. The strong job market report was further bolstered when coupled with adjusted figures for September, up 13,000, as well as for October, adjusted up 28,000.
“In the past 30 days, we’ve seen an overall slowdown in occupancy growth for the winter with several reversals since last month’s reporting in year-over-year comparisons,” Foley said. “At the end of October, four of the six winter months were underperforming compared to the winter of 2018 and now five of the months are running behind. In the coming weeks and months, lodging properties will have to monitor and manage rates to find the balance between maintaining occupancy and revenues in the face of continuing consumer pushback on rising daily rates.”
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