Summit may have too many rooms for rent
Business owners across the Summit County point to the same issues to explain a two-year downturn in sales: Sept. 11, war, reduced traveler confidence and drought.
Retailers, ski area officials and restaurateurs are waiting for a national economic upturn and a great snow year for business to improve, but those in the short-term rental market are contending with an additional challenge: increased competition from a saturated industry.
“You can’t double the inventory in a flat industry and expect there to be no consequences,” Michele Tonti, owner of Tonti Management, said in an interview last week.
For two decades, the number of skier days in North America hovered around 50 million. As skier numbers remain flat, developers continue to add units to the county’s bed base. While some units serve affordable housing needs, many are upscale developments that are increasing competition in the property management industry.
“The pie has gotten bigger, but the slice much smaller,” said John Gain, owner of Breckenridge Central Lodging. “So the town’s tax base looks rosy but us individual guys are dying of cancer from the inside.”
Gain said nightly rentals are down 20 to 30 percent.
In the mid 1990s, Gain’s company could rent a two-bedroom unit 90 nights and a three bedroom unit 120 nights in a season. Today, the same units would rent for 75 nights for a two bedroom and 100 nights for a three bedroom, he said.
And although rack rates steadily rose over the past few years, with a two-bedroom unit currently renting for $295 per night, this year Gain reduced rates by 35 percent in February and March and is selling nights for as much as 50 percent off in April.
Owners of Grand Timber Lodge and Tonti Management said those companies also reduced rates this spring to attract late-season customers.
“Some (customers) are better than none,” Gain said. “The lack of customers and too much competition have lowered the rates.”
Gain said business also is hurting because of shorter stays. In 1982, when Gain opened up for business, average length of stay was 6.2 nights, he said. In 1995, it was 5.2 nights and today it is 4.6 nights.
“You have to clean the units twice as much, and it triples the weekly cost,” he said.
Like other businesses, Gain said his bottom line is further reduced by a list of rising costs.
“Soap, toilet paper, hourly wages, health insurance; everything costs more,” he said, noting one exception in telephone service, which costs a fraction of what it did 10 years ago.
But Gain said he quickly spent those savings and more on Internet marketing.
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