Vail lodging rates are rising at a pace that’s ‘out of balance’ with occupancy, Vail Valley Partnership CEO says | VailDaily.com

Vail lodging rates are rising at a pace that’s ‘out of balance’ with occupancy, Vail Valley Partnership CEO says

In Vail, lodging occupancy during peak times in the winter has essentially been flat for the past few years. But even as occupancy remains relatively stable, the town’s lodging revenue has grown, due almost entirely to growth in daily rates.
Special to the Daily | iStockphoto

By the numbers

53.2 percent: Growth in Vail’s average summer lodging rates since 2007.

39.6 percent: Growth in average summer rates in competing Western resorts since 2007.

40 percent: Growth in Vail winter lodging rates since 2007.

21.7 percent: Growth in competing resort rates for the same periods.

Source: Inntopia Destimetrics

VAIL — As mountain resorts have recovered from — and exceeded — their pre-recession lodging peaks, winter room rates in Vail have far outstripped gains in occupancy. Is a correction coming?

The Vail Town Council at its Tuesday, Dec. 19, afternoon meeting heard a report from Katie Barnes, of Inntopia Destimetrics. The report had a host of data ranging from daily hotel occupancy to broader industry trends. That data includes a dip of between 9 percent and 20 percent per day in daily room occupancy in Vail. But, Barnes said, that dip has been in the chart since September and counts rooms booked far in advance.

For the summer, Vail’s gains in occupancy and room rates generally mirror the 20 other western resorts Inntopia Destimetrics tracks.

The biggest change is in the winter. In Vail, lodging occupancy during peak times has essentially been flat for the past few years. But even as occupancy remains relatively stable, the town’s lodging revenue has grown, due almost entirely to growth in daily rates.

That revenue growth has been dramatic, especially compared with other western resorts.

Tipping Point?

Barnes’ report showed that since the winter of 2007-08, winter lodging revenue has grown more than 40 percent in Vail. Revenue in the rest of the industry has grown more slowly in the same period — just more than 26 percent.

Council member Jenn Bruno asked if higher rates are affecting occupancy in town.

Barnes said that doesn’t seem to be happening during the 15 or so weekends every year when town lodging occupancy exceeds 90 percent.

Phil Metz, of Vail Resorts, is a member of the Vail Economic Advisory Council. Metz told the council that at Vail Resorts’ lodging properties, trends in occupancy and rate don’t seem to correlate.

The council also heard from Vail Valley Partnership CEO Chris Romer. The Partnership has a reservations arm, and is also an Inntopia Destimetrics client.

Romer told council members that in a healthy lodging economy, increases in occupancy and rate should be roughly equivalent. Romer said the big jump in winter rates is “concerning,” adding that the lodging market may be at a kind of tipping point.

“From a community standpoint, we’re out of balance,” Romer said, adding that it’s bad news when rates are up 7 percent and occupancy falls 3 percent.

Romer noted that some Vail Valley lodges are cutting rates as a way to drive occupancy during a snow-scarce December.

“Dropping rate will drive occupancy,” Romer said, adding that lodge owners and managers will naturally push rates as much as possible, but will fall back as demand wanes.

There are plenty of weeks when there’s opportunity to grow business between Sunday and Thursday night. Rate is part of attracting guests during those times, Romer said. But more important is the guest experience.

“It’s not about what you pay, but the experience,” Romer said.

Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, smiller@vaildaily.com and @scottnmiller.