Vail Valley tourism: Is consumer confidence coming back?
Vail, CO, Colorado
After a rough winter, a shaky summer?
Consumer confidence seems to be making shaky gains
Bug: Mountain Travel Monitor – Ralf Garrison mug in local > column mugs
The Mountain Travel Research Project’s May report presents a look back at winter (November ” April) and a forward look at the upcoming summer (May- October) and offers a broader perspective than the usual monthly update.
The past six months have seen historic shifts in national and global economies. The winter of 2008/09 made records, but not the kind one hopes for ” record jumps in unemployment, record-setting lows in consumer confidence and spending, and dramatic shifts in the fundamentals of the worldwide banking system. Collectively, these events have had a profound impact on travel and tourism.
Looking forward, a recent reduction of bad economic news has caused a corresponding uptick in the financial markets and consumer confidence. However, pundits agree that market fundamentals remain weak.
Dow Jones Industrial Average
The recent recovery in this highly-watched index has been greeted with much enthusiasm, but Wall Street holds widely different views about prospects for the future. Some feel the Dow is now driven more by speculation than hard data, making it an interesting but unreliable upstream indicator of what may be ahead.
The compounded effect of the financial crisis is depicted most dramatically by tracking consumer confidence, which began to slide in August 2007 to 111.2 points. It bottomed at a record-setting 25.0 points in February. At the end of April, the Consumer Confidence Index was showing signs of recovery, rising to 39.2 points. As markets continue to stabilize, the index is expected to move slowly upward.
Consumer Price Index
The price consumers pay for goods and services has gone full circle from a historic high in July 2008 (219.9 points). In December, the index hit bottom at 210.2 but has since begun to climb at a healthy pace and near the end of the season in March was at 212.7. The year-over-year prices for March were 0.38 percent below the same time last year.
What does this mean?
Discretionary spending has been hit hard. Travel, while clearly in the discretionary category, has been hit hardest in business and meeting/convention categories, and is doing least bad in leisure categories like the ski industry where consumer loyalty and passion is creating resilience.
– The historical long-distance, long-lead destination guest continues to be underrepresented while the short-haul, short-lead guest has been stronger as consumers travel closer to home.
– Snow has proven to be a positive influence for close-in skiers but it did not offset the effects of the economy where long-haul destination visitors were concerned.
– Price-based discounting produced more short term visitation, but had some long term consequences as consumers have learned to expect deals and may wait for them.
– Consumers have made a distinct move toward frugality, with predictable negative consequences for spending on luxury retail and lodging brands.
According to our data:
– The finally tally for the full winter season revealed a 15 percent decrease in occupancy and 9 percent decrease in rate. The combined effects of lower occupancy and rate, compound to an approximate 25 percent decrease in overall revenues, an unparalleled single year decrease.
– Skier/boarder visits as reported by the National Ski Area Association, are down 5 percent from the 07-08 record of 60.5 million visits, and down only slightly from the past 5-year average.
– This difference between lodging and skier/visit metrics shows that these two segments of the winter economy have unique attributes and are food for thought going forward.
The upcoming summer shows continued softness in the destination market in both occupancy and rate.
– The six-month summer view shows advance bookings down 26 percent, despite a proactive approach to attract guests with reduced pricing.
Armed with the experiences of last winter and little prospect for a significant improvement in fundamentals through summer, resort marketers are attempting to better manage uncertain market conditions. A look between the lines of the data suggests some cause for tepid optimism:
– There should be fewer surprises for either the resorts or their consumers ” even a decrease in bad news is being perceived positively
– Bargains are plentiful.
– Short-lead, near-in travel is easy in the summer and gas and air travel is very affordable;
Resort and lodging operators have learned to watch market and consumer trends carefully, react decisively and remain nimble, all signs that Darwin attributes to the survival of those most able to adapt to change.
Ralf Garrison is a director of the Mountain Travel Research Project.
El ganador va a recibir dos billetes adultos a Eagle County Rodeo para jueves.