Vail Valley Voices: How Vail economy looked in July
Vail, CO, Colorado
Editor’s note: The following is an excerpt from the Vail Homeowners Association monthly report in July. We plan to publish weekly excerpts from the association, which keeps a close eye on economic and political trends in and outside of the town.
Signs of Vail’s economic stabilization remain elusive, while at the national level, indicators are showing positive signs of recovery. (Bloomberg Report)
Many Vail businesses are adjusting to the “new” economy to the fullest extent possible. The panic of last winter has passed. The Vail Police Department estimated the largest crowd on record for the Fourth of July parade at 40,000. One local analyst quipped, “We hope the summer season didn’t begin and end with the Fourth of July.”
Some local consumers are saying that the “new” economy is changing their lives for the better. They can now, in some areas of Eagle County, afford a reasonably priced home or simply enjoy an evening out in a Vail restaurant. However, concerns over a back sliding in the quality of the Vail experience remain.
According to an informal survey, there are restaurants reporting volume off by 20 percent. Under normal circumstances, high summer season discounting would be unimaginable. Nearly every restaurant is offering discounts in one form or another. Liquor sales, according to one vendor, have shifted away from pricey wines to higher-potency hard liquor. (Town of Vail Business Review for May)
There are hoteliers expecting summer business at some properties to be down more than winter from 25 percent to 40 percent from the norm of recent years. Better performance is possible depending on how well the property is run. Last-minute bargain hunting is not having much effect in boosting business. Vail room rates are being discounted but not as much as at competing resorts. (Town of Vail MTRIP Report)
A positive sign is that the concert venues at Ford Park and the Sunday farmers’ market are pulling in sizeable crowds. Bravo!’s symphony concert series, with rare exception, is seeing increased ticket sales and attendance over last year.
A veteran merchant calculates that all businesses now have to focus on value-added incentives for their core customers, which are repeat guests, local and part-time residents. Our second-home owners, he says, are a large and loyal reservoir of customers. They have been historically and remain not only fiscally conservative but fiscally astute.
The broader view: It is some analysts’ view that it will be many years before Vail sees development presagain. Another “decade of excess” is unlikely any time soon.
Nationally and globally, it will take years to fix the massive accumulation of bad debt, a majority of it being individual mortgages, which avalanched into the financial market in the past 10 to 12 years.
Until people get their personal balance sheets under control, which means less consumer spending, the economy is going to be in the doldrums.
For many, it is going to be very painful and will inevitably mean a decline in their standard of living.
There is need for radical financial “surgery” that includes increasing exports and consumer spending. The value of the federal stimulus program is limited. Even when stimulus monies end up in people’s paychecks, very little will go into consumption. Consumer confidence, unsettled by current events, has shifted from discretionary consumption to paying down personal debt and increasing savings.
Vail is suffering not only from a downturn in discretionary vacation spending. It is also taking a hard hit from what some believe will be a slow recovery of the global financial investment industry, whose many beneficiaries in recent years have become affiliated with Vail. (The Economist)
Vail’s recovery could be slowed further by the result of national political debate that gambles monetary and fiscal policy, which some see as necessary for a faster economic recovery, against advancing social equity (i.e., universal health care) and environment sustainability (i.e., conversion to green technologies). The outcome, for those who favor a faster recovery, is in doubt.
Looking forward, a local opinion leader has concluded that the “new” economy gives Vail the opportunity to return to being a “resort community” again.
No longer do we have to be … just a resort. Vail has to get over its insecurity complex. It has to accept the fact that it is the No. 1 mountain resort in North American and make its decisions accordingly.
A historic truism for Vail recessions is “last in, first out.” Locally, other than cost cutting, there have been no prescriptions for a recovery in the near term.
Reforms not possible in boom times may come to the fore, but only when there is a broadly held presumption that continuing business-as-usual and holding fast to passe remedies won’t assure recovery any time soon.