Vail Valley voices: Vail’s economic dilemmas
Vail, CO Colorado
VAIL, Colorado – Vail business, as reflected in the town of Vail’s June sales tax receipts, is following the town’s predicted trend of a 20 percent monthly drop over the summer. Forward-looking indicators are showing little indica-tion of a reversal of fortune over the next six months.
Strategic economic moves for the coming season are beginning to appear. Taking a page from Vail Resorts’ Epic Pass playbook of advancing the collection of preseason revenues, some lodging properties have begun to offer dis-counts to pre-book the winter sea-son. They hope to reduce their vulnerability to last season’s phe-nomena of last minute bargain hunt-ing.
Vail Resorts has continued its cost-cutting measures by, in part, putting further restrictions on salaries. The town of Vail, on the other hand, is using $3.2 million in reserves in the hopes of keeping its $32 million oper-ational costs “flat” for the coming year. The town manager is saying that if fur-ther budget cuts are required, $1.6 million to $2 million in funding requests from community groups will be on the block before making addi-tional reductions in capital improve-ments or staff budgets. Community contributions are made to service groups that provide economic, cultur-al, social and recreational benefits to the Vail community.
Others, outside the government, say that the town’s revenue projec-tions are overly optimistic and addi-tional cost-cutting measures should be considered, such as delaying expensive capital-improvement proj-ects. Their suggestions include an across-the-board reduction in salaries and benefits in order to avoid more staff layoffs, which could result in service cuts. Also, investments should be made that attract more summer and winter guests. Bud-getary priorities will be a focal point of the upcoming Town Council elec-tion, in which four of seven seats will be decided.
The broader view
Wall Street pundits speculate whether the national economy is in a modest upswing or if another decline is on the horizon. A Gallup poll reports consumer confidence exhibits a pattern in which “greater optimism about the direction of the economy appears to be out ahead of economic reality. … Consumer spending has not improved on a sus-tained basis in Gallup’s measures all consumer sentiment, which is essen-tial to the pace of a strong recovery, remains negative in the face of sever-al challenges, including large job losses, weak income growth, falling house prices, rising energy prices and too much debt. While the rise in unemployment is slowing, projec-tions are being reported by Bloomberg that the housing reces-sion could cause nearly half of Amer-ica’s homeowners to owe more than their homes are worth by the first quarter of 2011. Prospects remain dim for the construction industry as commercial real estate and some big banks remain on shaky ground.
Elsewhere in the world, some European and Asian countries are passing out of recession because they were less affected by the col-lapse of America’s subprime mort-gage market. Even with a reported retreat of recessionary trends in Europe, there is a decline in tourism throughout many European coun-tries as well as other international destinations. Egypt’s tourism, a perennial favorite among world trav-elers, was reported to be down near-ly 50 percent during the prime spring tourism season. A general downturn in tourism globally increases the competitive pressures on Vail to look both toward and beyond its tradi-tional markets.