Will markets rattle tourism?
Vail resorts holds steady
While the most of the major stock and security indexes are firmly in “correction” territory now, meaning a loss of at least 10 percent of previous highs — Vail Resorts’ stock held steady Tuesday. The stock — MTN — closed Tuesday trading at 104.67, down .44 for the day. The stock has traded as high as 112.34 in the past 52 weeks.
EAGLE COUNTY — This isn’t the best time for a big correction in the stock market. But it’s far from the worst.
Global stock markets lost value again Tuesday, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaq all finishing in the red. In the past week, the Dow has lost more than 1,700 points. It, along with most other major global markets, is now in “correction” territory, meaning a loss of at least 10 percent from previous peak values.
The nosedive in securities has hammered stock-based accounts the world over. But a couple of local financial advisers said this correction — at least so far — is part of the normal cycle of investments that go up and down in value.
Kevin Brubeck, an Eagle-based adviser with Edward Jones, said on average, markets will experience a correction of 10 percent or more about once a year. Corrections of about 5 percent happen more frequently, about three times per year.
And, for the most part, Brubeck’s clients seem to be riding along with the current downturn.
“I haven’t had many calls at all at this point,” he said.
Shane Fleury, an adviser with the Vail Valley branch of the Northwestern Mutual Wealth Management Co., said he’s asking clients who call how they’re feeling right now.
“If you woke up (Monday) and noticed the Dow was down 1,050 points, did your stomach turn or are you excited about a new opportunity?” Fleury said. “If your stomach turned, you may be invested too deeply in equities.”
Fleury said he advises queasy clients to reduce their portfolio’s stock holdings — although not right now — and put money into cash, bonds or other, more stable, investments.
For now, though, Fleury and Brubeck are encouraging patience. That could be hard, given the current volatility in the global financial markets.
Brubeck said that the global nature of investing today means there’s always going to be at least some volatility. Fleury said that in the short term, U.S. markets may stabilize as sales volume increases — August is traditionally a light month for trading. As volume increases — particularly on the buying side — some stability should return, Fleury said.
The Vail Valley Partnership, the regional chamber of commerce, also runs and closely tracks lodging reservations and rates. Partnership CEO Chris Romer said he isn’t particularly concerned about the current dip in the markets. In fact, he said, there could be some positive elements to the current correction.
Romer said for the past three years, lodging rates have increased at a greater rate than occupancy. For instance, for rooms booked over the next six months, occupancy is up 3 percent, while the rate is up 9 percent.
“What we might see (over the next few months) is that rate and occupancy (growth) might become more equal,” Romer said.
On the other hand, the stock markets’ fluctuations can have an affect on where people go on vacation and what they do when they arrive.
Ralf Garrison is the director of Destimetrics, a Denver area-based market research company specializing in mountain and other resort lodging. Garrison said financial markets can affect consumers’ confidence at least as much as their actual spending.
Market corrections have a psychological impact almost as soon as they occur, Garrison said, with the pocketbook impact coming a bit later.
“You don’t have to create demand for vacations,” Garrison said. “It’s about the ability to go, and that requires time and money.” How consumers feel about time and money combine to affect travel patterns.
Since the 2008 international economic slump, a combination of income, employment and confidence have all come back, at least to a degree. How this correction affects the psychology of that recovery — fueled by six years of steady growth in the markets — remains to be seen.
Fleury noted that after all those years of relatively uninterrupted growth, the major stock indexes are down, and significantly, in 2015.
While no slump is good for consumer confidence, Garrison said this one hasn’t come at a terrible time for mountain resorts.
“The ideal time would be April, when ski season’s over and people aren’t yet set on summer,” Garrison said.
The worst time for a slump would be in September, October and November, when ski season reservations are strong.
August, toward the end of summer and before that season, isn’t such a bad time, Garrison said.
As long as the markets don’t wait too long for a bounce-back from bargain hunters.
Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, email@example.com and @scottnmiller.