Will resorts’ prosperity ever match the last boom?
ASPEN – The Roaring Fork Valley has traditionally bounced back strong from tough economic times, but this recession is so severe that Aspen might emerge as a different resort, according to experts on demographics and resort economies.
Jim Westkott, a senior demographer with the Colorado state government, and Ford Frick, managing director of BBC Research and Consulting in Denver, said they doubt Aspen and Snowmass Village can just ride out the recession and pick up with business as usual when it eases.
“I don’t see how anybody can say we’re going to return to lost levels of prosperity,” said Frick, whose firm advises organizations from ski resorts to major cities on everything from marketing studies to transportation systems. The firm helped Aspen study how to revitalize its downtown core.
While Aspen is “probably insulated as well as anyone,” Frick said it will be a tough time for destination resorts for the foreseeable future. “We haven’t seen this one before,” he said, referring to the strength and type of the recession. “The resorts are more vulnerable.”
Most recessions hit at the base of the population and sometimes trickle up to the wealthy. This recession struck the rich harder, quicker. Wealthy travelers who visit or live part-time at high-end resorts like Aspen were at “ground zero” of the recession, Frick said. As a result, he sees the real estate market eroding further. The number of real estate transactions has dropped in many western mountain resorts, but sales prices are generally hanging tough. He believes that will change.
“Prices will follow,” Frick said. “We’re hardly there yet.”
Demand, but less of it
Westkott has paid special attention to the Aspen-area’s economy as a speaker for several years at the annual State of the Valley conference hosted by the nonprofit Healthy Mountain Communities. He has helped elected officials in the valley understand the key role that second homes have played in the local economy.
Westkott said this week that there will continue to be a demand for high-end homes in Aspen, but at a reduced level than the boom period from 2002 through 2007. Buyers will now be people who truly want to live in Aspen at least part-time, not people buying property simply as a good investment.
“That’s going to be gone for sure, the second-home speculative market,” Westkott said.
But he was generally bullish about Aspen’s future despite what he foresees as “softening” of “the second-home dominance.” He believes traditional tourism will experience a revival. There will be more short-term visitors who don’t own property. They will revitalize the downtown commercial core and attract more businesses that cater to them.
Real estate sales and development, along with service for second-home owners, started supplanting short-term tourism as an economic driver in the 1990s. The recession will help restore some balance between the real estate sales and development sector and traditional tourism, he said.
Still a Mecca for Boomers
Westkott said aging Baby Boomers will continue to shape the future of Aspen and Snowmass Village. The recession doesn’t prevent people from aging, he quipped, and more and more Baby Boomers are reaching retirement age. They will be attracted to places like Aspen as homeowners and travelers.
“The beauty of the area has not been lost,” Westkott said.
But Frick believes the recession and its aftermath will be more cataclysmic for destination resorts, despite Baby Boomers. He doesn’t foresee a strong revival of traditional tourism. Participation in virtually all “skill sports,” such as downhill skiing, is declining among younger populations, he said. And as Baby Boomers age, they are leaving the sport. Resorts will settle to a new level of business, Frick said, and it will likely be “painful.”
The aging of the Baby Boomers also has implications on the real estate market in mountain resorts. Living at high altitude appeals to younger retirees in their late 50s and 60s, Frick said. But as people age and face medical issues, high elevation resorts lose their appeal for many people.
Both Frick and Westkott stressed that this recession is plowing up so much new ground that no one can forecast the effects with any certainty.
History shows that Pitkin, Garfield and Eagle counties recover from recessions quicker in general than Colorado and the United States as a whole. A nonprofit research organization called Headwaters Economics updated profiles on counties throughout the western United States earlier this year. In those profiles were snapshots of how counties recovered from recessions in key areas like job growth and personal income.
The study looked at how the counties fared during and immediately after the past five recessions: in 1975, 1980, 1982, 1991 and 2001.
Pitkin County added a higher percentage of jobs than Colorado and the United States in all recoveries except after the 1991 recession. Personal income – which measures everything from wages for worker bees to investments for fat cats – in Pitkin County far outpaced that of Colorado and the nation during all recoveries, according to Headwaters Economics’ data.
Garfield County’s recovery from the recessions was stronger than Colorado and the United States every year except 1982, the study showed. Eagle County bounced back quicker than the rest of the country after every recession.
(The county profiles can be found at http://www.headwaterseconomics.org, then clicking on the link titled “Economic Profile Systems” and following the instructions.)
While the Roaring Fork Valley recovered well from past recessions, there are no guarantees the trend will hold true.
“We’re still gauging the impact of this recession. Looking at statistics from the past alone can be risky. However, we know that more diverse economies are more resilient and more likely to recover faster,” said Ben Alexander, associate director of Headwaters Economics.