Paul Nitze: Our moment of reckoning arrives
December 11, 2008
A winter of discontent has arrived in the Roaring Fork Valley. Anyone can tell you that cash is seeping out of our economy like air from a flat tire. But sometimes it takes one particularly nasty piece of news to deliver that final steel-toed kick to the ribs. On the national level, that kick arrived last week in the form of the November jobs report, which showed a nausea-inducing half-million drop in employment.
Our kick came Tuesday, in the occupancy report released by the Aspen Chamber Resort Association (ACRA). That report shows that Christmas-week bookings now stand at 59 percent, down from an historical average of nearly 90 percent. While the 90 percent figure represents our actual average, and we will see some bookings over the next two weeks, this is still shaping up to be one of the worst ski seasons yet.
Helpfully, ACRA posts historical occupancy data on its website back to 1987. It appears they changed their reporting methodology in late 2003, but a glance at the numbers indicates we’re in for the lowest Christmas occupancy since at least 1991, and perhaps since they started keeping track. This is shocking data. A typical Christmas week in Aspen means absolutely zero vacancy at the Nell, the Jerome and the other top hotels in town. Even in prior down years, modest discounts and concessions have kept bookings high. Those tricks don’t seem to be working this year.
Other indicators are equally bleak. Aspen Skiing Co. Senior VP David Perry is putting on a brave face this season, which I applaud, but the Skico’s bottom line is going to get absolutely hammered. Fixed costs are just that ” fixed ” and the Skico will get no break on expenses, save perhaps for energy prices. Meanwhile, even if skier visits stay fairly strong, concessions will be materially weaker. And the Skico’s unfinished real estate development projects are likely to tread water for a couple of years.
Thank goodness it’s a private business. If you bought a share of Vail Resorts exactly 10 years ago, your investment is under water. I could only cringe when I saw CEO Rob Katz ring the opening bell on the New York Stock Exchange last week, in advance of Beaver Creek’s World Cup race. He may have been ringing a cow bell, but it must have sounded like a dirge. Vail announced largely symbolic layoffs recently, to the tune of about 50 employees, but if you think that’s the end of the cutting I have a subprime mortgage to sell you.
Real estate brokers are to Aspen what lawyers are to Washington, and most of those brokers are in for some lean times. Setting aside the star brokers like Josh Saslove or Bob Starodoj, these are people who generally subsist on no more than a half-dozen (or less) sales per year. Aspen is too beautiful for prices to crater, and we still might see $2 billion in Pitkin County transactions next year. But some listings are now coming well down from the $2,500- to $3,000-square-foot, high-water mark of 2007.
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None of this is good news for Aspen or the valley, but there is a silver lining to this season. Talk to someone who’s lived in Aspen for a long time, and you’ll inevitably hear about how much better it used to be. Cheaper, emptier, friendlier, less-polluted ” you name the virtue, and some old-timer will identify it as come and gone. We are never going back in time, but this season will be a restoration of sorts.
Some of the virtues that Aspen is alleged to have possessed are myths, pure and simple. In the modern era, Aspen has always been a destination for the jet set. Aspen was cheaper then, but it was never truly cheap. Nor is the Aspen of today a shallow reflection of the high-minded philosophers’ grove of the 1950s. Aspen is as cultured and intellectual a town as it ever was. And if you go off the beaten path, the trails are not crowded. Pick the most beautiful day in July and there will be no more than a couple of tents set up in Fravert Basin. Pick the snowiest day in March and there will be hardly any tracks on Baldy Knob.
What Aspen has lost, in part, is a sense of community. Both those who lived in town and those who vacationed here knew each other better in the past. I predict we’ll restore some of that community this year. Aspen is a fly-in town for many, and there simply won’t be as many people flying in this winter. We may never have the kinds of old-timers’ Christmas parties of yore, with Maggie Durrance, Fritz Benedict and Freidl Pfeiffer sharing eggnog, but the town will be a little closer this year. I’ll toast to that.
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