A destruction of demand in the ski industry | AspenTimes.com

A destruction of demand in the ski industry

Inside Business StaffAspen, CO Colorado

In the latest data released by the Mountain Travel Research Program (MTRiP), record-breaking low levels of consumer confidence, increasing unemployment figures, slow consumer reaction to the recent stimulus package legislation passed by the U.S. Congress, and continued declines on Wall Street, have been felt in all spending categories, including the mountain travel industry. Overall demand is down, damaged by the long-term negative market forces, said Ralf Garrison, who directs the research. The Consumer Confidence Index (CPI) dropped 33.7 percent in February to 25 percent its lowest level since it was introduced in 1967. Unemployment figures rose for the third consecutive month with more than 650,000 jobs lost in February for a total of 12.2 million unemployed nationally. The CPI was up slightly, 0.4 percent, and the Travel Price Index was down for the fifth consecutive month, a slight drop of 1.6 percent. Consumers have reacted by changing their spending habits. Their reluctance to make purchases has been described as a destruction of demand.Those broad economic indicators are having a significant impact on the ski industry and mountain travel destinations. Cumulative occupancy for February among participating MTRiP resorts was 54.5 percent compared to 63.9 percent last year; down 14.9 percent. The average daily rate for the same time period was down 8.6 percent. Reservations taken in February for the upcoming six months improved slightly, up 3.0 percent over last years pace and showing strength for short-term February arrivals. The combination of lower occupancy and reduced room rates is resulting in less overall revenue to resort communities. This reduction in revenue for community coffers is likely to pose a challenge for local government entities in resort communities as tax revenues will be less than budget expectations and there are probably going to be a variety of consequences for local programs and services in the coming months when the shortfalls become apparent, Garrison said. April is currently holding steady with reservations flat and room rates up 7 percent, primarily because of the Easter holiday falling in April this year instead of March as it did in 2008. The current tally for the 2008-2009 ski season from November through April shows total occupancy down 16.3 percent from last year and the average daily rate down 7.6 percent. Lift ticket sales are showing surprising resilience, especially at eastern resorts where skiers are staying closer to home and those resorts are pacing close to previous years based on anecdotal reports, Garrison said. The potential for last minute bookings from short-haul overnight guests still offers some positive prospects for resorts and lodging properties, but this trend, first observed in December, does not appear to have the same momentum as the season winds down.

Data is derived from a sample of 216 property management companies in 15 mountain destination communities across Colorado, Utah, California, and British Columbia. Data is representative of a comprehensive cross-section of the community and may not reflect the entire mountain destination travel industry.Inside Business is published Wednesdays in The Aspen Times.

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