Aspen economic forecast: ‘Flat is the new up’
The Aspen Times
Aspen, CO Colorado
ASPEN – The worst might be over.
Aspen business leaders, assessing the state of the local economy Wednesday at the annual Aspen Chamber Resort Association luncheon, predicted 2010 won’t be any worse than 2009 and, on some fronts, may show slight improvement.
The bar for optimism, it seemed, has been reset, just as it has for anything else having to do with the economy.
“Maybe flat is the new up,” summed up Barry Crook, assistant city manager.
With two years of budget cutting, city government has reduced its staffing to 2003 levels, reflecting sales tax and fee revenues that have also dropped back to the levels of seven years ago, he said.
The city has cautiously budgeted revenue growth of 1.5 percent for 2010 and has seen a hint of increased spending on some luxury items, according to Crook.
“Sales tax [revenues] don’t seem to be getting worse,” he offered.
A show of hands from business representatives who had a better March this year than last indicated few in the room had seen improvement, but a March survey of ACRA members indicated some businesses expect to do better this year than they did in 2009.
The survey results showed 45 percent of respondents expect business to be up this year, noted Debbie Braun, chamber president. A year ago, 15 percent had that expectation. This year, 16 percent expect their business to be down 10 to 20 percent, compared to 44 percent last year, she said.
“We’ve cleared the low bar,” Braun said.
The number of residential real estate sales and total sales volume have both plummeted since the boom years of 2005 to 2007, reported broker William Small of Frias Commercial Real Estate, but the decline has slowed.
“There are some indications that the market has bottomed out, but it’s still too early to say things are turning around,” he said. “I think it’s safe to say the worst is behind us.”
Small also reported a 30 to 50 percent drop in commercial lease rates and said he anticipates commercial vacancy rates, now in the 7 to 7.5 percent range, will start to come down.
Overall, he predicted “some modest improvement” over 2009 in the real estate market.
Banker Kurt Adam, president of Community Banks of Colorado, was less optimistic.
The lending market remains tight, interest rates will rise, and the national debt will continue to have a crippling effect on the economy, he predicted.
“The good old days that we saw on many of the charts and graphs – I don’t think will ever happen again,” he said. “I am worried about this year. I don’t see 2010 being anything but flat.”
Bill Tomcich, president of local reservations agency Stay Aspen Snowmass, offered one of the brighter reports of the day, noting Aspen has enjoyed three straight years of increased commercial airline capacity, an anomaly among mountain resorts around the West.
Competition, particularly between United and Frontier, has resulted in lower fares and increased business for the airlines as more locals and visitors fly in and out of Aspen, he said.
Lodging occupancy this winter looks like it will come out roughly even with last winter, but the prices visitors are paying to stay in Aspen have dropped significantly. Rates have dropped more locally than they have at other resorts as lodging properties compete aggressively for business, Tomcich said.
Advance reservations for the summer, particularly July, are pacing ahead of what they were at this point a year ago, Tomcich added.
“It’s not all gloom and doom,” he said.
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