Aspen economy bounces back strong from early 2021
Aspen City Council set to discuss 2022 budget recommendations
The Aspen economy has been on fire this year, but city financiers are still cautiously looking toward the future as elected officials begin deliberations on the 2022 budget.
Taxable sales through July are almost $548 million, which is $56 million more than 2019, or 11% up. City Finance Director Pete Strecker last week projected that August was up between 30% and 40%.
“We are really firing a lot better than we anticipated,” he told Aspen City Council during a Sept. 27 work session.
He updated council on the city’s financial condition in advance of budget talks beginning Monday that will last into November.
The local economy started off slow this year, as COVID-19 public health orders were still in effect, resulting in January and February being down 30% and 15%, respectively.
“We were struggling against the flow of everything, being in the red level restrictions at the end of 2020 and heading into 2021,” Strecker said. “But since then in March we started to pick up steam and we shook off the early impacts of COVID in the winter season and really have flourished since.”
But not all industries have bounced back, one of which is accommodations, which is a pillar industry in Aspen’s economy.
Lodging is 16% down over 2019 year to date, with a year-end projection of a 7% decrease, thanks to a busy summer.
“We are still trying to get out of this hole that started at the beginning of the year,” Strecker said, noting that transportation and tourism promotion will take a hit since lodging tax revenue funds those programs.
While there may have been plenty of room at the inn this year, it didn’t prevent the average daily rate from slipping. In July the average rate for one night at a lodge was $668 and in August it was $609.
“So while (accommodations) are still down it’s amazing that we are seeing such pricing,” Strecker said. “It seems as though while occupancy may have been waning in the beginning, it seems demand is very much based on the prices that can be charged such that we are starting to close the gap.”
Overall, Strecker predicts that taxable revenue will be 12% up over 2019 and 20% up over 2020.
What 2022 looks like is anyone’s guess, but Strecker is remaining cautious and projecting historical norms for sales tax to be up between 3%-5%.
“Domestic tourism is what really has been coming in spades for summer months,” he said. “As we go into winter and as we see COVID tick up again we have a little bit of risk showing, and we’re a little worried not to the point where we have any alarm bells going off saying you need to pull back.”
City Manager Sara Ott told council Strecker has provided a good, solid foundation of where the city is headed for the 2022 budget, which is projected at $141 million.
“This information has been really important in forming the recommended budget,” she said.